1
EXHIBIT 10.20
================================================================================
TEAM RENTAL GROUP, INC.
-----------------------
NOTE PURCHASE AGREEMENT
-----------------------
7.0% Convertible Subordinated Notes due 2003
Dated as of December 1, 1996
================================================================================
[Exhibits B, C-1 and C-2 are photocopies of the opinions as delivered.]
2
TABLE OF CONTENTS
Page
----
1. ISSUANCE OF NOTES............................................................ 1
1.1. Authorization; Conversion of Notes into Class A
Shares; Etc............................................................ 1
1.2. Purchase and Sale of Notes; the Closing ............................... 1
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............................... 2
2.1. Organization, Qualification, Authorization,
Capital Stock ......................................................... 2
2.2. Business, Properties and Other Information ............................ 3
2.3. Incorporation, Good Standing and Ownership of
Subsidiaries .......................................................... 4
2.4. Financial Statements .................................................. 4
2.5. Compliance with Laws, Other Instruments, Etc .......................... 5
2.6. No Defaults Under Existing Debt ....................................... 5
2.7. Governmental Authorizations, Etc ...................................... 6
2.8. Litigation; Observance of Statutes, Regulations
and Orders ............................................................ 6
2.9. Taxes ................................................................. 6
2.10. Title to Properties .................................................. 6
2.11. Licenses, Permits, Etc ............................................... 7
2.12. Compliance with ERISA ................................................ 7
2.13. Private Offering ..................................................... 8
2.14. Use of Proceeds; Margin Regulations .................................. 8
2.15. Investment Company Act and Holding Company Status, Etc ............... 9
2.16. Environmental Matters ................................................ 9
2.17. Solvency ............................................................. 10
2.18. Registration Rights .................................................. 10
2.19. Other Agreements ..................................................... 10
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER ............................. 11
3.1. Purchase of Notes ..................................................... 11
3.2. Source of Funds ....................................................... 11
4. CONDITIONS OF CLOSING ....................................................... 12
4.1. Proceedings ........................................................... 12
4.2. Representations and Warranties; No Default ............................ 13
4.3. Opinions of Counsel ................................................... 13
4.4. Registration Rights Agreement ......................................... 13
4.5. Private Placement Number .............................................. 13
4.6. Legality .............................................................. 13
4.7. Payment of Fees ....................................................... 14
4.8. Sale of Notes to Other Purchasers ..................................... 14
5. PREPAYMENTS OF NOTES; PURCHASE OF NOTES ..................................... 14
(i)
3
5.1. Optional Prepayment .................................................... 14
5.2. Notice of Optional Prepayment .......................................... 15
5.3. Prepayment in Connection with a Change of Control ...................... 15
5.4. Prepayment in Connection with Failure to Register ...................... 16
5.5. Partial Prepayments Pro Rata ........................................... 16
5.6. Purchase of Notes ...................................................... 16
6. FINANCIAL STATEMENTS AND INFORMATION ........................................ 16
7. [INTENTIONALLY OMITTED.] .................................................... 18
8. COVENANTS ................................................................... 18
8.1. Payment of Principal, Interest and Premium, Etc ........................ 18
8.2. To Keep Books; Payment of Taxes; Maintenance of
Properties; Etc ........................................................ 18
8.3. Limitation on Restricted Payments, Etc ................................. 19
8.4. Consolidation, Merger or Disposition of Assets
as an Entirety ......................................................... 21
9. DEFINITIONS ................................................................. 21
9.1. Definitions ............................................................ 21
9.2. Accounting Terms ....................................................... 30
00.XXXXXX OF DEFAULT; REMEDIES ................................................. 31
10.1. Events of Default; Acceleration of Maturity and
Rescission ............................................................ 31
10.2. Suits for Enforcement ................................................. 33
10.3. Remedies Cumulative ................................................... 33
10.4. Remedies Not Waived ................................................... 34
11. CONVERSION AND EXCHANGE OF NOTES; ANTIDILUTION PROVISIONS .................. 34
11.1. Conversion of Notes ................................................... 34
11.2. Antidilution Provisions; Accrued Interest and
Fractional Shares; Mechanics of Conversion; No
Impairment; Etc ....................................................... 34
12. SUBORDINATION OF NOTES ..................................................... 41
12.1. General .............................................................. 41
12.2. Distribution on Dissolution, Liquidation and
Reorganization; Subrogation .......................................... 41
12.3. No Payment in Event of Default on Senior Indebtedness ................ 43
12.4. Payments Permitted ................................................... 44
12.5. Modification of Terms of Senior Indebtedness ......................... 44
13. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES;
RESTRICTIVE LEGENDS TRANSFER RESTRICTIONS .................................. 44
(ii)
4
14. LOST, ETC., NOTES .......................................................... 45
15. AMENDMENT AND WAIVER ....................................................... 46
16. HOME OFFICE PAYMENT ........................................................ 47
17. LIABILITIES OF THE PURCHASER ............................................... 47
18. CERTAIN TAXES .............................................................. 47
19. MISCELLANEOUS .............................................................. 48
19.1. Expenses ............................................................. 48
19.2. Reliance on and Survival of Representations .......................... 49
19.3. Successors and Assigns ............................................... 49
19.4. Communications ....................................................... 49
19.5. Consent to Jurisdiction; Service of Process;
Waiver of Jury Trial ................................................. 50
19.6. Indemnification ...................................................... 50
19.7. Governing Law ........................................................ 51
19.8. Headings ............................................................. 51
19.9. Counterparts ......................................................... 51
SCHEDULE I -- Names and Addresses of Purchasers
EXHIBIT A -- FORM OF NOTE
EXHIBIT B -- FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
EXHIBIT C-1 -- FORM OF OPINION OF TRANSACTION COUNSEL
TO THE COMPANY
EXHIBIT C-2 -- FORM OF OPINION OF COUNSEL TO THE COMPANY
EXHIBIT D -- FORM OF REGISTRATION RIGHTS AGREEMENT
SCHEDULE 2.1 -- OUTSTANDING CONVERTIBLE SECURITIES,
OPTIONS, ETC.
SCHEDULE 2.3 -- SUBSIDIARIES
SCHEDULE 2.6 -- EXISTING DEBT
SCHEDULE 2.8 -- LITIGATION
SCHEDULE 2.11 -- LICENSES, PERMITS
SCHEDULE 2.16 -- ENVIRONMENTAL MATTERS
SCHEDULE 2.18 -- REGISTRATION RIGHTS
(iii)
5
TEAM RENTAL GROUP, INC.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
NOTE PURCHASE AGREEMENT
As of December 1, 1996
TO THE PURCHASER WHOSE NAME
APPEARS IN THE ACCEPTANCE
FORM AT THE END HEREOF
Ladies and Gentlemen:
TEAM RENTAL GROUP, INC., a Delaware corporation (the "COMPANY"), hereby
agrees with you as follows:
1. ISSUANCE OF NOTES.
1.1. AUTHORIZATION; CONVERSION OF NOTES INTO CLASS A SHARES; ETC.
The Company has duly authorized the issue and sale of $80,000,000 aggregate
principal amount of its 7.0% Convertible Subordinated Notes due 2003 (the
"NOTES"), each such Note to be substantially in the form of Exhibit A attached
hereto. As used herein, the term "NOTES" means all notes originally issued
pursuant to this Agreement and the other agreements referred to in Section 2.19
and all notes delivered in substitution or exchange for any such notes and,
where applicable, includes the singular number as well as the plural. Certain
capitalized and other terms used in this Agreement are defined in Section 9.
As provided in Section 11, the Notes are convertible into shares of the
Class A Common Stock, par value $.01 per share, of the Company (the "CLASS A
SHARES") at an initial Conversion Price of $20.07 per share. The Company is
obligated to file a Shelf Registration (as defined in the Registration Rights
Agreement referred to below) in respect of Class A Shares issuable upon
conversion of the Notes. Under circumstances described in Exhibit A, the
interest rate on the Notes is subject to adjustment from time to time if such
Shelf Registration has not become effective.
1.2. PURCHASE AND SALE OF NOTES; THE CLOSING.
Subject to the terms and conditions hereof, the Company hereby agrees to
sell to you, and you agree to purchase from the Company, the aggregate principal
amount of Notes as set forth opposite your name in Schedule I attached hereto,
at a purchase price equal to 100% of the principal amount of each Note being
purchased by you. The closing of such purchase shall be held at 10:00 A.M.,
New York time, on December 18, 1996 or on such later
6
2
Business Day as may be agreed to by you and the Company (the "CLOSING DATE"), at
the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX
00000.
On the Closing Date, the Company will deliver to you one or more Notes,
dated the Closing Date and registered in your name or in the name of one or more
of your nominees, in any denominations (in a minimum amount of $500,000) and in
the aggregate principal amount to be purchased by you, all as you may specify by
timely notice to the Company (or, in the absence of such notice, one Note
registered in your name), in each case against your delivery to the Company of
immediately available funds in the amount of the purchase price of such Notes,
such delivery to be by wire transfer to American National Bank, Jacksonville,
Florida, ABA No. 000000000, for credit to Tomoka State Bank, Account No.
408019258-01, for the account of Team Rental Group, Inc., Account No. 0000000.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you as follows:
2.1. ORGANIZATION, QUALIFICATION, AUTHORIZATION, CAPITAL STOCK.
A. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to own or hold under lease the property it purports to own
or hold under lease, to transact the business it transacts, to execute and
deliver this Agreement, the Notes and the Registration Rights Agreement and to
perform the provisions hereof and thereof. The Company is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the properties owned or held under lease by it or the nature of the
business transacted by it requires such qualification, except where the failure
to be so qualified individually and in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
B. The execution, delivery and performance of this Agreement, the Notes and
the Registration Rights Agreement have been duly authorized by all necessary
action on the part of the Company. This Agreement is, and the Notes and the
Registration Rights Agreement when executed and delivered by the Company will
be, legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency or other similar laws relating to or
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and except as enforceability of the
indemnity provisions
7
3
contained in the Registration Rights Agreement may be limited by public policy
considerations.
C. The authorized capital stock of the Company consists of:
20,000,000 shares of Common Stock, of which 17,500,000 shares are Class A
Shares and 2,500,000 shares are Class B Common Stock, par value $.01 per share
(the "CLASS B SHARES"), and 250,000 shares of Preferred Stock, par value $.01
per share; and 9,314,183 Class A Shares, 1,936,600 Class B Shares and no
shares of Preferred Stock are issued and outstanding. All of such issued and
outstanding shares of Common Stock are validly issued, fully paid and
nonassessable. Except as described in Schedule 2.1, as of the Closing Date the
Company will have no outstanding securities (other than the Notes) convertible
into or exchangeable for any shares of its capital stock or any preemptive or
other rights to subscribe for or to purchase, or any options for the purchase
of, or any agreements providing for the issuance (contingent or otherwise) of,
any calls, commitments or claims of any character relating to, any shares of
its capital stock or any securities convertible into or exchangeable for any
shares of its capital stock. As of the Closing Date, all Class A Shares
initially issuable upon conversion of the Notes will have been reserved for
issuance (as of December 17, 1996, at least 3,986,049 Class A Shares are
deemed to be so issuable) upon such conversion and, when so issued, will be
fully paid and nonassessable.
2.2. BUSINESS, PROPERTIES AND OTHER INFORMATION.
The Company is subject to the reporting requirements of the Exchange Act
and has delivered to you copies of the following reports and proxy statement
filed with the Commission:
A. its Annual Report on Form 10-K for its fiscal year ended December
31, 1995, filed pursuant to Section 13(a) of said Act;
B. its Quarterly Reports on Form 10-Q for its fiscal quarters ended
March 31, June 30 and September 30, 1996, each filed pursuant to Section
13(a) of said Act;
C. its Current Reports on Form 8-K dated as of February 27, 1996 (as
amended), February 29, 1996, August 1, 1996 and November 26, 1996; and
D. the Proxy Statement for its 1996 Annual Meeting of Stockholders,
filed pursuant to Section 14 of said Act.
Said reports and proxy statement comprise all reports and proxy statements
required to be filed by the Company with the Commission under the Exchange Act
since December 31, 1995 and are collectively called the "SEC REPORTS", which
term shall also include on the Closing Date all further reports and proxy
8
4
statements which the Company may theretofore have furnished to you pursuant to
Section 6D.
