EXHIBIT 10.20
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PURCHASE AGREEMENT
among
DOLLAR FINANCIAL GROUP, INC.,
GS MEZZANINE PARTNERS, L.P.,
GS MEZZANINE PARTNERS OFFSHORE, L.P.,
STONE STREET FUND 1998, L.P.,
BRIDGE STREET FUND 1998, L.P.,
ARES LEVERAGED INVESTMENT FUND, L.P.,
and
ARES LEVERAGED INVESTMENT FUND II, L.P.,
Dated as of December 18, 1998
Relating to:
$20,000,000 Aggregate Principal Amount of
10 7/8% Senior Subordinated Notes Due 2006
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TABLE OF CONTENTS
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RECITALS.................................................................................. 1
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
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1.1. Definitions......................................................................... 3
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1.2. Computation of Time Periods......................................................... 26
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1.3. Accounting Terms.................................................................... 27
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SECTION 2
consolidating statements
AUTHORIZATION AND ISSUANCE OF NOTES
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2.1. Authorization of Issue.............................................................. 27
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2.2. Grant of Option; Exercise........................................................... 27
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2.3. Closings............................................................................ 28
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SECTION 3
CONDITIONS TO CLOSINGS
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3.1. Representations and Warranties...................................................... 28
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3.2. Performance; No Default under Other Agreements...................................... 29
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3.3. Compliance Certificates............................................................. 29
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(a) Officer's Certificate...................................................... 29
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(b) Secretary's Certificate.................................................... 29
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3.4. Opinions of Counsel................................................................. 29
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3.5. Changes in Corporate Structure...................................................... 29
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3.6. Refinancing......................................................................... 30
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3.7. Merger; Credit Agreement; Buyer Cash Contribution; Minimum Aggregate
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Proceeds........................................................................... 30
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(a) Merger..................................................................... 30
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(b) Credit Documents........................................................... 30
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(c) Buyer Cash Contribution.................................................... 30
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(d) Minimum Aggregate Proceeds................................................. 30
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3.8. Commitment Fee....................................................................... 30
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3.9. Material Adverse Effect............................................................. 31
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3.10. Financial Information.............................................................. 31
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3.11. Proceedings and Documents.......................................................... 31
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3.12. Purchaser Permitted By Applicable Law, etc......................................... 31
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3.13. Transaction Documents in Force and Effect; Information............................. 31
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(a) Transaction Documents...................................................... 31
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(b) Accuracy of Information.................................................... 31
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3.14. No Violation; No Legal Constraints; Consents, Authorizations and Filings,
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etc................................................................................ 32
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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4.1. Due Incorporation; Power and Authority.............................................. 33
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4.2. Capitalization...................................................................... 33
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4.3. Subsidiaries........................................................................ 34
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4.4. Due Authorization, Execution and Delivery........................................... 34
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(a) Agreement.................................................................. 34
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(b) Notes and the Exchange Notes............................................... 34
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(c) Exchange and Registration Rights Agreement................................. 35
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(d) Other Transaction Documents................................................ 35
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4.5. Non-Contravention; Authorizations and Approvals..................................... 35
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4.6. Company Financial Statements; Company Reports....................................... 36
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(a) Company Financial Statements............................................... 36
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(b) Company Reports............................................................ 37
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4.7. Absence of Undisclosed Liabilities or Events........................................ 37
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4.8. No Actions or Proceedings........................................................... 38
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4.9. Title to Properties................................................................. 38
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4.10. Intellectual Property Rights....................................................... 38
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4.11. Taxes.............................................................................. 39
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4.12. Employee Benefit Plans............................................................. 40
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4.13. Private Offering; No Integration or General Solicitation........................... 41
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4.14. Eligibility for Resale under Rule 144A............................................. 42
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4.15. Status Under Certain Statutes...................................................... 42
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4.16. Insurance.......................................................................... 42
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4.17. Use of Proceeds; Margin Regulations................................................ 42
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4.18. Existing Indebtedness; Future Liens................................................ 43
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4.19. Compliance with Laws; Permits...................................................... 43
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4.20. Solvency........................................................................... 44
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4.21. Affiliate Transactions............................................................. 44
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4.22. Material Contracts................................................................. 44
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4.23. No Changes to Applicable Law....................................................... 44
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4.24. Indebtedness....................................................................... 44
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4.25. Fees............................................................................... 44
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4.26. Brokerage Fees..................................................................... 45
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4.27. Documents and Procedures........................................................... 45
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4.28. Standards and Procedures........................................................... 45
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4.29. No Unrelated Liabilities........................................................... 45
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SECTION 5
REPRESENTATIONS OF THE PURCHASERS
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5.1. Purchase for Investment............................................................. 46
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SECTION 6
COVENANTS TO PROVIDE INFORMATION
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6.1. Future Reports to Purchasers........................................................ 46
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(a) Monthly Statements......................................................... 46
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(b) Quarterly Statements....................................................... 47
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(c) Annual Statements.......................................................... 48
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(d) Chief Financial Officer Certificates....................................... 49
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(e) Auditors' Reports.......................................................... 49
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(f) Other Information.......................................................... 49
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(g) Notice of Default or Event of Default...................................... 50
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(h) Additional Information to Holders of Other Indebtedness.................... 50
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(i) Changes to Indebtedness.................................................... 50
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SECTION 7
OTHER AFFIRMATIVE COVENANTS
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7.1. Preservation of Corporate Existence and Franchises.................................. 50
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7.2. Maintenance of Properties........................................................... 51
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7.3. Taxes............................................................................... 51
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(a) Payment of Taxes........................................................... 51
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(b) Tax Returns................................................................ 51
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(c) Contest Provisions......................................................... 52
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7.4. Books, Records and Access........................................................... 52
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7.5. Compliance with Law................................................................. 52
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7.6. Insurance........................................................................... 52
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7.7. Offer to Repurchase Upon Change of Control.......................................... 53
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7.8. Offer to Purchase by Application of Excess Proceeds................................. 54
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7.9. Further Assurances.................................................................. 56
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SECTION 8
NEGATIVE COVENANTS
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8.1. Stay, Extension and Usury Laws...................................................... 57
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8.2. Restricted Payments................................................................. 57
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8.3. Dividend and Other Payment Restrictions Affecting Subsidiaries...................... 59
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8.4. Incurrence of Indebtedness and Issuance of Preferred Stock.......................... 60
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8.5. Asset Sales......................................................................... 63
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8.6. Transactions with Affiliates........................................................ 64
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8.7. Limitation on Ranking of Certain Indebtedness....................................... 65
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8.8. Limitation on Liens Securing Company Subordinated Indebtedness...................... 65
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8.9. Limitation on Issuances and Sales of Capital Stock of Subsidiaries.................. 66
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8.10. Payments for Consents.............................................................. 66
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8.11. Merger, Consolidation, or Sale of Assets........................................... 66
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8.12. Successor Company Substituted...................................................... 67
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8.13. Additional Subsidiary Guarantees................................................... 67
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SECTION 9
PROVISIONS RELATING TO RESALES OF NOTES
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9.1. Private Offerings................................................................... 68
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(a) Offers and Sales only to Institutional Accredited Investors or
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Qualified Institutional Buyers.................................................. 68
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(b) No General Solicitation.................................................... 68
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(c) Purchases by Non-Bank Fiduciaries.......................................... 68
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(d) Restrictions on Transfer................................................... 68
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(e) No Future Liability........................................................ 68
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9.2. Offering Memorandum................................................................. 69
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9.3. Amendments and Supplements to the Offering Memorandum............................... 70
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9.4. Copies of the Offering Memorandum................................................... 71
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9.5. Blue Sky Compliance................................................................. 71
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9.6. Ratings of the Notes................................................................ 71
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9.7. The Depositary...................................................................... 71
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9.8. Additional Company Information...................................................... 72
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9.9. Agreement Not to Offer or Sell Additional Securities................................ 72
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9.10. Exchange and Registration Rights Agreement......................................... 72
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9.11. No Integration..................................................................... 72
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9.12. Restriction on Repurchases......................................................... 72
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9.13. DTC Agreement...................................................................... 73
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9.14. PORTAL............................................................................. 73
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9.15. Form D............................................................................. 73
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9.16. Syndication........................................................................ 73
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9.17. Exchange Right..................................................................... 75
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SECTION 10
THE NOTES
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10.1. Form and Execution................................................................. 76
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10.2. Terms of the Notes................................................................. 76
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(a) Stated Maturity............................................................ 76
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(b) Interest................................................................... 76
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10.3. Denominations...................................................................... 76
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10.4. Form of Legend for the Notes....................................................... 76
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10.5. Payments and Computations.......................................................... 77
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10.6. Registration, Registration of Transfer and Exchange................................ 77
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(a) Security Register.......................................................... 77
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(b) Registration of Transfer................................................... 77
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(c) Exchange................................................................... 77
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(d) Effect of Registration of Transfer or Exchange............................ 78
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(e) Requirements; Charges..................................................... 78
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(f) Certain Limitations....................................................... 78
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10.7. Transfer Restrictions............................................................. 78