None of the SEC Reports listed above contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading. The Company knows of no facts not disclosed in the
SEC Reports listed above which, so far as the Company can now foresee, could
reasonably be expected to have a Material Adverse Effect.
2.3. INCORPORATION, GOOD STANDING AND OWNERSHIP OF SUBSIDIARIES.
Schedule 2.3 is a complete and correct list of Subsidiaries of the Company,
showing, as to each Subsidiary, the correct name thereof, the jurisdiction of
its organization and the percentage of shares of each class of securities of
such Subsidiary owned by the Company and each other Subsidiary of the Company.
All of the outstanding shares of each of the Subsidiaries shown in Schedule 2.3
as being owned by the Company and its Subsidiaries have been validly issued, are
fully paid and nonassessable and, except as set forth in Schedule 2.3, are owned
by the Company or another Subsidiary free and clear of any Lien. No shares of
the Company are owned by any of its Subsidiaries.
Each Subsidiary is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and is
duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which the character of the properties owned or held under lease
by it or nature of the business transacted by it requires such qualification,
except where the failure to be so qualified individually and in the aggregate
could not reasonably be expected to have a Material Adverse Effect. Each
Subsidiary has the corporate power and authority to own or hold under lease the
property it purports to own or hold under lease and to transact the business it
transacts.
2.4. FINANCIAL STATEMENTS.
The Company has delivered to you copies of
A. the consolidated balance sheets of the Company and its
Subsidiaries as of December 31, 1993, December 31, 1994 and December 31,
1995 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows of the Company and its Subsidiaries
for the fiscal years ending on such dates, all with reports thereon of
Deloitte & Touche LLP, independent public accountants; and
9
5
B. the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of September 30, 1996 and the related consolidated
statements of operations and cash flows of the Company and its
Subsidiaries for the fiscal quarter and nine-month period then ended.
All such financial statements (including any related schedules and notes)
present fairly the consolidated financial condition of the Company and its
Subsidiaries as of the respective dates of such consolidated balance sheets and
the consolidated results of their operations for the periods ended on said dates
and have been prepared in accordance with GAAP consistently applied by the
Company and its Subsidiaries throughout the periods involved (subject to normal
year-end audit adjustments). There has been no material adverse change in the
assets, liabilities, financial condition or results of operations of the Company
and its Subsidiaries since December 31, 1995 from that set forth in the
financial statements as of and for the fiscal year ended on said date.
2.5. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this Agreement,
the Notes and the Registration Rights Agreement will not: (A) conflict with the
Certificate of Incorporation or by-laws of the Company or any Subsidiary; (B)
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Company or any Subsidiary
under, any indenture, mortgage, deed of trust, bank loan or credit agreement, or
any other agreement or instrument to which the Company or any Subsidiary is a
party or by which their respective properties may be bound or affected; or (C)
conflict with or result in a breach of any of the terms, conditions or
provisions of any Order of any court, arbitrator or Governmental Body applicable
to the Company or any Subsidiary or violate any provision of any law, statute,
rule or regulation of any Governmental Body applicable to the Company or any
Subsidiary.
As used in this Agreement, the term "GOVERNMENTAL BODY" includes any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign; and the term "ORDER"
includes any written order, writ, injunction, decree, judgment, award, penalty,
determination, direction or demand.
2.6. NO DEFAULTS UNDER EXISTING DEBT.
Schedule 2.6 is a complete and correct list of all outstanding Debt of the
Company and each Subsidiary as of the dates therein stated, showing as to each
item the obligor, the obligee, the aggregate principal amount outstanding and
the final maturity date and a brief description of any security therefor.
All such Debt is Senior Indebtedness, except as indicated in
10
6
Schedule 2.6. Neither the Company nor any Subsidiary is in default (whether or
not waived) in the performance or observance of any of the material terms,
covenants or conditions contained in any instrument evidencing any Debt and no
event has occurred and is continuing which, with the giving of notice or the
lapse of time or both, would become such a default.
2.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration or filing with,
any Governmental Body is required to be obtained by the Company in connection
with the performance of this Agreement, the Notes or the Registration Rights
Agreement except as contemplated herein or therein.
2.8. LITIGATION; OBSERVANCE OF STATUTES, REGULATIONS AND ORDERS.
Except as set forth in Schedule 2.8, there are no actions, suits or
proceedings (including counterclaims) pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary or any property of the
Company or any Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Body, except actions, suits or proceedings which
in the aggregate, if adversely determined, could not be reasonably expected to
have a Material Adverse Effect.
Neither the Company nor any Subsidiary is in default under any Order of any
court, arbitrator or Governmental Body or is in violation of any statute, rule
or regulation of any Governmental Body, except for possible defaults or
violations which, in the aggregate, could not be reasonably expected to have a
Material Adverse Effect.
2.9. TAXES.
The Company and its Subsidiaries have filed all tax returns in all
jurisdictions in which such returns are required to have been filed by them and
have paid all taxes, assessments, fees and governmental charges due and payable
with respect to such returns to the extent the same have become due and payable
and before they have become delinquent, other than those being contested in good
faith by appropriate means and with respect to which the Company or a
Subsidiary, as the case may be, has set aside on its books adequate reserves in
conformity with GAAP.
2.10. TITLE TO PROPERTIES.
The Company and each Subsidiary has good and marketable title to their
respective real properties and own free and clear of any Liens their respective
other properties reflected in the consolidated balance sheet as at December 31,
1995, described in Section 2.4A, or purported to have been acquired by the
Company
11
7
or such Subsidiary after said date (other than properties and assets disposed of
in the ordinary course of business).
2.11. LICENSES, PERMITS, ETC.
The Company and its Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, proprietary software, copyrights,
trademarks and trade names, or rights thereto, material to the conduct of the
businesses of the Company and its Subsidiaries taken as a whole, without known
conflict with the rights of others, and, except as set forth on Schedule 2.11,
there are no written agreements providing for the expiration or termination of
any of the same prior to the final maturity of the Notes.
2.12. COMPLIANCE WITH ERISA.
A. The Company and each ERISA Affiliate have operated and administered each
Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to any Plan other than such
liabilities as would not be individually or in the aggregate material, and to
the Company's knowledge, no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.
B. The present value of the aggregate benefit liabilities under each of the
Plans (other than Multiemployer Plans), determined as of the end of such Plan's
most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "BENEFIT LIABILITIES" has the
meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the meaning specified in section 3 of ERISA.
C. The Company and its ERISA Affiliates have not incurred withdrawal
liabilities under Section 4201 of ERISA and are not subject to contingent
withdrawal liabilities under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
12
8
D. The expected postretirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
E. The execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any transaction that is subject to the
prohibitions of section 406(a) of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Subsection E is made in reliance
upon and subject to the accuracy of your representation in Section 3.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you.
2.13. PRIVATE OFFERING.
Neither the Company nor anyone acting on its behalf has offered the Notes
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than you, the other purchasers listed in Schedule I and not more
than eight other institutional investors. Neither the Company nor anyone acting
on its behalf has taken, or will take, any action which would cause an exemption
from the registration requirements of Section 5 of the Securities Act to be
inapplicable to the issuance or sale of the Notes or the Class A Shares issuable
upon conversion of the Notes.
2.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will use the proceeds of the issuance of the Notes to repay
existing Debt, to fund the expansion of its retail car sales operations and for
general corporate purposes. No part of the proceeds from the sale of the Notes
hereunder will be used, and no part of the proceeds of such existing Debt was
used, directly or indirectly, for the purpose of buying or carrying any margin
stock within the meaning of Regulation G of the Board of Governors of the
Federal Reserve System (12 CFR 207, as amended), or for the purpose of buying or
carrying or trading in any securities under such circumstances as to involve the
Company in a violation of Regulation X of said Board (12 CFR 224) or to involve
any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).
Margin stock does not constitute any of the assets of the Company and its
Subsidiaries, and the Company does not presently intend that margin stock will
constitute more than 20% of such assets. As used in this Section, the terms
"MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the meanings
assigned to them in the aforementioned Regulation G.
13
9
2.15. INVESTMENT COMPANY ACT AND HOLDING COMPANY STATUS, ETC.
Neither the Company nor any Subsidiary is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility Holding Company
Act of 1935, as amended, or the Federal Power Act, as amended.
2.16. ENVIRONMENTAL MATTERS.
A. The operations of the Company and its Subsidiaries comply with all
Environmental Laws and all other applicable Requirements of Law concerning
environmental health and safety, except where the failure so to comply
individually and in the aggregate could not be reasonably expected to have a
Material Adverse Effect.
B. In addition and without limitation to the foregoing, except as set
forth on Schedule 2.16:
(1) neither the Company nor any Subsidiary, nor any property or
operations currently owned or leased by the Company or any Subsidiary, is
subject to, and no property or operations formerly owned or leased by the
Company or any Subsidiary during such period of ownership or lease were to
the Company's knowledge subject to, any Order from or agreement with any
court, arbitrator or Governmental Body of competent jurisdiction or
subject to any judicial or docketed administrative proceeding respecting
(x) any Environmental Law or any other environmental or health or safety
Requirement of Law, (y) any action required to clean up, remove, treat or
in any other way address Contaminants in the environment or (z) any
written claim under any Environmental Law arising from the release or
threatened release of a Contaminant into the environment;
(2) all necessary authorizations, consents, permissions, licenses and
agreements required by Environmental Laws (collectively "ENVIRONMENTAL
CONSENTS") have been lawfully obtained by the Company and its Subsidiaries
except Environmental Consents the failure of which to obtain could not
reasonably be expected to have a Material Adverse Effect, and all
Environmental Consents are valid and subsisting and are in full force and
effect;
(3) the Company and its Subsidiaries have complied in all material
respects with all conditions attaching to Environmental Consents (whether
such conditions are expressly imposed or implied by statute) and the
Company is not aware of any circumstances which would render it
impossible for the Company or any Subsidiary to comply with such
conditions in the future;
(4) neither the Company nor any Subsidiary has received any written
notice, Order, correspondence or
14
10
communication from any Governmental Body in respect of any Environmental
Consent revoking, suspending, modifying or varying the same, or
threatening to do so, and the Company does not know of any reason for
any Environmental Consent to be revoked, suspended, modified or varied;
(5) neither the Company nor any Subsidiary has received any written
communication in any form from any Governmental Body in respect of any
violation of any Environmental Law; and the Company is not aware of any
circumstances which would be reasonably expected to give rise to such a
communication being received, or of any intention on the part of any
competent authority to deliver any such communication;
(6) to the Company's knowledge, no site owned or occupied by the
Company or any Subsidiary has been used for the deposit of waste during
the ownership or occupation of the Company or any Subsidiary except for
such usage in accordance with Environmental Law or pursuant to all
requisite material consents thereunder;
(7) to the Company's knowledge, all Contaminants produced in the
course of the businesses of the Company and its Subsidiaries have been
lawfully disposed of; and
(8) to the Company's knowledge, the Company and its Subsidiaries have
at all times supplied to the competent authorities such information as is
required by Environmental Laws, and all such information given was correct
at the time such information was supplied.
2.17. SOLVENCY.
The Company is, and after giving effect to the issuance of the Notes on the
Closing Date will be, a "solvent institution", as said term is used in Section
1405(c) of the New York Insurance Law, whose "obligations . . . are not in
default as to principal or interest", as said terms are used in said Section
1405(c).
2.18. REGISTRATION RIGHTS.
Except as set forth in Schedule 2.18 and as contemplated by this Agreement
and the Registration Rights Agreement no Person has the right to cause the
Company to effect the registration under the Securities Act of any shares of
Common Stock or any other securities (including securities evidencing Debt) of
the Company.
2.19. OTHER AGREEMENTS.
Concurrently with the execution and delivery of this Agreement, the Company
is entering into Note Purchase Agreements
15
11
identical to this Agreement (except as to the identity of the purchasers and the
aggregate principal amount and series of Notes to be purchased) with the other
purchasers named in Schedule I. The sales to you and said other purchasers are
to be separate and several sales.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
You represent and warrant to the Company as follows:
3.1. PURCHASE OF NOTES.
You are acquiring the Notes being purchased by you on the Closing Date
without a view to the resale or distribution thereof, provided that the
disposition of your property shall at all times be within your control. You
understand that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, and that the Company is
not required to register the Notes.