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10.8. Mutilated, Destroyed, Lost and Stolen Notes....................................... 80
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10.9. Persons Deemed Owners............................................................. 81
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10.10. Cancellation..................................................................... 81
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10.11. Home Office Payment.............................................................. 81
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SECTION 11
EVENTS OF DEFAULT
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11.1. Events of Default................................................................. 82
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11.2. Remedies.......................................................................... 84
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11.3. Waiver of Past Defaults........................................................... 85
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SECTION 12
REDEMPTION
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12.1. Right of Redemption............................................................... 86
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12.2. Partial Redemptions............................................................... 86
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12.3. Notice of Redemption.............................................................. 86
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12.4. Deposit of Redemption Price....................................................... 87
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12.5. Notes Payable on Redemption Date.................................................. 87
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12.6. Notes Redeemed in Part............................................................ 87
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SECTION 13
SUBORDINATION OF NOTES
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13.1. Notes Subordinate to Senior Indebtedness.......................................... 88
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13.2. Payment Over of Proceeds Upon Dissolution, Etc.................................... 88
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13.3. No Payment When Senior Indebtedness in Default.................................... 89
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13.4. Payment Permitted If No Default................................................... 91
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13.5. Subrogation to Rights of Holders of Senior Indebtedness........................... 91
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13.6. Provisions Solely to Define Relative Rights....................................... 91
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13.7. No Waiver of Subordination Provisions............................................. 92
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13.8. Reliance on Judicial Order or Certificate of Liquidating Agent.................... 93
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13.9. Reliance by Holders of Senior Indebtedness on Subordination Provisions............. 93
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SECTION 14
SUBSIDIARY GUARANTEES
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14.1. Subsidiary Guarantees............................................................. 93
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14.2. Execution and Delivery of Subsidiary Guarantees................................... 94
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14.3. Guarantors May Consolidate, Etc. On Certain Terms................................. 95
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14.4. Releases of Subsidiary Guarantees................................................. 96
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14.5. Subordination of Subsidiary Guarantees............................................ 97
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14.6. Limitation on Guarantor Liability................................................. 97
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14.7. Endorsement of Subsidiary Guarantees.............................................. 97
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SECTION 15
EXPENSES, INDEMNIFICATION AND CONTRIBUTION
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15.1. Expenses.......................................................................... 98
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15.2. Indemnification................................................................... 98
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(a) Indemnification by the Company............................................ 98
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(b) Indemnification by the Purchasers......................................... 100
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(c) Notifications and Other Indemnification Procedures........................ 100
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15.3. Contribution...................................................................... 101
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15.4. Survival.......................................................................... 102
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SECTION 16
MISCELLANEOUS
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16.1. Notices........................................................................... 102
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16.2. Benefit of Agreement; Assignments and Participations.............................. 103
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16.3. No Waiver; Remedies Cumulative.................................................... 104
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16.4. Amendments, Waivers and Consents................................................. 104
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16.5. Counterparts..................................................................... 104
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16.6. Reproduction..................................................................... 105
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16.7. Headings......................................................................... 105
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16.8. Survival of Covenants and Indemnities............................................ 105
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16.9. Governing Law; Submission to Jurisdiction; Venue................................. 105
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16.10. Severability.................................................................... 107
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16.11. Entirety........................................................................ 107
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16.12. Survival of Representations and Warranties...................................... 107
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16.13. Construction.................................................................... 107
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16.14. Incorporation................................................................... 107
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EXHIBITS
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Exhibit A - Form of Note
Exhibit B - Exchange and Registration Rights Agreement
Exhibit C - Form of Subsidiary Guarantee
Exhibit D - Form of Supplemental Agreement
Exhibit E - Management Services Agreement
Exhibit F - Form of Notation of Subsidiary Guarantee
Exhibit 3.3(a) - Form of Officer's Certificate
Exhibit 3.3(b) - Form of Secretary's Certificate
Exhibit 3.4 - Form of Opinion of Counsel for Company
SCHEDULES
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Schedule A - Information Relating to Purchasers
Schedule B - List of Current Guarantor Subsidiaries
Schedule 4.03 - Subsidiaries
Schedule 4.07(a) - Liabilities or Events
Schedule 4.07(b) - Other MAE Changes in Financial Condition
Schedule 4.08 - Actions or Proceedings
Schedule 4.9 - Liens
Schedule 4.11 - Taxes
Schedule 4.12(e) - Plans
Schedule 4.18 - Existing Indebtedness
Schedule 4.19(a) - Compliance with Laws
Schedule 4.19(b) - List of Permits
Schedule 4.21(a) - Affiliate Transactions
Schedule 4.22 - Material Contracts
Schedule 4.26 - Broker's Fees
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Schedule 4.27 - Documents and Procedures
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of December 18, 1998, among Dollar
Financial Group, Inc., a New York corporation (the "Company"), GS Mezzanine
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Partners, L.P., a limited partnership organized under the laws of Delaware ("GS
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Mezzanine"), GS Mezzanine Partners Offshore, L.P., a limited partnership
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organized under the laws of the Cayman Islands ("GS Mezzanine Offshore"), Stone
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Street Fund 1998, L.P., a limited partnership organized under the laws of
Delaware ("Stone Street"), Bridge Street Fund 1998, L.P., a limited partnership
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organized under the laws of Delaware ("▇▇▇▇▇▇ ▇▇▇▇▇▇", and collectively with
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Stone Street, GS Mezzanine and GS Mezzanine Offshore, the "GSMP Purchasers"),
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Ares Leveraged Investment Fund, L.P., a limited partnership organized under the
laws of Delaware ("Ares I") and Ares Leveraged Investment Fund II, L.P., a
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limited partnership organized under the laws of Delaware ("Ares II" and,
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collectively with Ares I, "Ares" and, collectively with GSMP Purchasers, the
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"Purchasers").
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RECITALS
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WHEREAS, DFG Holdings, Inc., a Delaware corporation ("Holdings"), owns
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all of the outstanding shares of the Company and Holdings has entered into an
Agreement and Plan of Merger, dated as of November 13, 1998 (the "Merger
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Agreement"), with DFG Acquisition, Inc., a Delaware corporation (the "Buyer"),
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and the other parties named therein pursuant to which the Buyer will be merged
with and into Holdings (the "Merger").
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WHEREAS, the Merger Agreement provides for a recapitalization of
Holdings (the "Recapitalization") prior to the Merger pursuant to which the
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outstanding shares of Common Stock, par value $0.001 per share, of Holdings will
be reclassified into 3,183.4587 shares of Class A Common Stock, par value $0.001
per share (the "Class A Common Stock"), of Holdings and 31,448.0500 shares Class
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B Common Stock, par value $0.001 per share (the "Class B Common Stock"), of
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Holdings.
WHEREAS, in the Merger (a) the Class A Common Stock will remain
outstanding, (b) the Class B Common Stock will be converted into the right to
receive cash in the amount of $3,225 per share and (c) each outstanding share of
common stock, par value $.01 per share, of Buyer will be converted into
12,403.10 shares of Class A Common Stock.
WHEREAS, the cash consideration payable in the Merger and the fees and
expenses of Holdings in connection with the Merger will be funded through the
following transactions: (a) Green Equity Investors II, L.P., a limited
partnership organized under the laws of Delaware and the parent of Buyer
("GEI"), will cause an equity contribution of $41,973,169.78 in cash to be made
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to Buyer prior to the Merger (the "Buyer Cash Contribution"), (b) upon the terms
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and subject to the conditions set forth therein, Holdings will sell to the
Purchasers an aggregate of 1,647.4603 shares of Class A Common Stock (the
"Shares") pursuant to a Subscription Agreement, dated the date hereof (the
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"Subscription Agreement"), among Holdings and the Purchasers for aggregate
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purchase price of $5,313,059.46 million, and (c) upon the terms and subject to
the conditions set forth in the Purchase Agreement, dated the date hereof (the
"Holdings Purchase Agreement"), among Holdings and the Purchasers, Holdings will
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sell $120,625,617.30 aggregate principal amount of its 13% Senior Discount Notes
Due 2006 in the form of Exhibit A to the Holdings Purchase Agreement (the
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"Senior Discount Notes") and 1,040.6103 shares of Class A Common Stock (the
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"Senior Discount Note Shares") to the Purchasers for aggregate cash proceeds of
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$62.08 million.
WHEREAS, the Company will enter into a $160 million credit facility,
dated December 18, 1998 (the "Credit Agreement"), among the Company, Holdings
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and ▇▇▇▇▇ Fargo Bank, National Association, a national banking association
("▇▇▇▇▇ Fargo"), as administrative agent for the lenders named therein, First
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Union Capital Markets and ▇▇▇▇▇ Fargo, as arrangers of the credit facilities
evidenced thereby, First Union National Bank, as syndication agent, U.S. Bank
National Association, as documentation agent, and the lenders named therein,
which will provide for a revolving credit facility in favor of the Company of up
to $70 million (of which not more than $14 million will be drawn at the Initial
Closing (as defined herein)) and two term loan facilities in favor of the
Company of up to $90 million,
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, the Company shall have the right at any time or from time to
time prior to nine months after the Initial Closing Date (as defined herein) to
sell to the Purchasers up to an aggregate of $20 million aggregate principal
amount of its 10 7/8% Senior Subordinated Notes Due 2006 in the form of
Exhibit A hereto (the "Notes") to (i) finance the repurchase by the Company of
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any of its currently outstanding 10 7/8% Series A Senior Notes Due 2006 (the
"Senior Notes") that are put to it as a result of the Merger pursuant to the
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indenture, dated as of November 15, 1996 (the "Senior Note Indenture"), among
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the Company, the Guarantors (as defined therein) and Fleet National Bank, as
trustee, under which the Senior Notes were issued and (ii) (x) finance any
acquisitions made by the
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Company after the Initial Closing Date or (y) to refinance any acquisitions made
by the Company after the Initial Closing Date and on or prior to the Change of
Control Payment Date (as defined in the Senior Note Indenture).
WHEREAS, the holders of the Notes from time to time will be entitled
to the benefits of an Exchange and Registration Rights Agreement, dated the date
hereof (the "Exchange and Registration Rights Agreement"), among the Company and
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the Purchasers in the form of Exhibit B hereto.
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WHEREAS, the Company has duly authorized the creation and issuance of
the Notes and the execution and delivery of this Agreement and the Exchange and
Registration Rights Agreement.
WHEREAS, all things necessary to make this Agreement, the Notes (when
issued and delivered hereunder) and the Exchange and Registration Rights
Agreement valid and binding obligations of the Company in accordance with their
respective terms have been done.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
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1.1 Definitions. As used herein, the following terms shall have the
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meanings specified herein unless the context otherwise requires:
"Accredited Investor" means any Person that is an "accredited
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investor" within the meaning of Rule 501(a) under the Securities Act.
"Acquired Debt" means, with respect to any specified Person, (i)
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Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person at the time such asset
is acquired by such specified Person.
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"Acquisition Documents" means the Merger Agreement and all
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certificates, instruments, financial and other statements and other documents
made or delivered in connection therewith.
"Additional Company Information" is defined in Section 9.8.
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"Affiliate" means, with respect to any specified Person, any other
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Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
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"controlling," "controlled by" and "under common control with"), as used with
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respect to any specified Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided, however, that in the case of the Company or
any of its Subsidiaries beneficial ownership of 10% or more of the voting
securities of the Company or such Subsidiary, as the case may be, shall be
deemed to be control. Notwithstanding the foregoing, in no event will the
Purchasers or any of their Affiliates be deemed to be an Affiliate of the
Company.
"Affiliate Transaction" is defined in Section 8.6.
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"Agreement" is defined in Section 16.4.
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"Applicable Law" means all applicable laws, statutes, treaties, rules,
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codes (including building codes), ordinances, regulations, certificates, orders
and licenses of, and interpretations by, any Governmental Authority and
judgments, decrees, injunctions, writs, permits, orders or like governmental
action of any Governmental Authority (including environmental laws and those
pertaining to health or safety) applicable to the Company any of its
Subsidiaries or any of their property or operations.
"Ares", "Ares I" and "Ares II" are defined in the preamble to this
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Agreement.
"Asset Sale" is defined in Section 8.5(a).
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"Asset Sale Offer" is defined in Section 7.8(a).
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"Audit Date" is defined in Section 4.6(b).
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"Bankruptcy Law" means Title 11 of the United States Code or any
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similar federal or state bankruptcy, insolvency, reorganization or other law for
the relief of debtors.
"Board" means the Board of Directors of the Company, or any authorized
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committee of such Board of Directors.
"Borrowing Base" means the sum of the following amounts with respect
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to the Company and its Subsidiaries, determined on a consolidated basis and,
where applicable, in accordance with GAAP: (i) 100% of cash held overnight in
store safes; (ii) 100% of balances held in store accounts; (iii) 100% of checks
held in store safes; (iv) 100% of clearing house transfers initiated on the
previous day and transfers of same-day funds to be credited to store accounts;
(v) 100% of cash held overnight by armored car carriers; (vi) 100% of eligible
government receivables in respect of government contracts; and (vii) 100% of
cash balances held in demand deposit accounts and/or investment accounts. The
Borrowing Base shall be determined by the Company upon each incurrence of
Indebtedness, and such determination shall be conclusive so long as it is made
in good faith.