You have had the opportunity to ask management of the Company questions
regarding the business and financial condition of the Company and the offering
of the Notes.
3.2. SOURCE OF FUNDS.
At least one of the following statements is an accurate representation as
to each source of funds (a "SOURCE") to be used by you to pay the purchase price
of the Notes to be purchased by you hereunder:
A. the Source is an "insurance company general account", as such term
is defined in Prohibited Transaction Exemption ("PTE") 95-60 (issued July
12, 1995), and there is no plan with respect to which the aggregate amount
of such general account's reserves and liabilities for the contracts held
by or on behalf of such plan and all other plans maintained by the same
employer (and affiliates thereof as defined in section V(a)(1) of PTE
95-60) or by the same employee organization (in each case determined in
accordance with PTE 95-60) exceeds or will exceed 10% of the total of all
reserves and liabilities of such general account (determined in accordance
with PTE 95-60, exclusive of separate account liabilities, plus any
applicable surplus) as of the Closing Date; or
B. the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or group
of plans maintained by the
16
12
same employer or employee organization beneficially owns more than
10% of all assets allocated to such pooled separate account or collective
investment fund; or
C. the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this Subsection C; or
D. the Source is a governmental plan; or
E. the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to
this Subsection E; or
F. the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 3.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
4. CONDITIONS OF CLOSING.
Your obligation to purchase and pay for the Notes to be purchased by you
hereunder is subject to the satisfaction on or before the Closing Date of the
following conditions:
4.1. PROCEEDINGS.
All corporate and other proceedings taken or to be taken in connection with
the transactions contemplated hereby and all documents and papers incident
thereto shall be satisfactory in form and substance to you, and you and your
special counsel shall have received all such counterpart originals or certified
17
13
or other copies of such documents and papers as you may reasonably request
related thereto.
4.2. REPRESENTATIONS AND WARRANTIES; NO DEFAULT.
The representations and warranties contained in Section 2 shall (except as
expressly affected by the transactions contemplated hereby) be true on and as of
the Closing Date as if made on and as of the Closing Date; the Company shall
have performed all agreements to be performed by it under this Agreement on or
before the Closing Date; there shall exist on the Closing Date no Default or
Event of Default; since September 30, 1996, the Company shall not have made any
Restricted Payment that would have been prohibited by Section 8.3 if said
Section had been in effect at all times since that date or consolidated with,
merged with or into, or sold, leased or otherwise disposed of its properties as
an entirety or substantially as an entirety to any Person, whether or not
permitted by Section 8.4; and the Company shall have delivered to you an
Officer's Certificate, dated the Closing Date, to each such effect.
4.3. OPINIONS OF COUNSEL.
You shall have received from (A) Xxxxxxx Xxxx & Xxxxxxxxx, who are acting
as your special counsel in connection with the transactions contemplated hereby,
(B) King & Spalding, counsel to the Company in connection with such
transactions, and (C) Xxxxxxx X. Xxxxxxxx Esq., counsel for the Company,
opinions substantially in the respective forms of Exhibits B, C-1 and C-2
attached hereto, each dated the Closing Date and addressed to you. Each such
opinion shall also cover such other customary legal matters as you may
reasonably request. The Company hereby instructs its counsel to deliver such
opinion to you.
4.4. REGISTRATION RIGHTS AGREEMENT.
A Registration Rights Agreement, substantially in the form of Exhibit D
attached hereto (the "REGISTRATION RIGHTS AGREEMENT"), shall have been executed
and delivered and shall be in full force and effect.
4.5. PRIVATE PLACEMENT NUMBER.
The Notes shall have been assigned a Private Placement Number by Standard
& Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation
Office of the National Association of Securities Commissioners).
4.6. LEGALITY.
On the Closing Date, the Notes to be purchased by you hereunder shall be a
legal investment for you under the laws of each jurisdiction to which you may be
subject (without resort, unless you so choose, to any so-called basket or leeway
provision
18
14
of said laws, such as Section 1405(a)(8) of the Insurance Law of the State of
New York), and you shall have received such certificates or other evidence as
you may reasonably request demonstrating the legality of such purchase under
such laws.
4.7. PAYMENT OF FEES.
The Company shall have paid the fees and disbursements of your special
counsel as contemplated by the second paragraph of Section 19.1.
4.8. SALE OF NOTES TO OTHER PURCHASERS.
The Company shall sell to the other purchasers referred to in Section 2.19
the Notes respectively to be purchased by them pursuant to the other agreements
referred to in said Section.
5. PREPAYMENTS OF NOTES; PURCHASE OF NOTES.
In addition to the payment of the entire unpaid principal amount of the
Notes at the final maturity thereof, the Company may make optional prepayments
in respect of the Notes and under certain circumstances may be required to offer
to prepay Notes, all as hereinafter provided.
5.1. OPTIONAL PREPAYMENT.
Upon notice given as provided in Section 5.2, the Company may at any time
on or after December 1, 1999 prepay the Notes as a whole, or from time to time
in part (in a minimum amount of $1,000,000 and otherwise in integral multiples
of $100,000), in each case at the principal amount to be prepaid, together with
interest accrued thereon to the date fixed for such prepayment, plus the
applicable prepayment premium (expressed as a percentage of the principal amount
so to be prepaid) indicated below:
Prepayment Date Prepayment Premium
--------------- ------------------
December 1, 1999 to November 30, 2000 3.50%
December 1, 2000 to November 30, 2001 2.333%
December 1, 2001 to November 30, 2002 1.170%
December 1, 2002 and thereafter 0.000%
provided that prior to December 1, 2001 Notes may not be prepaid pursuant to
this Section unless the Closing Price per Class A Share for a period of 10
consecutive Trading Days commencing 20 Trading Days before the date of the
Company's notice pursuant to Section 5.2 in respect of such prepayment was at
least 150% of the Conversion Price then in effect.
19
15
5.2. NOTICE OF OPTIONAL PREPAYMENT.
The Company shall call Notes for prepayment pursuant to Section 5.1 by
giving written notice thereof to each holder of the Notes, which notice shall be
given not less than 30 nor more than 60 days prior to the date fixed for such
prepayment and shall specify the principal amount so to be prepaid and the date
fixed for such prepayment and the prepayment premium in respect of such
prepayment. Each notice of a prepayment to be made prior to December 1, 2001
shall be accompanied by a certificate of a Senior Financial Officer showing the
Closing Price for each of the relevant Trading Days as required by Section 5.1.
Notice of prepayment having been so given, the aggregate principal amount
of the Notes so to be prepaid as specified in such notice, together with
interest accrued thereon to the date fixed for such prepayment, plus the
prepayment premium with respect thereto shall become due and payable on the
specified prepayment date.
5.3. PREPAYMENT IN CONNECTION WITH A CHANGE OF CONTROL.
Promptly and in any event within 20 days after the occurrence of a Change
of Control, the Company will give written notice thereof to the holders of all
outstanding Notes, which notice shall (a) refer specifically to this Section
5.3, (b) describe the Change of Control in reasonable detail and specify the
Change of Control Prepayment Date and the Response Date (as respectively defined
below) in respect thereof and (c) offer to prepay all Notes at the price
specified below on the date therein specified (the "CHANGE OF CONTROL PREPAYMENT
DATE"), which shall be a Business Day not less than 30 nor more than 60 days
after the date of such notice. Each holder of a Note will notify the Company of
such holder's acceptance (indicating the aggregate principal amount of notes to
be prepaid) or rejection of such offer by giving written notice of such
acceptance or rejection to the Company at least five days prior to the Change of
Control Prepayment Date (the "RESPONSE DATE"), except that the failure by any
such holder to respond in writing to such offer on or before the Response Date
shall be deemed to be a rejection of such offer by such holder in respect of
such Change of Control.
On the Change of Control Prepayment Date the Company will prepay all of the
Notes held by the holders as to which such offer has been accepted, at the
principal amount of each such Note, together with interest accrued thereon to
the Change of Control Prepayment Date, plus a premium equal to 1% of such
principal amount.
If any holder shall reject such offer, such holder shall be deemed to have
waived its rights under this Section 5.3 to require prepayment of all Notes held
by such holder in respect of such Change of Control but not in respect of any
subsequent Change of Control.
20
16
5.4. PREPAYMENT IN CONNECTION WITH FAILURE TO REGISTER.
If the Shelf Registration (as defined in the Registration Rights Agreement)
has not been declared effective on or before December 31, 1997, the Company will
give immediate written notice thereof to the holders of all outstanding Notes,
which notice shall (a) refer specifically to this Section 5.4, (b) specify the
Registration Failure Prepayment Date and the Response Date (as respectively
defined below) in respect thereof and (c) offer to prepay all Notes at the price
specified below on the date therein specified (the "REGISTRATION FAILURE
PREPAYMENT DATE"), which shall be January 30, 1998. Each holder of a Note will
notify the Company of such holder's acceptance (indicating the aggregate
principal amount of notes to be prepaid) or rejection of such offer by giving
written notice of such acceptance or rejection to the Company on or before
January 23, 1998 (the "RESPONSE DATE"), except that the failure by any such
holder to respond in writing to such offer on or before the Response Date shall
be deemed to be a rejection of such offer by such holder in respect of such
failure to register.
On the Registration Failure Prepayment Date the Company will prepay all of
the Notes held by the holders as to which such offer has been accepted, at the
principal amount of each such Note, together with interest accrued thereon to
the Registration Failure Prepayment Date, but without prepayment premium.
If any holder shall reject such offer, such holder shall be deemed to have
waived its rights under this Section 5.4 to require prepayment of all Notes held
by such holder in respect of such failure to register.
5.5. PARTIAL PREPAYMENTS PRO RATA.
Upon any prepayment of less than all of the outstanding Notes pursuant to
Section 5.1, the principal amount so prepaid shall be allocated to all Notes at
the time outstanding ratably in proportion to the respective unpaid principal
amounts thereof.
5.6. PURCHASE OF NOTES.
The Company will not, and will not permit any of its Subsidiaries to,
acquire directly or indirectly by purchase or prepayment or otherwise any of the
outstanding Notes except by way of payment or prepayment in accordance with the
provisions of the Notes and of this Agreement.
6. FINANCIAL STATEMENTS AND INFORMATION.
The Company will furnish to you, so long as you and the other purchasers
listed on Schedule I, shall in the aggregate, continue to hold any combination
of Notes (on an As Converted Basis) or Class A Shares representing at least 25%
of the Class A
21
17
Shares initially issuable upon conversion of all Notes (subject to adjustment
from time to time pursuant to Section 11.2):
A. promptly upon their becoming publicly available and in any event
within 105 days after the end of each fiscal year of the Company, copies
of a consolidated balance sheet of the Company and its Subsidiaries as of
the end of such fiscal year and the related consolidated statements of
operations, cash flows and changes in stockholders' equity of the Company
and its Subsidiaries for such fiscal year, all in reasonable detail and
stating in comparative form the respective consolidated figures as of the
end of and for the previous fiscal year and all accompanied by a report of
independent public accountants of recognized national standing selected by
the Company, which report shall state that such financial statements have
been prepared in accordance with GAAP, provided that the delivery within
the time period specified above of the Company's Annual Report on Form
10-K for such fiscal year (together with the Company's annual report to
stockholders, if any, prepared pursuant to Rule 14a-3 under the Exchange
Act) prepared in accordance with the requirements therefor and filed with
the Commission, together with the accountant's certificate described in
Subsection C below, shall be deemed to satisfy the requirements of this
Section 6A; and
B. promptly upon their becoming publicly available and in any event
within 45 days after the end of each fiscal quarter (other than the last
fiscal quarter) in each fiscal year of the Company, copies of an unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the
last day of such fiscal quarter and the related unaudited consolidated
statements of operations, cash flows and changes in stockholders' equity
of the Company and its Subsidiaries for such fiscal quarter and the period
from the beginning of the then current fiscal year to the end of such
fiscal quarter, all in reasonable detail and stating in comparative form
the consolidated figures for the corresponding date and period in the
previous fiscal year, and all certified by a Senior Financial Officer to
present fairly in all material respects the information contained therein,
in each case in accordance with GAAP, subject to normal year-end audit
adjustments, provided that delivery within the time period specified above
of copies of the Company's Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Commission
shall be deemed to satisfy the requirements of this Section 6B;
C. concurrently with each delivery of financial statements or reports
required to be furnished pursuant to Subsections A and B above, a
certificate of a Senior Financial Officer stating that, based upon such
examination or investigation and review of this Agreement as in the
22
18
opinion of the signer is necessary to enable the signer to express an
informed opinion with respect thereto, no Default or Event of Default has
occurred during such period, or, if any Default or Event of Default shall
have occurred, specifying all of the same and the nature and period of
existence thereof and what action the Company has taken, is taking or
proposes to take with respect thereto; and
D. promptly upon their becoming publicly available,
(1) copies of all other financial statements sent or made
available by the Company or a Subsidiary to its equity or other
security holders (other than the Company or another Subsidiary), all
regular and periodic reports and proxy statements, and all
registration statements and prospectuses, if any, filed by the
Company or any Subsidiary with any securities exchange or with the
Commission, and
(2) copies of all press releases and other statements made
available generally by the Company or any Subsidiary to the public
relating to financial matters or to other Material developments in
the business of the Company or any Subsidiary.