"Bridge Street" is defined in the preamble to this Agreement.
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"Business Day" means any day other than a Legal Holiday.
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"Buyer" is defined in the first recital to this Agreement.
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"Buyer Cash Contribution" is defined in the fourth recital to this
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Agreement.
"Calculation Date" means, with respect to any calculation of the Fixed
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Charge Ratio, the date on which the event requiring such calculation occurs.
"Capital Lease Obligation" means, at the time any determination
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thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
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stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether
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general or limited) and (iv) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) direct obligations of the United States
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of America or any agency thereof having maturities of not more than one year
from the date of acquisition, (ii) time deposits and certificates of deposit of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500 million, with maturities of not more than one year from the
date of acquisition, (iii) repurchase obligations issued by any bank described
in clause (ii) above with a term not to exceed 30 days; (iv) commercial paper
rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by ▇▇▇▇▇'▇, in each case maturing within one year after the
date of acquisition and (v) shares of any money market mutual fund, or similar
fund, in each case having excess of $500 million, which invests predominantly in
investments of the types describes in clauses (i) through (iv) above.
"Change of Control" means the occurrence of any of the following: (i)
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the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or more related transactions, of all or substan
tially all of the properties and assets of the Company and its Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act), other than the Principals or their Related Parties, (ii) the
adoption of a plan relating to the liquidation or dissolution of the Company,
(iii) the consummation of any transaction or other event (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 35%
of the voting stock of the Company or Holdings, (iv) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that Holdings ceases to own 100% of the outstanding Equity
Interests of the Company or (v) the first day on which a majority of the members
of the Board of Directors of the Company are not Continuing Directors.
"Change of Control Payment" is defined in Section 7.7(a).
-------------------------
"Change of Control Payment Date" is defined in Section 7.7(b)(ii).
------------------------------
"Class A Common Stock" is defined in the second recital.
--------------------
"Class B Common Stock" is defined in the second recital.
--------------------
-6-
"Closing" is defined in Section 2.3(a).
-------
"Closing Date" is defined in Section 2.3(a).
------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and the rules and regulations promulgated thereunder from time to time.
"Commission" means the Securities and Exchange Commission, as from
----------
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this Agreement such Commission is not existing and
performing the duties now assigned to it under the Exchange Act, the body
performing such duties at such time.
"Commitment Fee" is defined in Section 2.2.
--------------
"Company" shall have the meaning assigned in the preamble to this
-------
Agreement and its successors and permitted assigns.
"Company Financial Statements" is defined in Section 4.6(a).
----------------------------
"Company Indemnified Person" is defined in Section 15.2(b).
--------------------------
"Company Party" is defined in Section 4.4(f).
-------------
"Company Reports" is defined in Section 4.6(b).
---------------
"Consolidated" or "consolidated" (including the correlative term
------------ ------------
"consolidating") or on a "consolidated basis", when used with reference to any
------------- ------------------
financial term in this Agreement (but not when used with respect to any tax
return or tax liability), means the aggregate for two or more Persons of the
amounts signified by such term for all such Persons, with inter-company items
eliminated and, with respect to net income or earnings, after eliminating the
portion of net income or earnings properly attributable to minority interests,
if any, in the capital stock of any such Person or attributable to shares of
preferred stock of any such Person not owned by any other such Person, in
accordance with GAAP.
"Consolidated Cash Flow" means, with respect to any Person for any
----------------------
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary or non-recurring loss plus any net loss
realized in connection with an Asset Sale, the closure of any stores, the
-7-
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness by such Person or its Subsidiaries (to the
extent such losses were deducted in computing such Consolidated Net Income),
plus (ii) provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to commissions, discounts and other fees and charges incurred in respect
of letter of credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash charges (excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash charges were deducted in
computing such Consolidated Net Income, minus (v) non-cash items increasing
consolidated revenues in determining such Consolidated Net Income for such
period, minus (vi) the amount of Earn-out Obligations paid during such period
(to the extent not already reflected as an expense in Consolidated Net Income),
in each case, on a consolidated basis and determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any specified Person
-----------------------
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, that (i) the Net Income (but not loss) of any Person that
is not a Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or distributions
paid in cash to the specified Person or one of its Wholly Owned Subsidiaries,
(ii) the Net Income of any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders, (iii) the Net Income of any
Person acquired in a
-8-
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded and (iv) the cumulative effect of a change in
accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
----------------------
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Agreement in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person and
(y) all unamortized debt discount and expense and unamortized deferred charges
as of such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
--------------------
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors immediately after consummation of the Merger or (ii) was
nominated for election or elected to such Board of Directors with the approval,
recommendation or endorsement of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Contract" is defined in Section 4.5.
--------
"Controlling Person" is defined in Section 15.2(a).
------------------
"Credit Agreement" means the Credit Agreement as defined in the fifth
----------------
recital to this Agreement, including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, restated, renewed, refunded, replaced or
refinanced from time to time.
"Credit Documents" means the Credit Agreement and all certificates,
----------------
instruments, financial and other statements and other documents and agreements
made or delivered in connection therewith and related thereto.
-9-
"Custodian" is defined in Section 11.1(h).
---------
"Default" means any event, act or condition that is, or with the
-------
giving of notice, lapse of time or both would constitute an Event of Default.
"Depositary" is defined in Section 9.13.
----------
"Designated Senior Indebtedness" shall mean (i) the obligations of the
------------------------------
Company under the Credit Agreement and (ii) any other Senior Indebtedness of the
Company (other than to an Affiliate of the Company) permitted under this
Agreement the principal amount of which at original issuance is $5 million or
more and that has been designated by the Company as Designated Senior
Indebtedness.
"Director" means a member of the Board; provided, however, that in no
--------
event shall a Non-Voting Observer be deemed to be a Director.
"Disclosure Schedule" means all numbered Schedules to this Agreement.
-------------------
"Disqualified Stock" means any Capital Stock that, by its terms (or by
------------------
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the Stated Maturity of the Notes.
"Earn-out Obligations" means contingent payment obligations of the
--------------------
Company or any of its Subsidiaries incurred in connection with the acquisition
of assets or businesses, which obligations are payable based on the performance
of the assets or businesses so acquired; provided, however, that (i) such
obligations shall be expressly subordinated to the Notes to the same extent as
the Notes are subordinated to Senior Indebtedness as provided herein, (ii) the
amount of such obligations shall not exceed 25% of the total consideration paid
for such assets or businesses, and (iii) the amount of such obligations
outstanding at any time shall be measured by the maximum amount potentially
payable thereunder without regard to performance criteria, the passage of time
or other conditions.
"Enforceability Exceptions" means, with respect to any specified
-------------------------
obligation, any limitations on the enforceability of such obligation due to
bankruptcy, insolvency, reorganization, moratorium, and other similar laws of
-10-
general applicability relating to or affecting creditors' rights or general
equity principles (other than, in any such case, any Federal or state laws
relating to fraudulent transfers).
"Equity Interests" means Capital Stock and all warrants, options or
----------------
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Investee" is defined in Section 4.3.
---------------
"ERISA" is defined in Section 4.12.
-----
"ERISA Affiliate" is defined in Section 4.12.
---------------
"Event of Default" is defined in Section 11.1 hereof.
----------------
"Excess Proceeds" is defined in Section 8.5(b).
---------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exchange and Registration Rights Agreement" is defined in the seventh
------------------------------------------
recital.
"Exchange Notes" means the notes issued in the Exchange Offer.
--------------
"Exchange Note Offering" means an offering of all or any portion of
----------------------
the Exchange Notes without registration under the Securities Act.
"Exchange Offer" is defined in the Exchange and Registration Rights
--------------
Agreement.
"Exchange Offer Registration Statement" is defined in the Exchange and
-------------------------------------
Registration Rights Agreement.
"Existing Indebtedness" is defined in Section 4.18.
---------------------
"Financing Documents" means collectively, this Agreement, the Holdings
-------------------
Purchase Agreement, the Subscription Agreement, the Exchange and Registration
Rights Agreement, the Exchange and Registration Rights Agreement (as defined in
the Holdings Purchase Agreement), the Stockholders Agreement, the Notes, the
Exchange Notes, the Senior Discount Notes and all
-11-
certificates, instruments, financial and other statements and other documents
made or delivered in connection herewith and therewith.
"Fixed Charges" means, with respect to any Person for any period, the
-------------
sum of, without duplication, (i) the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) and (ii)
the consolidated interest expense of such Person and its Subsidiaries that was
capitalized during such period, and (iii) any interest expense on Indebtedness
of another Person that is Guaranteed by such Person or one of its Subsidiaries
or secured by a Lien on assets of such Person or one of its Subsidiaries
(whether or not such Guarantee or Lien is called upon) and (iv) the product of
(A) all cash dividend payments (and non-cash dividend payments in the case of a
Person that is a Subsidiary) on any series of preferred stock of such Person
plus all accrued but unpaid cash dividends on Disqualified Stock, times (B) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
---------------------------
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period calculated as provided in
Section 8.4.
"GAAP" means United States generally accepted accounting principles
----
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Agreement.
"GEI" is defined in the fourth recital to this Agreement.
---
-12-
"Governmental Authority" means (a) the government of the United States
----------------------
of America or any State or other political subdivision thereof,(b) any
government or political subdivision of any other jurisdiction in which the
Company or any Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any Subsidiary or (c)
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to, any such government.
"GS Mezzanine" is defined in the preamble to this Agreement.
------------
"GS Mezzanine Offshore" is defined in the preamble to this Agreement.
---------------------
"GSMP Purchasers" is defined in the preamble to this Agreement.
---------------
"Guarantee" means a guarantee (other than by endorsement of negotiable
---------
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means each of (i) the Subsidiaries of the Company set
----------
forth on Schedule B hereto and (ii) any other Subsidiary of the Company that
----------
executes a Subsidiary Guarantee in accordance with the provisions of this
Agreement, and their respective successors and assigns.
"Guarantor Senior Indebtedness" means (i) the Indebtedness of any
-----------------------------
Subsidiary of the Company evidenced by a guarantee of the obligations under the
Credit Agreement and (ii) the principal of (and premium, if any) and interest on
any other Indebtedness of any Guarantor for money borrowed, whether incurred on
or prior to the date of original issuance of the Notes or thereafter, and any
amendments, renewals, extensions, modifications, refinanc ings and refundings
of any such Indebtedness; provided, however, that the following shall not
constitute Guarantor Senior Indebtedness: (1) any Indebtedness as to which the
terms of the instrument creating or evidencing the same provide that such
Indebtedness is not superior in right of payment to the Subsidiary Guarantees,
(2) any Indebtedness as to which the terms of the instrument creating or
evidencing the same provide that such Indebtedness is subordinated in right of
payment in any respect to any other Indebtedness of such Guarantor, (3)
Indebtedness evidenced by the Subsidiary Guarantees, (4) any Indebtedness owed
to a Person when such Person is a Subsidiary of the Company, (5) any obligation
of such Guarantor arising from Disqualified Stock of
-13-
such Subsidiary, (6) any portion of any Indebtedness which is incurred in
violation of this Agreement and (7) Indebtedness which, when incurred and
without respect to any election under Section 1111(b) of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
Code, is without recourse to such Guarantor.
"Hedging Obligations" means, with respect to any Person, the
-------------------
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered on the
------
Security Register.
"Holdings" is defined in the first recital to this Agreement.
--------
"Holdings Purchase Agreement" is defined in the fourth recital to this
---------------------------
Agreement.
"incur" is defined in Section 11.3(a).
-----
"Indebtedness" means, with respect to any Person, any indebtedness of
------------
such Person, whether or not contingent, (i) in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof), (ii) representing
Capital Lease Obligations, (iii) the balance deferred and unpaid of the purchase
price of any property or services, except any such balance that constitutes an
accrued expense or trade payable, or (iv) representing any Hedging Obligations,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other Person.
"Indemnified Person" is defined in Section 15.2(c).
------------------
"Initial Closing" means the Closing as defined in the Holdings
---------------
Purchase Agreement.
-14-
"Initial Closing Date" means the Closing Date as defined in the
--------------------
Holdings Purchase Agreement.
"Institutional Accredited Investors" is defined in Section 9.1(a).
----------------------------------
"Institutional Investor" means (a) any original purchaser of a Note
----------------------
and any transferee that is an Affiliate of any original purchaser, (b) any
holder of a Note holding more than 25% of the aggregate principal amount of the
Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company or investment fund, any insurance company, any broker or dealer, or any
other similar financial institution or entity, regardless of legal form
organized under the laws of the United States or a State thereof, with capital
and surplus in excess of $50,000,000.
"Intellectual Property" means (a) all inventions and discoveries
---------------------
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations, continuations-in-
part, revisions, extensions and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names and corporate names, together
with all translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, (c) all copyrightable works, all
copyrights and all applications, registrations and renewals in connection
therewith, (d) all broadcast rights, (e) all mask works and all applications,
registrations and renewals in connection therewith, (f) all know-how, trade
secrets and confidential business information, whether patentable or
unpatentable and whether or not reduced to practice (including ideas, research
and development, know-how, formulas, compositions and manufacturing and
production process and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), (g) all computer software
(including data and related documentation), (h) all other proprietary rights,
(i) all copies and tangible embodiments thereof (in whatever form or medium) and
(j) all licenses and agreements in connection therewith.
"Interest Payment Date" is defined in Exhibit A.
--------------------- ---------
"Investments" means, with respect to any Person, all investments by
-----------
such Person in other Persons (including Affiliates) in the form of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding (i) commission, travel and similar
advances to officers and employees, (ii) extensions of trade credit and (iii)
any
-15-
loans to customers, in each case made on commercially reasonable terms and in
the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP; provided, however, that an acquisition of
assets, Equity Interests or other securities by the Company for consideration
consisting of common equity securities of the Company shall not be deemed to be
an Investment. If the Company or any Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of.
"IPO" means any underwritten public offering of the common stock of
---
the Company or Holdings, whether on a primary or secondary basis, pursuant to an
effective registration statement filed under the Securities Act which generates
gross proceeds to the seller(s) of at least $25 million.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
-------------
institutions in The City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If any payment date in
respect of the Notes is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Management Services Agreement" means the Management Services
-----------------------------
Agreement, dated the date hereof, among the Company, Holdings, and ▇▇▇▇▇▇▇ ▇▇▇▇▇
& Partners, L.P. in the form set forth in Exhibit E hereto.
---------
"Material" means material in relation to the business, operations,
--------
affairs, financial condition, properties, assets, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole.
-16-
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, operations, affairs, financial condition, assets, property, results of
operations or prospects of the Company and its Subsidiaries taken as a whole,
(b) the ability of the Company or any Subsidiary to perform any of its material
obligations under any of the Transaction Documents, or (c) the validity or
enforceability of any Transaction Document that is Material or material to the
holders of Notes.
"Material Contracts" means any agreements, contracts or arrangements
------------------
between the Company or its Subsidiaries, on the one hand, and any third parties,
on the other, that are Material.
"Maturity", when used with respect to any Note, means the date on
--------
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise (including in connection with any offer to purchase
that this Agreement requires the Company to make).
"Merger" is defined in the first recital to this Agreement.
------
"Merger Agreement" is defined in the first recital to this Agreement.
----------------
"Net Income" means, with respect to any Person, the net income (loss)
----------
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (A) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (B) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries,
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss) and (iii) any non-cash compensation expense of such Person attributable to
the exercise of options to acquire Capital Stock of Holdings by any officers,
directors or employees of Holdings or any of its Subsidiaries in each case prior
to the consummation of the Merger.
"Net Proceeds" means the aggregate cash proceeds received by the
------------
Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and
-17-
investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebted ness
(other than revolving credit Indebtedness under the Credit Agreement) secured by
a Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"New Documents" has the meaning specified in Section 9.17.
-------------
"Notes" has the meaning specified in the sixth recital.
-----
"Notes Payment" is defined in Section 13.2.
-------------
"Obligations" means any principal, premium, interest, Special Interest
-----------
and other liabilities payable by the Company or any of its Subsidiaries under or
in respect of this Agreement or the Notes.
"Offer Amount" is defined in Section 7.8(a).
------------
"Offer Period" is defined in Section 7.8(a).
------------
"Offering" means, collectively, any Exchange Note Offering and any
--------
Private Offering.
"Offering Memorandum" means an Offering Memorandum of the Company in
-------------------
form and substance satisfactory to the Purchasers delivered to the Purchasers in
connection with an Offering, including amendments or supplements thereto, any
exhibits thereto and the documents incorporated therein, in the most recent form
that has been prepared and delivered by the Company to the Purchasers in
connection with their solicitation of offers to purchase Notes or Exchange Notes
in connection with such Offering. Further, any reference to the Offering
Memorandum shall be deemed to refer to and include any Additional Company
Information furnished by the Company prior to the completion of the distribution
of the Notes or Exchange Notes in connection with any Offering and any
registration statement (if any) filed with the Commis sion related to such
Offering Memorandum. All references in this Agreement to financial statements
and schedules and other information which is "contained," "included" or "stated"
in the Offering Memorandum (or other references of like import) shall be deemed
to mean and include all such financial statements and schedules and other
information which are incorporated by reference in the
-18-
Offering Memorandum, and all references in this Agreement to amendments or
supplements to the Offering Memorandum shall be deemed to mean and include the
filing of any document under the Exchange Act which is incorporated or deemed to
be incorporated by reference in the Offering Memorandum.
"outstanding", when used with respect to the Notes, means, as of the
-----------
date of determination, all Notes theretofore executed and delivered under this
Agreement, except:
------
(i) Notes theretofore cancelled by the Company or delivered to the
Company for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore set aside by the Company with a third party in
trust for the Holders of such Notes; provided that if such Notes are to be
redeemed, notice of such redemption has been duly given as provided in this
Agreement; and
(iii) Notes which have been paid pursuant to Section 10.8 or in exchange
for or in lieu of which other Notes have been executed and delivered
pursuant to this Agreement, other than any such Notes in respect of which
there shall have been presented to the Company proof satisfactory to it
that such Notes are held by a bona fide purchaser in whose hands such Notes
are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be outstanding.
Notes so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Requisite
Holders the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
"Payment Blockage Period" is defined in Section 13.3.
-----------------------
"Payment Default" is defined in Section 11.1(f).
---------------
"Pension Plan" is defined in Section 4.12(b).
------------
-19-
"Permits" means all licenses, permits, certificates of need, approvals
-------
and authorizations from all Governmental Authorities required to lawfully
conduct a business as presently conducted.
"Permitted Investments" means (a) any Investment in the Company or in
---------------------
a Wholly Owned Subsidiary of the Company that is a Guarantor and that is engaged
in the same or a similar line of business as the Company and its Subsidiaries
were engaged in on the date of this Agreement; (b) any Investment in Cash
Equivalents, the Notes or the Senior Notes; (c) any Investment by the Company or
any Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Wholly Owned Subsidiary of the Company and a Guarantor
that is engaged in the same or a similar line of business as the Company and its
Subsidiaries were engaged in on the date of this Agreement or (ii) such Person
is merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Wholly Owned Subsidiary of the Company and that is engaged in the same or a
similar line of business as the Company and its Subsidiaries were engaged in on
the date of this Agreement; (d) any Restricted Investment made as a result of
the receipt of non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with the provisions of Section 8.05 hereof; (e) other
Investments in any Person (other than a Subsidiary of the Company) having an
aggregate fair market value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (e) that are at the time
outstanding, not to exceed $3.0 million; (f) any loan by the Company to a Wholly
Owned Subsidiary of the Company that is not a Guarantor and any other Investment
in a Wholly Owned Subsidiary of the Company that is not a Guarantor to the
extent necessary to preserve the full deductibility of interest relating to
Indebtedness of such Subsidiary; and (g) Investments in Subsidiaries of the
Company formed or acquired after the Initial Closing Date which (i) are
incorporated outside the United States, (ii) are not Guarantors and (iii) if
they were Guarantors would give rise to an investment in United States property
within the meaning of Section 956 of the Code which Investments shall not exceed
in the aggregate more than $15 million outstanding at any time (treating any
such Investment that is not Indebtedness at the value thereof on the date it is
made).
"Permitted Liens" means (i) Liens securing Indebtedness under the
---------------
Credit Agreement that was permitted by the terms of this Agreement to be
incurred; (ii) Liens in favor of the Company; (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with the
Company or any Subsidiary of the Company; provided, however, that such Liens
-20-
were in existence prior to the contemplation of such merger or consolidation and
do not extend to any assets other than those of the Person merged into or
consolidated with the Company; (iv) Liens on property existing at the time of
acquisition thereof by the Company or any Subsidiary of the Company; provided,
however, that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens securing Indebtedness
(including Capital Lease Obligations) permitted by clause (iv) of Section 8.4(b)
hereof covering only the assets acquired with such Indebtedness; (vii) Liens
existing on the date of this Agreement; (viii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded; provided, however, that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been made
therefor; (ix) Liens incurred in the ordinary course of business of the Company
or any Subsidiary of the Company with respect to obligations that do not exceed
$5.0 million at any one time outstanding and that (A) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (B) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Subsidiary; and (x) Liens securing Permitted Refinancing Indebtedness; provided,
however, that the Company was permitted to incur Liens with respect to the
Indebtedness so refinanced.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
----------------------------------
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries; provided, however, that
(i) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount plus accrued
interest (or accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is
-21-
subordinated in right of payment to, the Notes on terms at least as favorable to
the Holders of Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iv) such Indebtedness is incurred either by the Company or by the
Subsidiary which is the obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded and (v) if the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded was incurred in
reliance upon clause (vi) or (vii) of Section 8.4(b), such Indebtedness also
meets the requirements of such clause.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Plan" is defined in Section 4.12(a).
----
"PORTAL Market" is defined in Section 9.14.
-------------
"Predecessor Note" of any particular Note means every previous Note
----------------
evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"principal amount" means, when used with respect to any particular
----------------
Note, the principal amount of such Note at its Stated Maturity.