The Company also agrees to provide, at any time that it is not subject to
Section 13 or 15(d) of the Exchange Act to any prospective transferee of a Note
designated by a holder thereof information satisfying the requirements of
subsection (d)(4)(i) of Rule 144A of the Commission or any similar rule then in
effect.
7. [INTENTIONALLY OMITTED.]
8. COVENANTS.
The Company covenants and agrees that so long as any of the Notes shall be
outstanding:
8.1. PAYMENT OF PRINCIPAL, INTEREST AND PREMIUM, ETC.
The Company will duly and punctually pay the principal of, interest and
premium, if any, on, the Notes in accordance with the terms of the Notes and
this Agreement.
8.2. TO KEEP BOOKS; PAYMENT OF TAXES; MAINTENANCE OF PROPERTIES; ETC.
The Company will, and will cause each Subsidiary to,
A. keep proper books of record and account, and keep appropriate
reserves, all in accordance with GAAP;
23
19
B. pay and discharge or cause to be paid and discharged all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any of its property, real, personal or mixed, or
upon any part thereof, when due and so long as the same can be paid
without interest or penalty, as well as all lawful claims for labor,
materials and supplies which, if unpaid, could by law become a Lien upon
its property, provided that neither the Company nor any Subsidiary shall
be required to pay any such tax, assessment, charge, levy or claim if the
amount, applicability or validity thereof shall be contested on a timely
basis in good faith by appropriate proceedings (so long as the enforcement
of any Lien arising out of such nonpayment shall be stayed during any
proceedings) and if appropriate reserves, to the extent required by GAAP,
shall have been made therefor; and
C. maintain and keep, or cause to be maintained and kept, its
material properties in good repair, working order and condition (other
than ordinary wear and tear), so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times, provided that nothing in this Subsection shall prevent the Company
or any Subsidiary from discontinuing the operation and the maintenance of
any such properties if such discontinuance is, in the opinion of the
Company, in the best interest of the Company and its Subsidiaries taken as
a whole.
8.3. LIMITATION ON RESTRICTED PAYMENTS, ETC.
The Company will not, and will not permit any Subsidiary to, directly or
indirectly, (i) declare or pay any dividend or make any distribution on or in
respect of, or make any distribution to the holders of, Capital Stock of the
Company, (ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company (other than the BRAC Warrant), (iii) declare or pay
any dividend or make any distribution on or in respect of, or make any
distribution to holders of, Capital Stock of any Subsidiary (other than with
respect to any such Capital Stock held by the Company or any Wholly Owned
Subsidiary) or purchase, redeem or otherwise acquire or retire for value any
Capital Stock of any Subsidiary (other than such Capital Stock held by the
Company or any Wholly Owned Subsidiary), or (iv) purchase, repurchase, redeem,
defease or otherwise acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment, any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, or other acquisition or retirement being
herein referred to as a "RESTRICTED PAYMENT")
24
20
unless on the date of declaration and on the date of payment of such Restricted
Payment, and after giving effect thereto,
A. no Default or Event of Default shall have occurred and be
continuing, and
B. the aggregate amount of all Restricted Payments made or declared,
directly or indirectly, during the period from October 1, 1996 to and
including the date of such payment or declaration (the "COMPUTATION
PERIOD") would not exceed the sum of
(1) $5,000,000 plus
(2) 10% of cumulative Consolidated Net Income (or minus 100% of
any Consolidated Net Loss) for the Computation Period, plus
(3) the aggregate Net Cash Proceeds received by the Company
after the Closing Date from the issuance of shares of its Capital
Stock of any class (other than to a Subsidiary or an employee stock
ownership plan or similar trust), plus
(4) the aggregate Net Cash Proceeds received by the Company
after the Closing Date from the issuance of its Capital Stock (other
than Redeemable Capital Stock or Exchangeable Capital Stock) to an
employee stock ownership plan (provided that if such employee stock
ownership plan issues any Debt to finance its purchase of such
Capital Stock, such Net Cash Proceeds shall only be included to the
extent of any increase in the consolidated net worth of the Company
and its Subsidiaries resulting from principal repayments made by
such employee stock ownership plan with respect to such Debt), plus
(5) the amount by which consolidated Debt of the Company and
its Subsidiaries is reduced on the Company's consolidated balance
sheet upon the conversion or exchange (other than by a Subsidiary)
after the Closing Date of any Debt of the Company or any of its
Subsidiaries convertible or exchangeable for Capital Stock (other
than Redeemable Capital Stock or Exchangeable Capital Stock) of the
Company (less the amount of any cash, or other property, distributed
by the Company or any of its Subsidiaries upon such conversion or
exchange).
The Company will not declare any dividend or other Restricted Payment in
respect of its Common Stock of any class payable more than 90 days after the
declaration date.
25
21
8.4. CONSOLIDATION, MERGER OR DISPOSITION OF ASSETS AS AN ENTIRETY.
The Company will not, directly or indirectly, merge, consolidate or
amalgamate with any other Person or sell, lease, transfer or otherwise dispose
of all or substantially all of its assets (as an entirety) to any Person, unless
A. the Company shall be the continuing or surviving corporation, or
the continuing, surviving or acquiring Person shall be a solvent
corporation, partnership or trust organized in the United States of
America and shall expressly assume in writing (in a form reasonably
satisfactory to the Required Holders) the due and punctual payment of the
principal, premium (if any) and interest on the Notes and all of the other
obligations of the Company under this Agreement and the Registration
Rights Agreement, and
B. immediately after any such merger, consolidation, amalgamation,
sale, lease or other disposition and giving effect to any concurrent
transactions, no Default or Event of Default shall have occurred and be
continuing and the Company shall have complied with its obligations under
Section 11.2 resulting from such transaction.
9. DEFINITIONS.
9.1. DEFINITIONS.
Except as otherwise specified or as the context may otherwise require, the
following terms shall have the respective meanings set forth below whenever used
in this Agreement and shall include the singular as well as the plural:
"AFFILIATE" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such Person. Notwithstanding the foregoing, in
no event shall you or any of your Affiliates or any other holder of any Notes be
deemed to be an Affiliate of the Company solely by reason of the ownership of
the Notes or the Class A Shares acquired upon the conversion of the Notes.
"APPLICABLE RATE" has the meaning specified in Exhibit A.
"AS CONVERTED BASIS" means, when used in reference to Notes, whether at the
time of a determination of the number of Class A Shares or otherwise, that
number of Class A Shares into which such Notes may then be converted based upon
the conversion rights of the Notes as adjusted pursuant to Section 11.2.
26
22
"BOARD OF DIRECTORS" means the Board of Directors of the Company or any
committee of directors lawfully exercising the relevant powers of said Board or
Directors.
"BRAC WARRANT" shall mean the warrant issued by the Company to Budget Rent
A Car Corporation on August 24, 1994 to purchase 175,000 Class A Shares.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day on
which commercial banks are required or authorized by law to be closed in New
York, New York.
"CAPITAL STOCK" means, with respect to any corporation, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests (however designated) in stock issued by that
corporation.
"CAPITALIZED LEASE OBLIGATIONS" means, with respect to any Person, all
outstanding obligations of such Person in respect of any rental obligation which
is required to be capitalized on the face of a balance sheet of such Person
under GAAP, taken at the capitalized amount thereof accounted for as
indebtedness (net of interest expense) in accordance with GAAP.
"CHANGE OF CONTROL" means such time as
(i) a "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), excluding any "person" or "group" of which
Xxxxx Xxxxxx, Xxxx X. Xxxxxxx or Xxxxxxx X. Xxxxxx, or their controlled
Affiliates, are a substantial part (and for such purpose Messrs. Xxxxxx,
Xxxxxxx and Cogdon, and their controlled Affiliates, shall not be deemed
to be a substantial part of such person or group unless in the aggregate
they own beneficially at least 15% of the total then outstanding voting
power of the Voting Stock of the Company), (A) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50%
of the total then outstanding voting power of the Voting Stock of the
Company or (B) has the right or the ability by voting right, contract or
otherwise to elect or designate for election a majority of the entire
Board of Directors;
(ii) (A) the Company consolidates with or merges into any other
Person or conveys, transfers, sells or leases all or substantially all of
its assets as an entirety to any Person or (B) any Person merges into the
Company, in either event pursuant to a transaction in which Voting Stock
of the Company representing more than 50% of the total voting power of the
Company outstanding immediately prior to the effectiveness thereof is
reclassified or changed into or exchanged for cash, securities or other
property; provided that any consolidation, merger, conveyance, transfer,
sale or lease between the Company and any of its Subsidiaries
27
23
(including without limitation the reincorporation of the Company in
another jurisdiction) shall be excluded from the operation of this clause
(ii); or
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors, or whose
nomination for election by the shareholders of the Company, as the case
may be, was approved by a vote of 66 2/3% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in
office.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred by virtue of the Company's or any of its employee benefit or stock
plan's filing (or being required to file after the lapse of time) a Schedule 13D
or 14D-1 (or any successor or similar schedule, form or report under the
Exchange Act) as a result of the Company or any such plan becoming the
beneficial owner of shares of capital stock of the Company entitling such person
to exercise a majority of the total voting power of the Voting Stock of the
Company.
"CLASS A SHARES" has the meaning specified in Section 1.1.
"CLASS B SHARES" has the meaning specified in Section 2.1.
"CLOSING DATE" has the meaning specified in Section 1.2.
"CLOSING PRICE" on any Trading Day with respect to the per share price of
Class A Shares means the last reported sales price regular way or, in case no
such reported sale takes place on such Trading Day, (i) the reported closing bid
price regular way on the Nasdaq Stock Market's National Market if the Class A
Shares are listed or admitted to trading on such National Market, or (ii) if the
Class A Shares are not listed or admitted to trading on the Nasdaq Stock
Market's National Market, the average of the reported closing bid and asked
prices regular way on the principal national securities exchange on which the
Class A Shares are listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, the closing bid price in the
over-the-counter market as furnished by any New York Stock Exchange member firm
that is selected from time to time by the Company for that purpose and is
reasonably acceptable to the Majority Holders.
"CODE" means the Internal Revenue Code of 1986, as amended.
28
24
"COMMISSION" means the Securities and Exchange Commission and any successor
agency of the United States federal government having similar powers.
"CONSOLIDATED NET INCOME (LOSS)" for any period shall mean the net income
(loss) of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, excluding
A. the proceeds of any life insurance policy,
B. any gains arising from (i) the sale or other disposition of any
assets (other than current assets) to the extent that the aggregate amount
of the gains during such period exceeds the aggregate amount of the losses
during such period from the sale, abandonment or other disposition of
assets (other than current assets), (ii) any write-up of assets or (iii)
the acquisition of outstanding securities of the Company or any
Subsidiary,
C. any amount representing any interest in the undistributed
earnings of any other Person (other than a Subsidiary),
D. any earnings, prior to the date of acquisition, of any Person
acquired in any manner, and any earnings of any Subsidiary prior to its
becoming a Subsidiary,
E. any earnings of a successor to or transferee of the assets of the
Company prior to its becoming such successor or transferee,
F. any deferred credit (or amortization of a deferred credit)
arising from the acquisition of any Person, and
G. any extraordinary gains not covered by clause B above.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special or toxic waste, petroleum or
petroleum-derived substance or waste, or any constituent of any such substance
or waste regulated under any Environmental Law.
"CONTROL" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing; it being understood that Budget Rent A Car Corporation, merely by
virtue of being a franchisor, shall not be deemed to control the Company or any
of its other franchisees.
29
25
"CONVERSION PRICE" has the meaning specified in Section 11.1.
"DEBT" of any person means, without duplication,
A. the principal of and premium, if any, in respect of (1)
indebtedness of such person for money borrowed and (2) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such person is responsible or liable;
B. all Capitalized Lease Obligations of such person;
C. all obligations of such person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such
person and all obligations of such person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary
course of business);
D. all obligations of such person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses A
through C above) entered into in the ordinary course of business of such
person to the extent such letters of credit are not drawn upon or, if and
to the extent drawn upon, such drawing is reimbursed no later than the
third Business Day following receipt by such person of a demand for
reimbursement following payment on the letter of credit);
E. all obligations of such person with respect to the redemption,
repayment or other repurchase of any Redeemable Capital Stock or
Exchangeable Capital Stock (but excluding any accrued dividends);
F. all obligations of the type referred to in clauses A through E
above of other persons and all dividends of other persons for the payment
of which, in either case, such person is responsible or liable as obligor,
guarantor or otherwise, including any guarantees of such obligations and
dividends; and
G. all obligations of the type referred to in clauses A through F of
other persons secured by any Lien on any property or asset of such person
(whether or not such obligation is assumed by such person), the amount of
such obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured.
The amount of Debt of any person at any date shall be the outstanding balance at
such date of all unconditional obligations
30
26
as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations
referred to above at such date.
"DEFAULT" means an event which, with the lapse of time and/or the giving of
notice, would constitute an Event of Default.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment, or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
"EVENT OF DEFAULT" has the meaning specified in Section 10.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time.
"EXCHANGEABLE CAPITAL STOCK" means any Capital Stock which is exchangeable
or convertible into another security (other than Capital Stock of the Company
which is neither Exchangeable Capital Stock nor Redeemable Capital Stock).
"GAAP" means generally accepted accounting principles from time to time in
the United States.
"GOVERNMENTAL BODY" has the meaning specified in Section 2.5.
"LIEN" means any mortgage, pledge, security interest, conditional sale or
other title retention agreement or other similar lien.
"MAJORITY HOLDERS" means the holder or holders of at least a majority of
the aggregate unpaid principal amount of the Notes at the time outstanding.
"MATERIAL" means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.
31
27
"MATERIAL ADVERSE EFFECT" means, with respect to an action or event or
group of actions or events, a material adverse effect on (A) the business,
properties or condition (financial or other) of the Company and its Subsidiaries
taken as a whole, (B) the ability of the Company to perform its obligations
under this Agreement and the other Transaction Documents or (C) the legality,
validity or enforceability of this Agreement or the other Transaction Documents.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).
"NET CASH PROCEEDS" with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"NON-PAYMENT DEFAULT" means, at any time when the Company has outstanding
obligations constituting Senior Indebtedness, the occurrence or existence of any
event, circumstance, condition or state of facts that, by the terms of such
Senior Indebtedness, permits one or more holders of such obligations (or a
trustee or agent on behalf of the holders thereof) to declare such obligations
immediately due and payable prior to the date on which they would otherwise
become due and payable, other than a Payment Default.
"NOTES" has the meaning specified in Section 1.1.
"NOTE REGISTER" has the meaning specified in Section 13.
"OBLIGATION" of any Person means any obligation of such Person to pay
principal, premium, interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company,
whether or not a claim for such post-petition interest is allowed in such
proceeding), penalties, reimbursement or indemnification amounts, fees, expenses
or other amounts.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"ORDER" has the meaning specified in Section 2.5.
"PAYMENT DEFAULT" means a default in the payment of any principal of or
premium, if any, interest or sinking fund on, or other payment Obligation of the
Company constituting, Senior
32
28
Indebtedness when due, whether at maturity of any such payment or by declaration
of acceleration, call for redemption or otherwise.
"PERSON" or "PERSON" means and includes an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust, an
association, a joint-stock company, an unincorporated organization and a
government or any department or agency thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"REDEEMABLE CAPITAL STOCK" means, any Capital Stock that by its terms or
otherwise is required to be redeemed on or prior to the first anniversary of the
Stated Maturity of the Notes or is redeemable at the option of the holder
thereof at any time on or prior to the first anniversary of the Stated Maturity
of the Notes; provided that such Redeemable Capital Stock shall not include any
Capital Stock redeemable upon a Change of Control and provided further that such
redemption rights are subordinate to the Company's obligation to prepay Notes
upon a Change of Control pursuant to Section 5.3.
"REGISTRATION RIGHTS AGREEMENT" has the meaning specified in Section 4.4.
"REQUIRED HOLDERS" means the holder or holders of at least 66 2/3% of the
aggregate unpaid principal amount of the Notes at the time outstanding.
"REQUIREMENT OF LAW" means, as to any Person, each law, rule or regulation,
including Environmental Laws and ERISA, or Order, decree or other determination
of an arbitrator or a court or other Governmental Body applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"RESTRICTED PAYMENT" has the meaning specified in Section 8.3.
"SEC REPORTS" means the meaning specified in Section 2.2.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
33
29
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
"SENIOR INDEBTEDNESS" means the principal of (and premium, if any) and
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts payable and obligations owing in connection with, the following,
whether absolute or contingent, secured or unsecured, due or to become due,
outstanding on the date of this Agreement or thereafter created, incurred or
assumed: (A) all indebtedness of the Company (including obligations of the
Company arising from its guarantee of the indebtedness of others) to banks,
insurance companies and other financial institutions evidenced by credit or loan
agreements, notes or other written obligations, (B) all other indebtedness of
the Company (including obligations of the Company arising from its guarantee of
the indebtedness of others) other than the Notes, (C) all Capitalized Lease
Obligations of the Company or in respect of any lease or related document
(including a purchase agreement) which provides that the Company is
contractually obligated to purchase or cause a third party to purchase the
leased property and thereby effectively guarantees a minimum residual value of
the leased property to the lessor and the obligations of the Company under such
lease or related document to purchase or cause a third party to purchase such
leased property; (D) all obligations of the Company issued or assumed as the
deferred purchase price of property (but excluding any portion thereof
constituting trade accounts payable arising in the ordinary course) and (E) all
obligations of the Company for the reimbursement of any letter of credit or any
amendment, renewals, extensions, modifications and refundings; provided that
Senior Indebtedness shall not include (i) any such indebtedness or obligation if
the terms of such indebtedness or obligation (or the terms of the instrument
under which or pursuant to which, it is issued) expressly provide that such
indebtedness or obligation shall not be senior in right of payment to the Notes,
or expressly provide that such indebtedness or obligation is pari passu with or
junior to the Notes and (ii) accounts payable of the Company to trade creditors.
"STATED MATURITY" when used with respect to any Note or any installment of
interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.
"SUBORDINATED OBLIGATION" means, at any date, any Debt of the Company which
is subordinate or junior in right of payment to the Notes.
"SUBSIDIARY" of any Person means any corporation or other entity a majority
of the total combined voting power of all classes of Voting Stock of which
shall, at the time as of which
34
30
any determination is being made, be owned by such Person and/or one or more of
its Subsidiaries. Except as otherwise expressly indicated herein, references to
Subsidiaries shall mean Subsidiaries of the Company.
"TRADING DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"TRANSACTION DOCUMENTS" means this Agreement, the Notes and the
Registration Rights Agreement.
"U.S. GOVERNMENT OBLIGATIONS" means securities that are (A) direct
obligations of the United States of America for the payment of which is full
faith and credit is pledged or (B) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of principal
of or interest on the U.S. Government Obligation evidenced by such depository
receipt.
"VOTING STOCK" means, with respect to any Person, any shares of stock or
other equity interests of any class or classes of such Person whose holders are
entitled under ordinary circumstances (irrespective of whether at the time stock
or other equity interests of any other class or classes shall have or might have
voting power by reason of the happening of any contingency) to vote for the
election of a majority of the directors, managers, trustees or other governing
body of such Person.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Capital Stock of which
(other than directors' qualifying shares) is owned by the Company or another
Wholly Owned Subsidiary.
9.2. ACCOUNTING TERMS.
All accounting terms used herein which are not expressly defined in this
Agreement have the meanings respectively given to them in accordance with GAAP.
Except as otherwise specifically provided herein, all computations made
35
31
pursuant to this Agreement shall be made in accordance with GAAP and all balance
sheets and other financial statements with respect thereto shall be prepared in
accordance with GAAP consistently applied. Except as otherwise expressly
provided, any consolidated financial statement or financial computation shall be
done in accordance with GAAP; and, if at the time that any such statement or
computation is required to be made the Company shall not have any Subsidiary,
such terms shall mean a financial statement or a financial computation, as the
case may be, with respect to the Company only.
10. EVENTS OF DEFAULT; REMEDIES.
10.1. EVENTS OF DEFAULT; ACCELERATION OF MATURITY AND RESCISSION.
If any of the following Events of Default (each an "Event of Default")
shall occur and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise):
A. default shall be made in the due and punctual payment of any
principal of or premium, if any, on any Note when and as the same shall
become due and payable, whether at Stated Maturity, by acceleration, by
notice of prepayment or otherwise; or
B. default shall be made in the due and punctual payment of any
interest on any Note when and as the same shall become due and payable
and such default shall have continued for a period of 30 days; or
C. default shall be made in the due performance or observance of any
term, covenant or agreement contained in Section 5.3 or 5.4; or
D. the Company or any Subsidiary shall default beyond any applicable
grace period in any payment of principal of or premium or interest on any
Debt in excess of $10,000,000 in aggregate unpaid principal amount (other
than the Notes) or in the due performance or observance of any provision
contained in any agreement relating to such Debt the effect of which is
(1) to cause such Debt to become or be declared due and payable prior to
its stated maturity or (2) to require the repayment or repurchase of such
Debt prior to its stated maturity, provided that if such default shall be
remedied or cured by the Company or waived by the holders of such Debt
prior to an acceleration under this Agreement, then the Event of Default
hereunder by reason thereof shall be deemed likewise to have been
thereupon remedied, cured or waived without further action upon the part
of any of the holders of the Notes; or
36
32
E. default or breach shall be made in the performance of any covenant
or warranty made by the Company in this Agreement or any other Transaction
Document or in any certificate or other writing furnished pursuant hereto
or thereto and such default or breach shall have continued for a period of
60 days after the Company becomes aware of such default or breach; or
F. the Company shall (1) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property, (2)
admit in writing its inability to pay its debts as such debts become due,
(3) make a general assignment for the benefit of its creditors, (4)
commence a voluntary case under any law relating to bankruptcy, insolvency
or reorganization, (5) file a petition seeking to take advantage of any
other law providing for the relief of debtors, or (6) fail to controvert
in a timely or appropriate manner (but within 30 days in any event), or
acquiesce in writing to, any petition filed against it in an involuntary
case under any law relating to bankruptcy, insolvency or reorganization;
or
G. a proceeding or case shall be commenced against the Company,
without the application or consent of the Company in any court of
competent jurisdiction seeking (1) its liquidation, reorganization,
dissolution or winding up, or composition or readjustment of its debts,
(2) the appointment of a trustee, receiver, custodian, liquidator,
encumbrancer or the like of it or of all or any substantial part of its
assets or (3) similar relief in respect of it under any law providing for
the relief of debtors, and such proceeding or case shall continue
undismissed, or unstayed and in effect, for a period of 60 days; or an
order for relief shall be entered in an involuntary case under any law
relating to bankruptcy, insolvency or reorganization against the Company;
then (i) upon the occurrence of any Event of Default described in Subsection F
or G, the unpaid principal amount of all Notes, together with the interest
accrued thereon, shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which are
hereby expressly waived by the Company, or (ii) upon the occurrence and during
the continuance of any other Event of Default, the holders of at least 25% of
the unpaid principal amount of the Notes at the time may, by written notice to
the Company, declare the unpaid principal amount of all Notes to be, and the
same shall forthwith become, due and payable, together with the interest accrued
thereon, without presentment, further demand, protest or other requirements of
any kind, all of which are hereby expressly waived by the Company.