"Principals" means GEI or any person that is a general partner of GEI
----------
as of the date of this Agreement.
"Private Offering" is any offering by any of the Purchasers of some or
----------------
all of the Notes without registration under the Securities Act.
"Proceeding" is defined in Section 13.2.
----------
"property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
"Purchase Date" is defined in Section 7.8(a).
-------------
"Purchase Price" is defined in Section 2.2.
--------------
-22-
"Purchasers" is defined in the preamble to this Agreement.
----------
"Purchaser Indemnified Person" is defined in Section 15.2(a).
----------------------------
"Qualified Institutional Buyer" means any Person that is a "qualified
-----------------------------
institutional buyer" within the meaning of Rule 144A.
"Recapitalization" is defined in the second recital to this Agreement.
----------------
"Redemption Date", when used with respect to any Note to be redeemed,
---------------
means the date fixed for such redemption by or pursuant to this Agreement.
"Redemption Price", when used with respect to any Note to be redeemed,
----------------
means the price at which it is to be redeemed pursuant to this Agreement.
"Registration Default" is defined in Exhibit A.
--------------------
"Regular Record Date" is defined in Exhibit A.
-------------------
"Regulation S" means Regulation S under the Securities Act (or any
------------
successor provision), as it may be amended from time to time.
"Regulation U" means Regulation U of the Board of Governors of the
------------
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Related Party" with respect to any Principal means (a) any Subsidiary
-------------
of such Principal or any general partner of such Principal or (b) any investment
fund or investment partnership managed by such Principal or any Affiliate of
such Principal.
"Replacement Notes" is defined in Section 9.17.
-----------------
"Request Date" is defined in Exhibit A.
------------
"Required Holders" means Holders holding more than 50% of the
----------------
aggregate principal amount of outstanding Notes and Exchange Notes (exclusive of
Notes then owned directly or indirectly by the Company, any other obligor on the
Notes or any Affiliate of the Company).
-23-
"Resale Registration Statement" is defined in Exhibit A.
-----------------------------
"Restricted Investment" means an Investment other than a Permitted
---------------------
Investment.
"Restricted Payments" is defined in Section 8.2(a).
-------------------
"Rule 144" means Rule 144 under the Securities Act (or any successor
--------
provision), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
---------
provision), as it may be amended from time to time.
"sale" is defined in Section 10.7(a).
----
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Security Register" has the meaning given to such term in Section
-----------------
10.6(a).
"Selling Purchaser" is defined in Section 9.2(b).
-----------------
"Senior Discount Note Shares " is defined in the fourth recital to
---------------------------
this Agreement.
"Senior Discount Notes" is defined in the fourth recital to this
---------------------
Agreement.
"Senior Indebtedness" means (i) the principal of (and premium, if any)
-------------------
and interest (including interest accruing on or after the filing of any petition
in bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding) on, and
penalties and any obligation of the Company for reimbursement (including
attorneys' fees incurred in connection with any such proceeding, whether or not
allowed in such proceeding), indemnities and fees relating to, and all other
amounts owing under, the Credit Agreement, (ii) the principal of (and premium,
if any) and interest on Indebtedness of the Company for money borrowed, whether
incurred on or prior to the date of original issuance of the Notes or
thereafter, and any amendments, renewals, extensions, modifications,
refinancings and refundings of any such Indebtedness and (iii) Hedging
Obligations entered into with respect to Indebtedness described in clauses (i)
and (ii) above; provided, however, that
-24-
the following shall not constitute Senior Indebtedness: (1) any Indebtedness
evidenced by the Senior Notes, (2) any Indebtedness as to which the terms of the
instrument creating or evidencing the same provide that such Indebtedness is not
superior in right of payment to the Notes, (3) any Indebtedness as to which the
terms of the instrument creating or evidencing the same provide that such
Indebtedness is subordinated in right of payment in any respect to any other
Indebtedness of the Company, (4) Indebtedness evidenced by the Notes or the
Subsidiary Guarantees, (5) any Indebtedness owed to a Person when such Person is
a Subsidiary of the Company, (6) any obligation of the Company arising from
Disqualified Stock of the Company, (7) any portion of any Indebtedness which is
incurred in violation of this Agreement and (8) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of ▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, is without recourse to the Company.
"Senior Nonmonetary Default" is defined in Section 13.3.
--------------------------
"Senior Note Indenture" is defined in the sixth recital to this
---------------------
Agreement.
"Senior Notes" is defined in the sixth recital to this Agreement.
------------
"Senior Payment Default" is defined in Section 13.3.
----------------------
"Shares" is defined in the fourth recital to this Agreement.
------
"Shelf Registration Statement" is defined in the Exchange and
----------------------------
Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
----------------------
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Solvent" means, with respect to any Person as of the date of any
-------
determination, that on such date (a) such Person is able to pay its debts and
other liabilities, contingent obligations and other commitments as they mature
in the normal course of business, (b) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (c) such Person is not
engaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Person's property would constitute unreasonably
-25-
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed as the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Special Interest" is defined in Exhibit A.
----------------
"Stated Maturity", when used with respect to any Note or any
---------------
installment of interest thereon, means the date specified in this Agreement or
such Note as the fixed date on which the principal of such Note or such
installment of interest is due and payable.
"Stockholders Agreement" means the Amended and Restated Stockholders
----------------------
Agreement, dated the date hereof, among Holdings, the Purchasers and the other
stockholders of Holdings named therein.
"Stone Street" is defined in the preamble to this Agreement.
------------
"Subscription Agreement" is defined in the fourth recital to this
----------------------
Agreement.
"Subsequent Purchaser" is defined in Section 4.13(a).
--------------------
"Subsidiary" means, with respect to any Person, (i) any corporation,
----------
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (A) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (B)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantees" means the Guarantees by the Guarantors of the
---------------------
Obligations.
"Successor Company" is defined in Section 8.11.
-----------------
-26-
"Tax Returns" means all reports and returns required to be filed on or
-----------
before the Closing Date with respect to the Taxes of the Company and the Tax
Subsidiaries including, without limitation, consolidated federal income tax
returns of the Company and the Tax Subsidiaries.
"Tax Subsidiaries" means any Subsidiary of the Company of which the
----------------
Company owns, directly or indirectly, 80% or more of the equity interests
therein for U.S. federal income tax purposes.
"Taxes" means all federal, state, local or foreign income, gross
-----
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes imposed on
the income, properties or operations of the Company and the Tax Subsidiaries,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ▇▇.▇▇. 77aaa-
---
77bbbb) as in effect on the date on which the Indenture is qualified under the
TIA.
"Transaction Documents" means, collectively, the Financing Documents,
---------------------
the Credit Documents and the Acquisition Documents.
"Transactions" means the Transactions provided for in, or contemplated
------------
by, the Transaction Documents.
"United States" shall have the meaning assigned to such term in
-------------
Regulation S.
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (A) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (B) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
-----------------------
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such
-27-
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
1.2. Computation of Time Periods. For purposes of computation of
---------------------------
periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
1.3. Accounting Terms. Accounting terms used but not otherwise
----------------
defined herein shall have the meanings provided, and be construed in accordance
with, GAAP.
SECTION 2
AUTHORIZATION AND ISSUANCE OF NOTES
-----------------------------------
2.1. Authorization of Issue. On or prior to the execution and
----------------------
delivery of this Agreement, the Company will authorize the issue and sale of up
to $20 million aggregate principal amount of the Notes. The Notes shall be in
the form specified in this Agreement.
2.2. Grant of Option; Exercise. Subject to the terms and conditions
-------------------------
set forth in this Agreement, in consideration for the payment by the Company to
the Purchasers of an aggregate commitment fee of $200,000 (the "Commitment Fee")
--------------
concurrently with the execution and delivery of this Agreement (such fee to be
allocated among the Purchasers in accordance with the percentages set forth
opposite their respective names in Schedule A hereto) each of the Purchasers
----------
hereby grants to the Company an option (collectively, the "Option") to sell up
------
to an aggregate of $20 million aggregate principal amount of the Notes to the
Purchasers in one or more exercises at any time or from time to time prior to
nine months on or after the Initial Closing Date for cash at a purchase price
(the "Purchase Price") equal to 98% of the principal amount of the Notes to be
--------------
sold; provided, however, that in no event may the Option be exercised for an
aggregate principal amount of Notes of less than $5 million. In order to
exercise the Option in whole or in part the Company must deliver a written
exercise notice (each, an "Exercise Notice") to the Purchasers stating the
---------------
aggregate principal amount of the Notes with respect to which the Option is
exercised and the closing date (each, a "Closing Date") for the purchase and
------------
sale pursuant to such exercise; provided, that an Exercise Notice must be
delivered to the Purchasers at least twenty Business Days prior to the Closing
Date specified in such Exercise Notice. If the Company shall have validly
delivered an Exercise Notice, then subject to the terms and conditions provided
herein the Company shall sell
-28-
to each Purchaser, and each Purchaser shall purchase from the Company, on the
Closing Date specified in such Exercise Notice the percentage of the aggregate
principal amount of Notes specified in the Exercise Notice that is set forth
opposite such Purchaser's name in Schedule A hereto for cash at the Purchase
----------
Price provided above.
2.3. Closings.
--------
(a) Each purchase and sale of Notes pursuant to an exercise of the
Option shall occur at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New York City time, at a closing (each, a
"Closing") on the Closing Date specified in the applicable Exercise Notice. At
--------
each Closing, the Company will deliver to each Purchaser certificates for the
Notes to be purchased by such Purchaser on such Closing Date, in such
denominations (in any integral multiple of $1,000 principal amount) as such
Purchaser may request, dated the Closing Date and registered in such Purchaser's
name, against payment by such Purchaser to the Company or to its order of
immediately available funds in the amount of the Purchase Price therefor (as
provided in Section 2.2) by wire transfer of immediately available funds to such
bank account or accounts as the Company may request in writing at least two
Business Days prior to the Closing Date.
(b) If at any Closing the Company shall fail to deliver to the
Purchasers the certificates evidencing all the Notes to be purchased by such
Purchaser at such Closing, as provided in Section 2.3(a), or any of the
conditions specified in Section 3 shall not have been fulfilled with respect to
such Closing to the Purchasers' satisfaction, then each Purchaser shall, at its
election, be relieved of all further obligations under this Agreement and the
Option with respect to such Notes, without thereby waiving any rights such
Purchaser may have by reason of such failure or such nonfulfillment.
SECTION 3
CONDITIONS TO CLOSINGS
----------------------
Each Purchaser's obligation to purchase and pay for the Notes to be
purchased by it at any Closing is subject to the satisfaction or waiver by it
prior to or at such Closing of each of the conditions specified below in this
Section 3:
-29-
3.1. Representations and Warranties. Each of the representations
------------------------------
and warranties of the Company in this Agreement and in each of the other
Transaction Documents shall be true and correct (in the case of such other
Transaction Documents only, in all material respects) when made and (except in
the case of the Merger Agreement) on or as of the Closing Date as if made on and
as of the Closing Date (unless stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and correct as of
such earlier date and, in any such case, there shall not have occurred since
such date and prior to the time of such Closing any developments with respect to
the subject matter of any such representation and warranty which the Purchasers
reasonably consider to be Material and adverse).