37
33
The provisions of this Section are subject, however, to the condition that
if, at any time after any Note shall have become declared due and payable, the
Company shall pay all arrears of interest on the Notes and all payments on
account of the principal of and premium (if any) on the Notes which shall have
become due otherwise than by acceleration (with interest on such principal,
premium (if any) and, to the extent permitted by law, on overdue payments of
interest, at the respective rates specified in the Notes with respect to overdue
payments) and an additional amount sufficient to reimburse the holders of the
Notes for the reasonable costs and expenses incurred in connection with any such
declaration, and all Events of Default (other than nonpayment of principal of,
premium, if any, and accrued interest on Notes due and payable solely by virtue
of acceleration) shall be remedied or waived pursuant to Section 15, then, and
in every such case, the Majority Holders, by written notice to the Company, may
rescind and annul any such acceleration of Notes and its consequences; but no
such action shall affect any subsequent Default or Event of Default or impair
any right consequent thereon.
10.2. SUITS FOR ENFORCEMENT.
If any Event of Default shall have occurred and be continuing, the holder
of any of the Notes may proceed to protect and enforce its rights, either by
suit in equity or by action at law, or both, whether for the specific
performance of any covenant or agreement contained in this Agreement or in the
other Transaction Documents or in aid of the exercise of any power granted in
this Agreement or in the other Transaction Documents, or the holder of any Note
may proceed to enforce the payment of all sums due upon such Note or to enforce
any other legal or equitable right of the holder of such Note.
Without limiting the generality of Section 19.1, the Company covenants
that, if default shall be made in the making of any payment due under any Note
or in the performance or observance of any agreement contained in this Agreement
or the other Transaction Documents, the Company will pay to each holder of Notes
such further amounts, to the extent lawful, as shall be sufficient to pay all
costs and expenses of collection or of otherwise enforcing such holder's rights
under this Agreement or the other Transaction Documents, including counsel fees.
10.3. REMEDIES CUMULATIVE.
No remedy herein conferred upon you or the holder of any Note is intended
to be exclusive of any other remedy and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise.
38
34
10.4. REMEDIES NOT WAIVED.
No course of dealing between the Company and you or the holder of any Note
and no delay or failure in exercising any rights hereunder or under any other
Transaction Document in respect of such Note shall operate as a waiver of any of
your rights or the rights of any holder of such Note.
11. CONVERSION AND EXCHANGE OF NOTES; ANTIDILUTION PROVISIONS.
11.1. CONVERSION OF NOTES.
Each Note will be convertible, in whole or in part, at any time at the
option of the holder thereof, into such number of whole Class A Shares as is
equal to the unpaid principal amount being converted of such Note divided by the
conversion price of $20.07 per share, subject to adjustment as described in
Section 11.2 (the "CONVERSION PRICE"). The Company will pay to the holder of
each Note being so converted all accrued and unpaid interest on such Note (or
portion thereof being converted) to the date of such conversion. Notes called
for prepayment pursuant to Section 5.1 will not be convertible after the close
of business on the Business Day preceding the date fixed for such prepayment,
unless the Company defaults in payment of the amount due upon such prepayment.
11.2. ANTIDILUTION PROVISIONS; ACCRUED INTEREST AND FRACTIONAL SHARES;
MECHANICS OF CONVERSION; NO IMPAIRMENT; ETC.
A. The Conversion Price is subject to adjustment from time to time as
follows:
(1) In case the Company shall (a) subdivide its outstanding shares of
Class A Shares into a greater number of shares or (b) combine its
outstanding Class A Shares into a smaller number of shares, the Conversion
Price in effect immediately prior to such action shall be adjusted so that
the holder of any security thereafter surrendered for conversion shall be
entitled to receive the number of shares of Class A Shares which such
holder would have received or been entitled to receive immediately
following such action had such security been converted immediately prior
thereto. An adjustment made pursuant to this clause (1) shall become
effective immediately.
(2) In case the Company shall pay a dividend or make a distribution
on Class A Shares in Class A Shares, on the day after the record date for
the determination of holders entitled to receive such dividend or
distribution, the Conversion Price shall be adjusted to a price, computed
to the nearest cent, so that the same shall be reduced to the product of:
39
35
(a) the Conversion Price in effect immediately prior to the
record date for the determination of holders entitled to receive
such dividend or distribution multiplied by a fraction, of which
(b) the numerator shall be the number of Class A Shares
outstanding at the close of business on the date fixed for such
determination, and of which
(c) the denominator shall be the sum of such number of Class A
Shares and the total number of Class A Shares constituting such
dividend or other distribution.
Such adjustment shall become effective immediately, except as
provided in clause (7) below, on the day after the record date for the
determination of holders entitled to receive such dividend or
distribution. For the purposes of this clause (2), the number of Class A
Shares at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not pay any dividend or make
any distribution on Class A Shares held in the treasury of the Company.
(3) In case the Company shall issue rights, warrants or options to
all holders of Class A Shares entitling them (for a period expiring within
45 days after the record date therefor) to subscribe for or purchase Class
A Shares at a price per share less than the Current Market Price per share
(as determined pursuant to clause (6) below) of the Class A Shares on the
day after the record date for the determination of holders entitled to
receive such rights, warrants or options, the Conversion Price shall be
adjusted to a price, computed to the nearest cent, so that it shall equal
the price determined by multiplying:
(a) the Conversion Price in effect immediately prior to the
date of issuance of such rights, warrants or options by a fraction,
of which
(b) the numerator shall be (i) the number of Class A Shares
outstanding on the date of issuance of such rights, warrants or
options immediately prior to such issuance, plus (ii) the number of
Class A Shares which the aggregate offering price of the total
number of Class A Shares so offered for subscription or purchase
would purchase at such Current Market Price (determined by
multiplying such total number of Class A Shares by the sum of the
exercise price of such rights, warrants or options plus the fair
market value of any consideration paid to the Company for such
rights, warrants or options and dividing the product so obtained by
such Current Market Price), and of which
40
36
(c) the denominator shall be (i) the number of Class A Shares
outstanding on the date of issuance of such rights, warrants or
options, immediately prior to such issuance, plus (ii) the number of
additional Class A Shares which are so offered for subscription or
purchase.
Such adjustment shall become effective immediately, except as provided in
clause (7) below, on the day after the record date for the determination
of holders entitled to receive such rights, warrants or options. For the
purposes of this clause (3), the number of Class A Shares at any time
outstanding shall not include shares held in the treasury of the Company.
The Company shall not issue any rights, warrants or options in respect of
Class A Shares held in the treasury of the Company.
(4) In case the Company shall issue to an Affiliate Class A Shares
at a net price per share less than the Current Market Price per share (as
determined pursuant to clause (6) below), on the date the Company fixes
the offering price of such additional shares, the Conversion Price shall
be reduced so that it shall equal the price determined by multiplying:
(a) such Conversion Price in effect immediately prior thereto
by a fraction, of which
(b) the numerator shall be (i) the number of Class A Shares
outstanding immediately prior to the issuance of such additional
shares, plus (ii) the number of Class A Shares which the aggregate
offering price of the total number of Class A Shares so offered
would purchase at the Current Market Price, and of which
(c) the denominator shall be the number of Class A Shares that
would be outstanding immediately after the issuance of such
additional shares.
Such adjustment shall become effective immediately after the issuance of
such Class A Shares. An adjustment shall be made successively whenever
such an issuance is made. For the purposes of this clause (4), the number
of Class A Shares at any time outstanding shall not include shares held in
the treasury of the Company. This clause (4) shall not apply to Class A
Shares issued to any Affiliate under bona fide benefits plans adopted by
the Board of Directors for the benefit of the Company's directors,
employees, consultants and advisers and approved by the holders of Class A
Shares if required by law.
(5) In case the Company shall distribute to all or substantially all
holders of Class A Shares documents or
41
37
instruments evidencing indebtedness, equity securities (including
equity interests in a Subsidiary) other than Class A Shares, or other
assets (other than ordinary cash dividends out of earnings), or shall
distribute to all or substantially all holders of Class A Shares rights,
warrants or options to subscribe to securities (other than those referred
to in clause (3) above), then in each such case the Company shall pay to
the holder of each Note such holder's pro rata share, on an As Converted
Basis in respect of such Note, of such distributions.
(6) For the purpose of any computation under clause (3) or (4)
above, the "CURRENT MARKET PRICE" per Class A Share on any date of
determination shall be deemed to be the average of the last sale prices of
a Class A Share for the ten consecutive Trading Days selected by the
Company commencing not more than 20 Trading Days before the day (the
"BENCHMARK DATE") which is the earlier of (a) such date of determination
and (b) the day immediately preceding the "ex" date with respect to the
issuance or distribution requiring such computation, and ending not later
than the Benchmark Date. For purposes of this clause (6), the term "'EX'
DATE", when used with respect to any issuance or distribution, means the
first date on which the Class A Shares trade regular way on the principal
national securities exchange on which the Class A Shares are listed or
admitted to trading (or if not so listed or admitted on The Nasdaq Stock
Market or a similar organization if The Nasdaq Stock Market is no longer
reporting trading information) without the right to receive such issuance
or distribution.
(7) In any case in which this Section 11.2 shall require that an
adjustment be made on the day after a record date, the Company may elect
to defer the effectiveness of such adjustment (but in no event until a
date later than the effective time of the event giving rise to such
adjustment), in which case the Company shall, with respect to any Note
converted after such record date and before such adjustment shall have
become effective (a) defer making any cash payment or issuing to the
holder of such Note the number of Class A Shares and other capital stock
of the Company issuable upon such conversion in excess of the number of
Class A Shares and other capital stock of the Company issuable thereupon
only on the basis of the Conversion Price prior to adjustment, and (b) not
later than five Business Days after such adjustment shall have become
effective, pay to such holder the appropriate cash payment and issue to
such holder the additional Class A Shares and other capital stock of the
Company issuable on such conversion.
(8) No adjustment in the Conversion Price shall be required in
respect of any dividend or distribution if holders of the Notes may
participate therein (on a basis and
42
38
with notice that the Board of Directors determines in good faith to
be fair and appropriate) and receive the same consideration they would
have received if they had converted the Notes immediately prior to the
record date with respect to such dividend or distribution. In addition, no
adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Conversion Price, provided that any adjustment which by reason of this
clause (8) is not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
(9) Except as expressly set forth in this Section 11.2, no adjustment
in the Conversion Price shall be made because the Company issues, in
exchange for cash, property or services, Class A Shares, or any securities
convertible into or exchangeable for Class A Shares, or securities
(including warrants, rights and options) carrying the right to subscribe
for or purchase Class A Shares or such convertible or exchangeable
securities (including Class B Shares).
(10) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly give each holder of Notes a notice of such
adjustment accompanied by a copy of a certificate signed by a Senior
Financial Officer setting forth the Conversion Price after such adjustment
and setting forth in reasonable detail the facts requiring such adjustment
and the calculations on which the adjustment is based.
(11) At its option, the Company may make such reduction in the
Conversion Price, in addition to those otherwise required by this Section
11.2, as the Board of Directors deems advisable to avoid or diminish any
income tax to holders of Class A Shares resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes; provided that any such reduction
shall not be effective until written evidence of the action of the Board
of Directors authorizing such reduction shall be filed with the secretary
of the Company and notice thereof shall have been given to each holder of
Notes.
(12) Notwithstanding any other provision of this Section 11.2, no
adjustment to the Conversion Price shall reduce the Conversion Price below
the then par value per share of the Class A Shares, and any such purported
adjustment shall instead reduce the Conversion Price to such par value.
The Company hereby covenants not to take any action (i) to increase the
par value per share of the Class A Shares or (ii) that would or does
result in any adjustment
43
39
in the Conversion Price that, if made without giving effect to the
previous sentence, would cause the Conversion Price to be less than the
then par value per share of the Class A Shares.