3.2. Performance; No Default under Other Agreements. The Company
----------------------------------------------
and its Subsidiaries, to the extent parties hereto or thereto, shall have
performed and complied in all material respects with all agreements and
conditions contained in this Agreement and each of the other Financing Documents
and Credit Documents required to be performed or complied with by it prior to or
at such Closing, and after giving effect to the issue and sale of the Notes and
the other Transactions (and the application of the proceeds thereof as
contemplated by Section 4.17 hereof and the other Transaction Documents) no
Default or Event of Default shall have occurred and be continuing and no default
or event of default shall have occurred and be continuing under any of the other
Financing Documents or under the Credit Documents.
3.3. Compliance Certificates.
-----------------------
(a) Officer's Certificate. The Company shall have delivered to
---------------------
such Purchaser an Officer's Certificate, dated the Closing Date, in the form of
Exhibit 3.03(a) hereto, certifying that the conditions specified in Sections
---------------
3.1, 3.2, 3.5, 3.6, 3.7, 3.9, 3.12, 3.13 and 3.14 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to
-----------------------
such Purchaser a certificate in the form of Exhibit 3.03(b) hereto certifying as
---------------
to the Company's certificate of incorporation, bylaws and resolutions attached
hereto, the incumbency and signatures of certain officers of the Company, and
other corporate proceedings of the Company relating to the authorization,
execution and delivery of the Notes, this Agreement and the other Transaction
Documents to which the Company is a party.
-30-
3.4. Opinions of Counsel. Such Purchaser shall have received
-------------------
opinions in form and substance satisfactory to it, dated the date of such
Closing, from Irell & ▇▇▇▇▇▇▇ LLP, counsel for the Company, substantially in the
form set forth in Exhibit 3.04 and as to such other matters as such Purchaser
------------
may reasonably request.
3.5. Changes in Corporate Structure. Except for the consummation of
------------------------------
the Merger on the Initial Closing Date and the Merger Agreement, neither the
Company nor any of its Subsidiaries shall have changed their respective
jurisdiction of incorporation or been a party to any merger or consolidation or
succeeded to all or any substantial part of the liabilities of any other Person
at any time following the Audit Date and there shall have occurred no event
which constitutes a Change of Control of the Company and the Company shall not
have entered into any agreement or understanding which, if consummated, would
constitute a Change of Control of the Company.
3.6. Refinancing. Except for the Existing Indebtedness, on the
-----------
Initial Closing Date, all Indebtedness of the Company and each of its
Subsidiaries shall have been repaid in full and such Purchaser shall have
received evidence of such repayment satisfactory to the Purchaser and such
Purchaser's special counsel.
3.7. Merger; Credit Agreement; Buyer Cash Contribution; Minimum
----------------------------------------------------------
Aggregate Proceeds.
------------------
(a) Merger. Prior to or simultaneously with the Closing of the
------
sale and purchase of the Notes, (i) in the case of any Closing on the Initial
Closing Date, all of the conditions to the Merger set forth in the Merger
Agreement shall have been satisfied or waived on terms and conditions
satisfactory to such Purchaser or (ii) in the case of any other Closing, the
Merger shall have been consummated on the terms provided in the Merger Agreement
on the date hereof, and in each case the Purchaser shall have received evidence
satisfactory to the Purchaser and such Purchaser's special counsel of the
foregoing.
(b) Credit Documents. The Credit Documents (i) shall be on the
----------------
Initial Closing Date in the form satisfactory to the Purchaser and such
Purchaser's special counsel, (ii) shall have been duly authorized, executed and
delivered by the parties thereto, (iii) shall constitute a valid, binding and
enforceable obligation of the parties thereto and shall be in full force and
effect and (iv) no default on the part of any party thereto shall exist
thereunder.
-31-
(c) Buyer Cash Contribution. Buyer shall have received the Buyer
-----------------------
Cash Contribution on terms and conditions satisfactory to the Purchaser and such
Purchaser's special counsel.
(d) Minimum Aggregate Proceeds. Prior to or simultaneously with
--------------------------
the consummation of the Merger, Holdings and the Company shall have received not
less than an aggregate amount of $16,313,059.46 in cash proceeds from the
purchase of Class A Common Stock under the Subscription Agreement and revolving
loans made under the Credit Agreement and on or prior to the time of such
Closing the Purchasers shall have purchased the Senior Discount Notes and the
Senior Discount Note Shares.
3.8. Commitment Fee. Such Purchaser shall have received from the
--------------
Company the portion of the Commitment Fee allocable to it pursuant to Section
2.2.
3.9. Material Adverse Effect. No event or events shall have
-----------------------
occurred since the Initial Closing Date which, individually or in the aggregate,
have had or would reasonably be expected to have a Material Adverse Effect.
3.10. Financial Information. Such Purchaser shall have received a
---------------------
pro forma consolidated balance sheet for the Company and its Subsidiaries as of
such Closing Date after giving effect to the Transactions, including the
issuance of the Notes and the use of the proceeds thereof, which have been
certified by the chief financial officer of the Company and which are in form
and substance satisfactory to such Purchaser.
3.11. Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated by this Agreement and the other
Transaction Documents, and all documents and instruments incident to such
transactions and the terms thereof, shall be reasonably satisfactory to such
Purchaser and such Purchaser's special counsel, and such Purchaser and the
Purchaser's special counsel shall have received all such counterpart originals
or certified or other copies of such documents as it or they may reasonably
request.
3.12. Purchaser Permitted By Applicable Law, etc. On such Closing
-------------------------------------------
Date, such Purchaser's purchase of the Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which it is subject, (b) not violate any
Applicable Law (including, without limitation, Regulation U, T or X of the Board
of Governors of the Federal Reserve System) and (c) not subject such
-32-
Purchaser to any tax, penalty or liability under or pursuant to any Applicable
Law, which Applicable Law was not in effect on the date hereof.
3.13. Transaction Documents in Force and Effect; Information.
------------------------------------------------------
(a) Transaction Documents. The Purchasers shall have received true
---------------------
and correct copies of all Transaction Documents and such documents (i) shall
have been duly executed and delivered by the parties thereto, (ii) shall be in
form and substance reasonably satisfactory to the Purchasers and (iii) shall be
valid and binding obligation of the parties thereto enforceable against each of
them in accordance with its respective terms, subject to the Enforceability
Exceptions.
(b) Accuracy of Information. All information furnished by the
-----------------------
Company and its representatives to the Purchasers on or prior to the time of
such Closing with respect to the business and financial condition of the Company
and its Subsidiaries shall be accurate and complete in all material respects.
3.14. No Violation; No Legal Constraints; Consents, Authorizations
---------------------------------------------------------------
and Filings, etc.
----------------
(a) The consummation by the Company and its Subsidiaries of the
Transactions shall not contravene, violate or conflict with any Applicable Law,
except for violations which, individually or in the aggregate, do not, and could
not reasonably be expected to, have a Material Adverse Effect.
(b) All consents, authorizations and filings, if any, required in
connection with the execution, delivery and performance by each of the Company
and its Subsidiaries of the Transaction Documents to which it is a party shall
have been obtained or made and shall be in full force and effect, except for
such consents, authorizations and filings the failure of which to obtain or
make, individually or in the aggregate, do not, and would not reasonably be
expected to, have a Material Adverse Effect.
(c) There shall be no inquiry, injunction, restraining order,
action, suit or proceeding pending or entered or any statute or rule proposed,
enacted or promulgated by any Governmental Authority or any other Person which,
in the opinion of the Purchasers, (i) individually or in the aggregate, has had
or would reasonably be expected to have a Material Adverse Effect or which seeks
to enjoin or seek damages against the Company or its Subsidiaries or any of the
Purchasers as a result of the Transactions, including the Merger or the issuance
of the Notes, Senior Discount Notes, Senior Discount Note Shares or
-33-
Shares or (ii) relates to any of the Transactions and has or will have a
material adverse effect on any Purchaser or (iii) alleges liability on the part
of any Purchaser in connection with this Agreement, any other Transaction
Documents or the transactions contemplated hereby or thereby or (iv) would bar
the issuance of the Notes, Senior Discount Notes, Senior Discount Note Shares or
Shares or the use of the proceeds thereof in accordance with the terms of this
Agreement and the other Transaction Documents.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Purchasers as of the date
hereof and on each Closing Date (in each case both before and after giving pro
forma effect to the issuance of the Notes to be issued on such Closing Date and,
if such Closing Date is the Initial Closing Date, to the consummation on such
Closing Date of the Merger, the transactions contemplated by this Agreement and
the other Transaction Documents, the issuance of the Senior Discount Notes and
the Shares, and in each case the application of the proceeds thereof) that:
4.1. Due Incorporation; Power and Authority. Each of the Company and
--------------------------------------
each of its Subsidiaries (a) is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, (b) is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, other than any failures to so qualify or to be in
good standing which, individually or in the aggregate, have not had and would
not be reasonably expected to have a Material Adverse Effect, (c) has full
corporate power and authority to own, lease and operate its properties and to
conduct its businesses as they are currently conducted, and (d) has full
corporate power and authority to enter into and perform its obligations under
each of the Transaction Documents to which it is a party.
4.2 Capitalization. As of the date of this Agreement the
--------------
authorized Capital Stock of the Company consists solely of 20,000 shares of
Common Stock, of which 100 shares were issued and outstanding. All the shares of
Common Stock were held by Holdings and no shares of any class of the Capital
Stock of the Company were held by the Company in its treasury or by the
Company's Subsidiaries. The Company (i) has not issued any shares of any class
of its Capital Stock and (ii) has not split, combined or reclassified any of its
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shares of any class of its Capital Stock. All the issued and outstanding shares
of Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable and are free of preemptive rights. There are no securities of the
Company or any of its Subsidiaries that are convertible into or exchangeable for
shares of any Capital Stock of the Company or any of its Subsidiaries, and no
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments which obligate the Company or any of its
Subsidiaries to issue, transfer or sell any shares of Capital Stock of, or other
interests in, the Company or any of its Subsidiaries. There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of Capital Stock of the Company or any of its
Subsidiaries and neither the Company nor any of its Subsidiaries has any awards
or options outstanding under any stock option plans or agreements or any other
outstanding stock-related awards. After the Closing Date, neither the Company
nor any of its Subsidiaries will have any obligation to issue, transfer or sell
any shares of Capital Stock of the Company or its Subsidiaries. There are no
voting trusts or other agreements or understandings to which the Company or any
of its Subsidiaries is a party with respect to the holding, voting or disposing
of Capital Stock of the Company or any of its Subsidiaries. As of the date
hereof, neither the Company nor any of its Subsidiaries has any outstanding
bonds, debentures, notes or other obligations or other securities (other than
the Common Stock) that entitle the holders thereof to vote with the stockholders
of the Company or any of its Subsidiaries on any matter or which are convertible
into or exercisable for securities having such a right to vote.