B. If any transaction shall occur, including without limitation (1) any
recapitalization or reclassification of shares of Common Stock (other than a
change in par value, or from no par value to par value, or as a result of a
subdivision or combination of Common Stock), (2) any consolidation, merger or
amalgamation of the Company with or into another person or any merger of another
person into the Company (other than a merger that does not result in a
reclassification, conversion, exchange or cancellation of Common Stock), (3) any
sale or transfer of all or substantially all of the assets of the Company, or
(4) any compulsory share exchange, pursuant to any of which holders of Class A
Shares or Class B Shares shall be entitled to receive other securities, cash or
other property, then appropriate provision satisfactory to the Majority Holders
shall be made so that the holder of each Note then outstanding shall have the
right thereafter to convert such Note only into the kind and amount of the
securities, cash or other property that would have been receivable upon such
recapitalization, reclassification, consolidation, merger, amalgamation, sale,
transfer, or share exchange by a holder of the number of Class A Shares issuable
upon conversion of such Note immediately prior to such recapitalization,
reclassification, consolidation, merger, amalgamation, sale, transfer or share
exchange, after giving effect to any adjustment in the Conversion Price in
accordance with this Section 11.2, assuming such holder of Class A Shares is not
a company formed by such consolidation or amalgamation or resulting from such
merger or that acquires such assets or that acquires the Company's shares, as
the case may be (the "CONSTITUENT PERSON"), and the Company shall not enter into
any such consolidation, merger, amalgamation or sale, unless the Constituent
Person shall make provisions in its certificate or articles of incorporation or
other constituent document to establish such right. Such certificate or articles
of incorporation or other constituent document shall provide for adjustments
that, for events subsequent to the effective date of such certificate or
articles of incorporation or other constituent documents, shall be as nearly
equivalent as may be practicable to the relevant adjustments provided for in
this Section 11.2. Prior to the occurrence of any such transaction, the Company
may prepay the Notes pursuant to Section 5.1, if such prepayment is then
permitted by said Section.
C. Interest shall cease to accrue on the Notes surrendered for conversion
into Class A Shares pursuant to Section 11.1. No fractional Class A Shares shall
be issued upon conversion of any Note. In lieu of any fractional shares to which
the holder of any Note would otherwise be entitled, the Company shall, after
aggregation of all fractional share interests held by each holder, pay cash
equal to such remaining
44
40
fractional interest multiplied by the fair market value (determined in good
faith by the Board of Directors and described in a resolution of the Board of
Directors) of such share at the time of conversion.
D. Before any holder of a Note shall be entitled to convert the same into
Class A Shares pursuant to Section 11.1 and to receive certificates therefor,
such holder shall surrender such Note to be converted at the office of the
Company where the Note Register is maintained pursuant to Section 13 or at the
place of payment named in such Note, and shall give written notice to the
Company at such office or place of payment that such holder elects to convert
the same. Such conversion pursuant to Section 11.1 shall be deemed to have been
made immediately prior to the close of business on the date of such surrender
and the person or persons entitled to receive the Class A Shares issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such Class A Shares on such date. The Company shall, within five
Business Days after such surrender, issue and deliver at such office or place of
payment to the holder of such Note (or to any other person specified in the
notice delivered by such holder), a certificate or certificates for the number
of Class A Shares to which such holder shall be entitled as aforesaid and a
check payable to such holder for any cash amounts payable as the result of a
conversion into fractional Class A Shares. In case any Note shall be surrendered
for conversion of only a part of the unpaid principal amount thereof, the
Company shall deliver within five Business Days at such office or place of
payment a new Note or Notes, as may be requested by such holder and payable to
such holder, in the same aggregate unpaid principal amount as the unpaid
principal amount of the Note so surrendered which is not being converted.
Notwithstanding the foregoing, the Company shall not be obligated to issue
certificates evidencing the Class A Shares issuable upon conversion of any Notes
unless such Note is either delivered to the Company or the Company shall have
received evidence pursuant to Section 14 that such Note has been lost, stolen,
destroyed or mutilated and an indemnity satisfactory to the Company pursuant to
said Section. The issuance of certificates of Class A Shares issuable upon
conversion of Notes shall be made without charge to the converting holder for
any tax imposed in respect of the issuance thereof, provided that the Company
shall not be required to pay any tax which may be payable with respect to any
transfer involved in the issue and delivery of any certificate in a name other
than that of the holder of the Notes being converted, and provided further that
the Company in no event shall be required to pay any income taxes which may be
incurred by any holder upon such conversion or transfer.
E. The Company will not, through any reorganization, transfer of assets,
consolidation, merger, amalgamation, dissolution, issue or sale of securities or
any other action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company,
45
41
but will at all times in good faith assist in the carrying out of all of the
provisions of this Section 11 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of the Notes against impairment.
F. The Company will at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Class A Shares, for the
purpose of effecting the conversion of Notes, the full number of Class A Shares
then issuable upon the conversion of all outstanding Notes. The Company
covenants that all Class A Shares issued upon conversion of Notes will upon
issue be fully paid and nonassessable and, except as provided in Subsection D
above, the Company will pay all taxes and charges with respect to the issue
thereof.
12. SUBORDINATION OF NOTES.
12.1. GENERAL.
Notwithstanding any provision of this Agreement or the Notes to the
contrary, payments of the principal of and premium, if any, and interest on the
Notes shall be subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness to the extent and in the manner provided in
this Section.
12.2. DISTRIBUTION ON DISSOLUTION, LIQUIDATION AND REORGANIZATION;
SUBROGATION.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization or receivership proceeding or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or otherwise (subject to the power of a court of competent
jurisdiction to make other equitable provision reflecting the rights conferred
in this Section 12 upon the Senior Indebtedness and the holders thereof, with
respect to the Notes and the holders thereof, by a lawful plan of reorganization
under applicable bankruptcy law),
A. the holders of all Senior Indebtedness shall be entitled to
receive payment in full of the principal thereof, premium, if any, and
the interest due thereon before the holders of the Notes are entitled to
receive any payment upon the principal of or premium, if any, or interest
on the Notes;
B. any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the
holders of the Notes would be entitled except for the provisions of this
Section 12 shall be paid by the liquidating trustee or agent or other
person
46
42
making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to
the holders of 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, premium, if any, and interest on the
Senior Indebtedness held or represented by each, to the extent necessary
to make payments in full of all 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, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, shall be received by the holders of the
Notes before all Senior Indebtedness is paid in full, such payment or
distribution shall be held in trust for and paid over to the holders of
such 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
as aforesaid, for application to the payment of all Senior Indebtedness
remaining unpaid until all such Senior Indebtedness shall have been paid
in full, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the holders of
the Notes shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distribution of cash, property or securities
of the Company applicable to Senior Indebtedness until the principal of,
premium, if any, and interest on the Notes shall be paid in full and no such
payments or distributions to the holders of the Notes of cash, property or
securities otherwise distributable to the holders of Senior Indebtedness shall,
as between the Company, its creditors other than the holders of Senior
Indebtedness and the holders of the Notes, be deemed to be a payment by the
Company to or on account of the Notes. It is understood that the provisions of
this Section 12 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 12 or
elsewhere in this Agreement or in the Notes is intended to or shall impair, as
between the Company, its creditors other than the holders of Senior Indebtedness
and the holders of the Notes, as the case may be, the obligations of the
Company, which are unconditional and absolute, to pay to the holders of the
Notes principal of, premium, if any, and interest on the Notes as and when the
same shall become due and payable in accordance with their terms, or to affect
the relative rights of the holders of the Notes and
47
43
creditors of the Company other than the holders of Senior Indebtedness, nor
shall anything herein or in the Notes prevent holders of any Note from
exercising all remedies otherwise permitted by applicable law upon default under
this Agreement, subject to the rights, if any, under this Section 12 of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
If any holder of Notes does not file a proper claim or proof of debt in the
form required in any proceeding referred to above prior to 30 days before the
expiration of the time to file such claim in such proceeding, then the holder of
any Senior Indebtedness is hereby authorized, and has the right, to file an
appropriate claim or claims for or on behalf of such holder of Notes.
12.3. NO PAYMENT IN EVENT OF DEFAULT ON SENIOR INDEBTEDNESS.
In the event that any Payment Default shall have occurred and be
continuing, then no payment on account of any principal, premium (if any),
interest, or prepayment of the Notes shall be made unless and until such Payment
Default shall have been cured or waived or shall have ceased to exist or all
amounts then due and payable in respect of Senior Indebtedness shall have been
paid in full, or provision shall have been made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness.
In the event that any Non-Payment Default shall have occurred with respect
to any Senior Indebtedness and be continuing, then, upon the receipt by the
holder of the Notes of written notice of such Non-Payment Default from a holder
of such Senior Indebtedness or a representative thereof, no payment on account
of any principal, premium (if any) or interest in respect of the Notes shall be
made during the period (the "PAYMENT BLOCKAGE PERIOD") commencing on the date of
such receipt of such written notice and ending on the earlier of (i) the date on
which such Non-Payment Default shall have been cured or waived or shall have
ceased to exist or any acceleration of the Senior Indebtedness to which such
Non-Payment Default relates shall have been rescinded or annulled or such Senior
Indebtedness shall have been discharged and (ii) the 180th day after the date of
such receipt of such written notice. During any 360-day period the aggregate of
all Payment Blockage Periods shall not exceed 180 days and there shall be a
period of at least 180 consecutive days in each 360-day period when no Payment
Blockage Period is in effect. For all purposes of this paragraph, no Payment
Default or Non-Payment Default that existed or was continuing on the date of
commencement of any Payment Blockage Period shall be, or be made, the basis for
the commencement of a subsequent Payment Blockage Period by holders of Senior
Indebtedness or their representatives unless such Payment Default or Non-Payment
48
44
Default shall have been cured for a period of not less than 60 consecutive days.
If notwithstanding the foregoing the Company shall make any payment to the
holder of any Note prohibited by the foregoing provisions of this Section, and
if such fact shall, at or prior to the time of such payment, be actually known
to such holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 12.2 would be applied.
12.4. PAYMENTS PERMITTED.
Nothing contained in this Agreement or in any of the Notes shall affect
the obligation of the Company to make, or prevent the Company from making, at
any time, except as provided in Sections 12.2 and 12.3, payments of principal
of, premium, if any, or interest on the Notes.
12.5. MODIFICATION OF TERMS OF SENIOR INDEBTEDNESS.
Any renewal or extension of the time of payment of any Senior Indebtedness
or the exercise by the holders of Senior Indebtedness of any of their rights
under any instrument creating or evidencing Senior Indebtedness, including
without limitation the waiver of defaults thereunder, may be made or done all
without notice to or assent from the holders of the Notes.
No compromise, alteration, amendment, modification, extension, renewal or
other change of, or waiver, consent or other action in respect of, any liability
or obligation under or in respect of, or of any of the terms, covenants or
conditions of any indenture or other instrument under which any Senior
Indebtedness or of such Senior Indebtedness, whether or not such release is in
accordance with the provisions of any applicable document, shall in any way
alter or affect any of the provisions of this Section 12 or of the Notes
relating to the subordination thereof.
13. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; RESTRICTIVE LEGENDS
TRANSFER RESTRICTIONS.
The Company will keep at the Company's principal office, or at such other
office or agency in the United States as the Company may from time to time
designate in writing to the holders of the Notes, a register (the "NOTE
REGISTER") in which, subject to such reasonable regulations as it may prescribe,
but at its expense (other than transfer taxes, if any), it will provide for the
registration and transfer of Notes.
Whenever a Note shall be surrendered either at such office of the Company
or at the place of payment named in such
49
45
Note, for transfer or exchange, within five Business Days thereafter the Company
will execute and deliver in exchange therefor a new Note or Notes, as may be
requested by such holder, in the aggregate unpaid principal amount as the series
and unpaid principal amount of the Note so surrendered. Each such new Note shall
be payable to such Person as such holder may request. Each Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or such holder's attorney duly authorized in writing. Any
Note issued in exchange for any other Note or upon transfer thereof shall carry
the rights to unpaid interest and interest to accrue which were carried by the
Note so exchanged or transferred, and neither gain nor loss of interest shall
result from any such transfer or exchange. Any transfer tax relating to
such transaction shall be paid by the holder requesting the exchange.
The Company and any agent of the Company may deem and treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of the principal of and premium, if any, and
interest on such Note and for all other purposes whatsoever, whether or not such
Note be overdue and the Company shall not be affected by notice to the contrary.