4.3. Subsidiaries. Schedule 4.03 correctly states as of the Initial
------------ -------------
Closing Date (a) the name of each of the Company's Subsidiaries and any other
Person whose Equity Interests are owned, directly or indirectly, by the Company
(each, an "Equity Investee"), (b) the name of each holder of each class of
---------------
outstanding Capital Stock or other securities of the Company or any of its
Subsidiaries or any Equity Investee and the nature and number of such securities
held by such holder, and (c) the number of authorized, issued and treasury
shares of each Subsidiary of the Company and each Equity Investee. The Company
does not own or control, directly or indirectly, any Capital Stock or other
interest or investment (whether equity or debt) in any Person other than the
Capital Stock of its Subsidiaries and Equity Investees listed on Schedule 4.03.
-------------
Each issued and outstanding share of Capital Stock of each Subsidiary and Equity
Investee of the Company (a) has been duly authorized and validly issued and is
fully paid and nonassessable and free of preemptive rights and (b) except for
any Equity Interests of any Equity Investee not owned directly of indirectly by
the Company as shown on Schedule 4.03, is owned by the Company, directly or
-------------
through Subsidiaries, free and clear of any security interest, mortgage, pledge,
-35-
lien, encumbrance or claim, other than the liens established under the Credit
Documents.
4.4. Due Authorization, Execution and Delivery.
-----------------------------------------
(a) Agreement. This Agreement has been duly authorized, executed
---------
and delivered by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable against it in accordance with its terms,
subject to the Enforceability Exceptions.
(b) Notes and the Exchange Notes. The Notes to be purchased by the
----------------------------
Purchasers from the Company are in the form contemplated by this Agreement, have
been duly authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Company on the Closing Date as provided herein, will
have been duly executed, issued and delivered by the Company, and will
constitute valid and legally binding obligations of the Company, enforceable
against it in accordance with their terms, subject to the Enforceability
Exceptions. If and when the Exchange Notes are issued pursuant to the Exchange
and Registration Rights Agreement and this Agreement in accordance with the
terms thereof and hereof, the Exchange Notes will have been duly and validly
authorized for issuance by the Company, will have been duly executed, issued and
delivered by the Company, and will constitute valid and legally binding
obligations of the Company, enforceable against it in accordance with their
terms, subject to the Enforceability Exceptions.
(c) Exchange and Registration Rights Agreement. The Exchange and
------------------------------------------
Registration Rights Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding obligation of the Company,
enforceable against it in accordance with its terms, subject to the
Enforceability Exceptions.
(d) Other Transaction Documents. Each Transaction Document (other
---------------------------
than those referred to in paragraphs (a) through (c) of this Section 4.04) to
which Holdings, the Company or any of its Subsidiaries is a party (each such
party, a "Company Party") (i) has been duly authorized, executed and delivered
-------------
by each Company Party and (ii) constitutes a valid and legally binding
obligation of each Company Party, enforceable against such Company Party in
accordance with its terms, subject to the Enforceability Exceptions.
4.5. Non-Contravention; Authorizations and Approvals. Neither the
-----------------------------------------------
Company nor any of its Subsidiaries is in violation of its certificate of
incorporation or bylaws (or comparable constituent or governing documents) or
-36-
is in default (or, with the giving of notice, lapse of time or both, would be in
default) under any note, bond, mortgage, indenture, deed of trust, loan or
credit agreement, license, franchise, Permit, lease, contract or other
agreement, instrument, commitment or obligation to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective properties or assets is bound (including, without
limitation, the Credit Agreement), or under which the Company or any of its
Subsidiaries or any of their respective properties or assets is entitled to a
benefit (each, a "Contract"), except for any such defaults that, individually or
--------
in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect. None of (a) the execution and delivery by the Company
or any of its Subsidiaries of any of the Transaction Documents to which they are
a party, (b) the performance by any of them of their respective obligations
thereunder, (c) the consummation of the transactions contemplated thereby or (d)
the issuance and delivery of the Notes hereunder will: (i) violate, conflict
with or result in a breach of any provisions of the certificate of incorporation
or bylaws (or comparable constituent or governing documents) of the Company or
any of its Subsidiaries; (ii) violate, conflict with, result in a breach of any
provision of, constitute a default (or an event which, with notice, lapse of
time or both, would constitute a default) under, result in the termination or in
a right of termination of, accelerate the performance required by or benefit
obtainable under, result in the triggering of any payment or other obligations
(including any repurchase or repayment obligations) pursuant to, result in the
creation of any Lien upon any of the properties of the Company or any of its
Subsidiaries under, or result in there being declared void, voidable, subject to
withdrawal, or without further binding effect, any of the terms, conditions or
provisions of any Contract, except for any such violations, conflicts, breaches,
defaults, accelerations, terminations or other matters which, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect; (iii) require any consent, approval or authorization
of, or declaration, filing or registration with, any Governmental Authority,
except for those consents, approvals, authorizations, declarations, filings or
registrations which have been obtained or made or the failure of which to obtain
or make, individually or in the aggregate, have not had and would not be
reasonably expected to have a Material Adverse Effect; or (iv) violate any
Applicable Laws applicable to the Company, any of its Subsidiaries or any of
their respective property or assets, except for violations which, individually
or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect.
-37-
4.6. Company Financial Statements; Company Reports.
---------------------------------------------
(a) Company Financial Statements. The Company has delivered to the
----------------------------
Purchasers (collectively, the "Company Financial Statements") (i) complete and
----------------------------
correct copies of the consolidated balance sheets of the Company and its
Subsidiaries as of June 30, 1996, 1997 and 1998 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years then
ended, including the footnotes thereto, certified by the Company's independent
certified public accountants, (ii) complete and correct copies of the unaudited
consolidated balance sheets of the Company and its Subsidiaries as of September
30, 1998 and the related unaudited consolidated statements of operations,
stockholders' equity and cash flows for the quarter then ended and (iii) a
complete and correct copy of the consolidated balance sheet of the Company and
its Subsidiaries as of November 30, 1998 and the related unaudited consolidated
statement of operations for the month then ended. Each of the consolidated
balance sheets contained in the Company Financial Statements fairly present the
consolidated financial position of the Company and its Subsidiaries as of its
date and each of the consolidated statements of operations, stockholders' equity
and cash flows included in the Company Financial Statements fairly presents the
consolidated results of operations and income, retained earnings and
stockholders' equity or cash flows, as the case may be, of the Company and its
Subsidiaries for the periods to which they relate (subject, in the case of any
unaudited interim financial statements, to normal year-end adjustments that will
not be material in amount or effect), in each case in accordance with GAAP
applied on a consistent basis during the periods involved, except as noted
therein. All projections provided by the Company to the Purchasers in
connection with the Transactions have been prepared in good faith based on
assumptions believed by management of the Company to be reasonable.
(b) Company Reports. The Company has delivered to the Purchaser
---------------
each registration statement, report or information statement prepared by the
Company since June 30, 1998 (the "Audit Date"), including (i) the Company's
----------
Annual Report on Form 10-K for the year ended June 30, 1998 and (ii) the
Company's Quarterly Report on Form 10-Q for the three months period ended
September 30, 1998, each in the form (including exhibits, annexes and any
amendments thereto) filed with the Commission (collectively, including any such
reports filed subsequent to the date hereof and as amended, the "Company
-------
Reports"). As of their respective dates, (or, if amended, as of the date of
-------
such amendment) the Company Reports did not, and any Company Reports filed with
the Commission subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated
-38-
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presents, or will fairly
present, the consolidated financial position of the Company and its subsidiaries
as of its date and each of the consolidated statements of operations,
stockholders' equity or cash flows included in or incorporated by reference into
the Company Reports (including any related notes and schedules) fairly presents,
or will fairly present, the results of operations and income, retained earnings
and stockholders' equity or cash flows, as the case may be, of the Company and
its Subsidiaries for the periods to which they relate (subject, in the case of
unaudited statements, to normal year-end audit adjustments that will not be
material in amount or effect), in each case in accordance with GAAP con
sistently applied during the periods involved, except as may be noted therein.
4.7. Absence of Undisclosed Liabilities or Events.
--------------------------------------------
(a) Except for the amounts disclosed to, and approved in writing
by, the GSMP Purchasers pursuant to Section 4.25 hereof and the liabilities and
obligations arising under the Financing Document or the Credit Documents,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations, whether accrued, contingent or otherwise, except (i) for
liabilities and obligations in the respective amounts reflected or reserved
against in the consolidated balance sheet as of the Audit Date included in the
Company Financial Statements, (ii) borrowings under the Company's existing
revolving credit facility in the ordinary course of business or (iii)
liabilities and obligations incurred in the ordinary course of business since
the Audit Date which, individually or in the aggregate, have not had and would
not reasonably be expected to have a Material Adverse Effect.
(b) Since the Audit Date there has been no change in the financial
condition, results of operations, business, properties or prospects of the
Company or its Subsidiaries except for changes that, individually or in the
aggregate, have not had or would not reasonably be expected to have a Material
Adverse Effect. There are no facts known to the Company that have had or would
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Disclosure Schedule.
4.8. No Actions or Proceedings. Except as set forth in Schedule
-------------------------
4.8, there are no legal or governmental actions, suits or proceedings pending
or, to the best of the Company's knowledge, threatened against or affecting the
Company, any of its Subsidiaries, any of their directors or officers (in their
-39-
capacities as such) or any of their property or assets which, individually or in
the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect or to prohibit, delay or materially restrict the consummation of
any of the transactions contemplated by the Transaction Documents. To the
knowledge of the Company, no Governmental Authority has notified the Company of
an intention to conduct any audit, investigation or other review with respect to
the Company or any of its Subsidiaries, except for those investigations or
reviews which, individually or in the aggregate, have not had or would not be
reasonably expected to have a Material Adverse Effect.
4.9. Title to Properties. Except as set forth in Schedule 4.9, each
------------------- ------------
of the Company and its Subsidiaries has (a) good and marketable title to and fee
simple ownership of, or a valid and subsisting leasehold interest in, all of its
real property, and (b) good title to, or a valid and subsisting leasehold
interest in, all of its equipment and other personal property, in each case free
and clear of all Liens, except Permitted Liens. The Company and its
Subsidiaries have paid or discharged, or reserved for, all lawful claims which,
if unpaid, might become a Lien (other than a Permitted Lien) against any
property or assets of the Company or its Subsidiaries.
4.10. Intellectual Property Rights. The Company and its Subsidiaries
----------------------------
own or possess all Intellectual Property reasonably necessary to conduct their
businesses as now conducted, except where the expiration or loss of any of such
Intellectual Property, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. To the best knowledge of the
Company and its Subsidiaries, (a) there is no infringement of, or conflict with,
such Intellectual Property by any third party and (b) the conduct of their
businesses as currently conducted do not infringe or conflict with any
Intellectual Property of any third party, in each case other than any such
infringements or conflicts which, individually or in the aggregate, have not had
or would not reasonably be expected to have a Material Adverse Effect.