The certificates evidencing the Notes and any Class A Shares issuable upon
conversion of the Notes shall bear at the time of issuance a legend in
substantially the following form:
"This security has not been registered under the Securities Act of
1933, as amended, or applicable state securities laws, and this
security may not be sold, transferred or otherwise disposed of in
the absence of such registration or an exemption therefrom under
said Act and laws and the respective rules and regulations
thereunder. The transferability of this security is also subject to
restrictions contained in a Note Purchase Agreement and a
Registration Rights Agreement which agreements the Company will
furnish to the holder of this security upon request."
14. LOST, ETC., NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Note, and (in case of loss,
theft or destruction) of indemnity satisfactory to it, and upon surrender and
cancellation of such Note, if mutilated, within five Business Days thereafter
the Company will deliver in lieu of such Note a new Note in a like unpaid
principal amount, dated as of the date to which interest has been paid thereon
or dated the date of the lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon. In the case of you, or any other
50
46
institutional investor holder of a Note having (individually or as a member of
an affiliated group) at least $1,000,000 in total assets, your or such holder's
unsecured agreement of indemnity shall be deemed satisfactory to the Company.
15. AMENDMENT AND WAIVER.
A. Any provision of this Agreement or the other Transaction Documents may,
with the consent of the Company, be amended or waived (either generally or in a
particular instance and either retroactively or prospectively), by one or more
substantially concurrent written instruments signed by the Required Holders,
provided that
(1) no such amendment or waiver shall
(a) change the rate or time of payment of interest on any of
the Notes, change the number or the method of calculating the number
of Class A Shares that may be purchased upon conversion of any Note
or the Conversion Price in respect of such Class A Shares, or modify
Section 16, without the consent of the holder of each Note so
affected,
(b) modify any of the provisions of this Agreement with respect
to the payment or prepayment or purchase of Notes, or change the
percentage of the principal amount of the Notes the holders of which
are required with respect to any such amendment or to effectuate any
such waiver, or to accelerate any Note or Notes, without the consent
of the holders of all of the Notes then outstanding, or
(c) be effective prior to the Closing Date without your
consent, and
(2) no such waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon.
B. Any amendment or waiver pursuant to Subsection A above shall apply
equally to all of the holders of the Notes and shall be binding upon them, upon
each future holder of any such Note and upon the Company, in each case whether
or not a notation thereof shall have been placed on any Note.
C. The Company will not solicit, request or negotiate for or with respect
to any proposed waiver or amendment of any of the provisions of this Agreement
or the other Transaction Documents unless each holder of a Note affected thereby
shall be informed thereof by the Company and shall be afforded the opportunity
of considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and
51
47
correct copies of any amendment or waiver effected pursuant to the provisions of
this Section shall be delivered by the Company to each holder of Notes forthwith
following the date on which the same shall have become effective. Neither the
Company nor any of its Affiliates will directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, to any holder of a Note as consideration for or as an
inducement to the entering into by such holder of any such amendment or waiver
unless such remuneration is concurrently paid ratably to the holders of all of
the Notes then outstanding.
D. For purposes of determining whether the holders of outstanding Notes of
the requisite percentage of unpaid principal amount at any time have taken any
action authorized by this Section or otherwise by this Agreement, any Notes
owned by the Company, any Subsidiary or any Affiliate of the Company shall be
deemed not outstanding.
16. HOME OFFICE PAYMENT.
Notwithstanding anything to the contrary in this Agreement or the
Transaction Documents, so long as you or any nominee designated by you shall be
the holder of any Note, the Company shall pay all amounts which become due and
payable on such Note by wire or electronic funds transfer of immediately
available funds to you at your address set forth in Schedule I on the date any
such amounts become due, or at such other place in the United States and in such
other manner as you may designate by notice to the Company, without presentation
or surrender of such Note. You agree that prior to the sale, transfer or other
disposition of any Note, you will make notation thereon of the portion of the
principal amount prepaid and the date to which interest has been paid thereon,
or surrender the same in exchange for a Note or Notes of the same series
aggregating the same principal amount as the unpaid principal amount of the Note
so surrendered. The Company agrees that the provisions of this Section shall
inure to the benefit of any other institutional investor holder of a Note (or
nominee thereof) who shall have agreed to comply with the requirements of this
Section.
17. LIABILITIES OF THE PURCHASER.
Neither this Agreement nor any disposition of any of the Notes shall be
deemed to create any liability or obligation of you or any other holder of any
of the Notes to enforce any provision hereof or of any of the other Transaction
Documents for the benefit or on behalf of any other Person who may be the holder
of any of the Notes.
18. CERTAIN TAXES.
The Company agrees to pay all stamp, documentary or similar taxes which may
be payable in respect of the execution
52
48
and delivery of this Agreement or the other Transaction Documents (but not the
transfer of any Note) or of any amendment of, or waiver or consent under or with
respect to, this Agreement or any of the other Transaction Documents and will
save you and all subsequent holders harmless against any loss or liability
resulting from nonpayment or delay in payment of any such tax. The obligations
of the Company under this Section shall survive the payment or conversion of the
Notes.
19. MISCELLANEOUS.
19.1. EXPENSES.
The Company agrees, whether or not the transactions hereby contemplated
shall be consummated, to pay all reasonable expenses incident to such
transactions (including all document production costs and other expenses, the
fees and disbursements of your special counsel for their services with relation
to such transactions the expenses of obtaining a private placement number for
the Notes and all out-of-pocket expenses in connection with the shipping to and
from your office or the office of your nominee of the Notes and upon any
exchange or substitution pursuant to the provisions of this Agreement or the
other Transaction Documents), and to reimburse you for any reasonable
out-of-pocket expenses in connection therewith. The Company also agrees to pay
all reasonable expenses incurred by you (including reasonable counsel and
financial adviser fees) in connection with the enforcement and collection of the
Notes, the enforcement of this Agreement or the other Transaction Documents,
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the transactions contemplated
hereby or by reason of any holder's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case, and in connection
with any amendment or requested amendment of, or waiver or consent or requested
waiver or consent under or with respect to, this Agreement or any of the other
Transaction Documents, whether or not the same shall become effective. The
obligations of the Company under this Section and Section 10.2 shall survive the
payment or conversion of the Notes.
In furtherance of the foregoing, on the Closing Date the Company will pay
or cause to be paid the reasonable fees and disbursements of your special
counsel which are reflected in the statement of such special counsel submitted
to the Company on or prior to the Closing Date. The Company will also pay,
promptly upon receipt of supplemental statements therefor, additional fees, if
any, and disbursements of such special counsel in connection with the
transactions hereby contemplated (including disbursements unposted as of the
Closing Date).
53
49
19.2. RELIANCE ON AND SURVIVAL OF REPRESENTATIONS.
All agreements, representations and warranties of the Company or any
Subsidiary contained herein and in any certificates or other instruments
delivered pursuant to this Agreement shall (A) be deemed to have been relied
upon by you, notwithstanding any investigation heretofore or hereafter made by
you or on your behalf, and (B) shall survive the execution and delivery of this
Agreement and the delivery of the Notes to you, and shall continue in effect so
long as any Note is outstanding and thereafter as provided in Sections 18, 19.1
and 19.6.
19.3. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of and be enforceable by
the Company and its permitted successors and assigns hereunder, you and your
successors and assigns, and, in addition, shall inure to the benefit of and be
enforceable by all holders from time to time of the Notes, provided that the
benefits of Sections 6, 7, 14 (as to satisfactory indemnity) and 16 shall be
limited as provided therein.
19.4. COMMUNICATIONS.
Except as otherwise specifically provided herein, all notices and other
communications provided for in this Agreement shall be in writing and shall be
sent by confirmed facsimile transmission (hard copy to be sent by overnight mail
on the date of such transmission) or delivered by hand or sent by a reputable
overnight courier service prepaid (with confirmation of receipt)
A. if to the Company, at the address set forth at the beginning of
this Agreement, to the attention of Xxxxxxx Xxxxxx, or at such other
address as the Company may hereafter designate by notice to you and to
each other holder of a Note at the time outstanding,
B. if to you, at your address as set forth in Schedule I or at such
other address as you may hereafter designate by notice to the Company, or
C. if to any other holder of a Note, at the address of such holder
as it appears on the Note Register.
Any notice or other communication herein provided to be given to the
holders of all outstanding Notes shall be deemed to have been duly given if sent
as aforesaid to each of the registered holders of the Notes at the time
outstanding at the address for such purpose of such holder as it appears on
Schedule I or the Note Register, as the case may be.
54
50
19.5. CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
A. The Company irrevocably submits to the non-exclusive in personam
jurisdiction of any New York State or federal court sitting in the Borough of
Manhattan, The City of New York, over any suit, action or proceeding arising out
of or relating to this Agreement or the other Transaction Documents. To the
fullest extent permitted by applicable law, the Company irrevocably waives and
agrees not to assert, by way of motion, as a defense or otherwise, any claim
that it is not subject to the in personam jurisdiction of any such court, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
B. The Company consents to process being served in any suit, action or
proceeding of the nature referred to in Subsection A above by mailing a copy
thereof by registered or certified mail, postage prepaid, return receipt
requested, to the Company at its address specified in Section 19.4 or at such
other address of which you shall then have been notified pursuant to said
Section. The Company agrees that such service upon receipt (1) shall be deemed
in every respect effective service of process upon it in any such suit, action
or proceeding and (2) shall, to the fullest extent permitted by applicable law,
be taken and held to be valid personal service upon and personal delivery to the
Company. Notices hereunder shall be conclusively presumed received as evidenced
by a delivery receipt furnished by the United States Postal Service or any
reputable commercial delivery service.
C. Nothing in this Section 19.5 shall affect the right of any holder of
Notes to serve process in any manner permitted by law, or limit any right that
the holders of any of the Notes may have to bring proceedings against the
Company in the courts of any appropriate jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
D. THE COMPANY WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH
RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH.
19.6. INDEMNIFICATION.
The Company agrees, to the fullest extent permitted by applicable law, to
indemnify, exonerate and hold you and each of your officers, directors,
employees and agents (collectively the "INDEMNITEES" and individually an
"INDEMNITEE") free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities and damages, and expenses in connection
therewith, including without limitation reasonable counsel fees
55
51
and disbursements (collectively the "INDEMNIFIED LIABILITIES") incurred by the
Indemnitees or any of them as a result of, or arising out of, or relating to,
any transaction financed or to be financed in whole or in part directly or
indirectly with proceeds from the sale of any of the Notes or the execution,
delivery, performance or enforcement of this Agreement, any other Transaction
Document or any instrument contemplated hereby by any of the Indemnitees, except
as to any Indemnitee for any such Indemnified Liabilities arising on account of
such Indemnitee's gross negligence or willful misconduct; and if and to the
extent the foregoing undertaking may be unenforceable for any reason, the
Company agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. The obligations of the Company under this Section shall survive payment or
conversion of the Notes.
19.7. GOVERNING LAW.
This Agreement and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
19.8. HEADINGS.
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect any of the terms hereof.
19.9. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument.
56
52
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By XXXXXXX XXXXXX
Chief Executive Officer
The foregoing Agreement is
hereby accepted as of the
date first above written.
[The forms of signatures by each of the Purchasers, as they appear on the
respective Note Purchase Agreements, are set forth below.]
METROPOLITAN LIFE INSURANCE COMPANY
By XXXXXXX X. XXXXXXX
Assistant Vice President
By XXXXXX X. HOI
Associate General Counsel
XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY
By XXXX X. XXXX
Senior Investment Officer
XXXX XXXXXXX VARIABLE LIFE INSURANCE COMPANY
By XXXX X. XXXX
Vice President - Investments
57
SIGNATURE 1A (CAYMAN), LTD.
By XXXX XXXXXXX MUTUAL LIFE INSURANCE
COMPANY, PORTFOLIO ADVISER
By XXXXXX X. XXXXX
Vice President
NEW YORK LIFE INSURANCE COMPANY
By XXXXXX X. XXXXXXXXX
Assistant Vice President
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By XXXX X. XXXXX
Managing Director
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED
By MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
ITS INVESTMENT MANAGER
By XXXX X. XXXXX
Managing Director
MASSMUTUAL PARTICIPATION INVESTORS
By XXXX X. XXXXX
Vice President
MASSMUTUAL CORPORATE INVESTORS
By XXXX X. XXXXX
Vice President