4.11. Taxes.
-----
(a) all Tax Returns that are required to be filed on or before the
Closing Date by or with respect to the Company or the Tax Subsidiaries, have
been or will be timely filed on or before the Closing Date, and all such Tax
Returns are or will be true and complete in all material respects;
(b) all Taxes shown to be due on the Tax Returns referred to in
clause (a) have been or will be timely paid in full;
-40-
(c) adequate provision has been made for the payment of Taxes for
which the Company or Tax Subsidiaries may be liable for the periods ending after
the Closing Date that are not yet due and payable;
(d) the Tax Returns referred to in clause (a) have been examined by
the Internal Revenue Service or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired;
(e) all deficiencies asserted or assessments made as a result of
such examinations have been paid in full;
(f) no issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns referred
to in clause (a) are currently pending;
(g) no waivers of statutes of limitation have been given by or
requested with respect to any Taxes of the Company or the Tax Subsidiaries;
(h) neither the Company nor the Tax Subsidiaries will be required,
as a result of (i) a change in accounting method to include any adjustment under
Section 481(c) of the Code (or any similar provision of state, local or foreign
law) in taxable income for any Tax period ending on or after the Closing Date,
or (ii) any "closing agreement" as described in Section 7121 of the Code (or any
similar provision of state, local or foreign Tax law), to include any item of
income in or exclude any item of deduction from any Tax period ending on or
after the Closing Date;
(i) there are no Liens on any of the assets of the Company or the
Tax Subsidiaries that arose in connection with any failure (or alleged failure)
to pay any Tax;
(j) the Company and the Tax Subsidiaries have never been a member of
an affiliated, combined, consolidated or unitary Tax group for purposes of
filing any Tax Return other than for purposes of filing U.S. federal income tax
returns, a group of which Holdings was the common parent;
(k) no closing agreements, private letter rulings, technical advance
memoranda or similar agreement or rulings have been entered into or issued by
any taxing authority with respect to the Company or the Tax Subsidiaries;
-41-
(l) neither the Company nor any Tax Subsidiary or any predecessors
to any of such entities has made any consent under Section 341 of the Code with
respect to the Company or any Tax Subsidiary; and
(m) all interest on debt issued by the Company pursuant to this
Agreement (including original issue discount if any) will be deductible in full,
as such interest accrues, by the Company for federal income tax purposes.
4.12. Employee Benefit Plans.
----------------------
(a) There has been no failure by any employee benefit plan, within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which is maintained by the Company or any of its
-----
Subsidiaries or to which the Company or any of its Subsidiaries contributes
(each a "Plan") to comply with the applicable requirements of ERISA and the Code
----
other than any such failures that, individually or in the aggregate, have not
had and would not reasonably be expected to have a Material Adverse Effect.
There is no material pending or, to the knowledge of the Company threatened,
litigation relating to the Plans. Neither the Company nor any of its
Subsidiaries has engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject the Company or any of its Subsidiary to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA other than those
that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect.
(b) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by the Company or any of its Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). Neither the Company, any of its subsidiaries nor an
---------------
ERISA Affiliate has contributed to a "multiemployer plan", within the meaning of
Section 3(37) of ERISA, at any time on or after September 26, 1980. No notice
of a "reportable event", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any Plan which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") or by any ERISA Affiliate
------------
within the 12-month period ending on the date hereof.
-42-
(c) Neither any Pension Plan nor any single-employer plan of an
ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA and no
ERISA Affiliate has an outstanding funding waiver. Neither the Company nor any
of its Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(d) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Plan's most recent actuarial valuation),
did not exceed the then current value of the assets of such Plan, and there has
been no material change in the financial condition of such Plan since the last
day of the most recent plan year.
(e) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Plan, except as
required by applicable law or as set forth on Schedule 4.12(e). The Company or
-------
the subsidiaries may amend or terminate any such Plan at any time without
incurring any liability thereunder.
4.13. Private Offering; No Integration or General Solicitation.
--------------------------------------------------------
(a) Subject to compliance by the Purchasers with the representations
and warranties set forth in Section 5 hereof and with the procedures set forth
in Section 10 hereof, it is not necessary in connection with the offer, sale and
delivery of the Notes to the Purchasers and to any Person to whom any Purchaser
sells any of such Notes (each, a "Subsequent Purchaser") in the manner
--------------------
contemplated by this Agreement to register the Notes under the Securities Act,
or, until such time as the Exchange Notes are issued or the Notes or Exchange
Notes are otherwise registered pursuant to an effective registration statement
under the Securities Act, to qualify an indenture relating to the Notes or
Exchange Notes under the TIA.
(b) The Company has not, directly or indirectly, offered, sold or
solicited any offer to buy and will not, directly or indirectly, offer, sell or
solicit any offer to buy, any security of a type or in a manner which would be
integrated with the sale of the Notes and require the Notes to be registered
under the Securities Act. None of the Company, its Affiliates or any person
acting on its or any of their behalf (other than the Purchasers, as to whom the
Company makes no
-43-
representation or warranty) has engaged or will engage in any form of general
solicitation or general advertising (within the meaning of Rule 502(c) under the
Securities Act) in connection with the offering of the Notes. With respect to
the Notes, if any, sold in reliance upon the exemption afforded by Regulation S:
(i) none of the Company, its Affiliates or any person acting on its or their
behalf (other than the Purchasers, as to whom the Company makes no
representation or warranty) has engaged or will engage in any directed selling
efforts within the meaning of Regulation S and (ii) each of the Company and its
Affiliates and any person acting on its or their behalf (other than the
Purchasers, as to whom the Company makes no representation or warranty) has
complied and will comply with the offering restrictions set forth in Regulation
S.
4.14. Eligibility for Resale under Rule 144A. The Notes are eligible
--------------------------------------
for resale pursuant to Rule 144A and will not, at the Closing Date, be of the
same class as securities listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted on a U.S. automated interdealer
quotation system.
4.15. Status Under Certain Statutes. Neither the Company nor any of
-----------------------------
its Subsidiaries is or, after receipt of payment for the Notes and the
consummation of the other transactions contemplated by the Transaction
Documents, will be (a) subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Interstate Commerce Act, each
as amended, (b) an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, or controlled by such a
company, or (c) a "holding company," or a "Subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "Subsidiary" or a
"holding company," within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
4.16. Insurance. Each of the Company and its Subsidiaries are
---------
insured by financially sound institutions with policies in such amounts and with
such deductibles and covering such risks as are generally deemed adequate for
their businesses including, but not limited to, policies covering real and
personal property owned or leased by the Company and its Subsidiaries against
theft, damage, destruction and acts of vandalism.
4.17. Use of Proceeds; Margin Regulations. The Company will apply
-----------------------------------
the proceeds from the sale of the Notes solely to (i) finance the repurchase by
the Company of any Senior Notes that are put to it pursuant to the Change of
Control Offer (as defined in the Senior Note Indenture) made as a result of the
Merger or (ii) finance any acquisitions made by the Company after
-44-
the Initial Closing Date or to refinance any acquisitions made by the Company
after the Initial Closing Date and on or prior to the Change of Control Payment
Date (as defined in the Senior Note Indenture). No part of the proceeds from the
sale of the Notes hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning of Regulation
U, or for the purpose of buying or carrying or trading in any securities. Margin
stock does not constitute more than 5% of the value of the consolidated assets
of the Company and its Subsidiaries and the Company has no present intention
that margin stock will constitute more than 5% of the value 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 Regulation U.
4.18. Existing Indebtedness; Future Liens. Schedule 4.18 sets forth a
----------------------------------- -------------
complete and correct list of all Indebtedness of the Company and its
Subsidiaries that will be outstanding immediately after the consummation of the
Merger except for any such Indebtedness not so scheduled which, in the
aggregate, does not exceed $50,000 (such scheduled and unscheduled Indebtedness,
the "Existing Indebtedness"). Neither the Company nor any Subsidiary of the
---------------------
Company is in default, and no waiver of default is currently in effect, in the
payment of the principal of or interest on any Indebtedness of the Company or
such Subsidiary and no event or condition exists with respect to any
Indebtedness of the Company or any Subsidiary of the Company that would permit
(or that with notice, lapse of time or both, would permit) any Person to cause
such Indebtedness to become due and payable before its Stated Maturity or before
its regularly scheduled dates of payment. Neither the Company nor any of its
Subsidiaries has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property or assets, whether
now owned or hereafter acquired, to be subject to a Lien that would be
prohibited by this Agreement if incurred after the first issuance of Notes.
4.19. Compliance with Laws; Permits. Each of the Company and each of
-----------------------------
its Subsidiaries has complied, and is in compliance, in all material respects
with all Applicable Laws and has all Permits material to, and necessary in, the
conduct of its business as currently conducted and all such Permits are in full
force and effect. No violations have been recorded in respect of any such
licenses, permits and qualifications, and no proceeding is pending or, to the
best knowledge of the Company and its Subsidiaries, threatened to revoke or
limit any Permit, except for violations and proceedings which, individually or
in the aggregate, have not and could not reasonably be expected to have a
Material Adverse Effect. Schedule 4.19 sets forth a list of all such Permits
-------------
and the expiration dates thereof.
-45-
4.20. Solvency. The Company and its Subsidiaries are, and after
--------
giving effect to the Transactions will be, Solvent.
4.21. Affiliate Transactions. Except with respect to transactions
----------------------
occurring on or after the Initial Closing Date as permitted by Section 8.06
hereof: (a) there is no Indebtedness between the Company or any of its
Subsidiaries, on the one hand, and any officer, stockholder, director or
Affiliate (other than the Company or any of its Subsidiaries) of the Company, on
the other, (b) no such officer, stockholder, director or Affiliate provides or
causes to be provided any assets, services or facilities to the Company or any
of its Subsidiaries which, individually or in the aggregate, are material to the
business, assets, condition (financial or otherwise), results of operations or
prospects of the Company and its Subsidiaries, (c) neither the Company nor any
of its Subsidiaries provides or causes to be provided any assets, services, or
facilities to any such officer, stockholder, director or Affiliate which,
individually or in the aggregate, are material to the business, assets,
condition (financial or otherwise), results of operations or prospects of the
Company and its Subsidiaries, and (d) neither the Company nor any Subsidiary
beneficially owns, directly or indirectly, any investment in or issued by any
such officer, director or Affiliate, and (e) no such officer, stockholder,
director or Affiliate has any direct or indirect ownership interest in any
Person with which the Company or any of its Subsidiaries competes or has a
business relationship.
4.22. Material Contracts. Schedule 4.22 contains a true, correct and
------------------ -------------
complete list of all Material Contracts in effect on the Initial Closing Date.
Except as described on Schedule 4.22, as of the Closing Date each Material
-------------
Contract is in full force and effect and no material defaults enforceable
against the Company or any of its Subsidiaries currently exist thereunder. To
the best knowledge of the Company and its Subsidiaries, no party to any Material
Contract intends to terminate such Material Contract.
4.23. No Changes to Applicable Law. To the best knowledge of the
----------------------------
Company, no changes to Applicable Law affecting the Company or any of its
Subsidiaries have occurred since the Audit Date or are currently pending or
threatened, in each case other than those which have not had and would not
reasonably be expected to have a Material Adverse Effect.
4.24. Indebtedness. On the Initial Closing Date, after consummation
------------
of the Transactions, the consolidated Indebtedness of the Company and its
Subsidiaries will not exceed $130 million.
-46-
4.25. Fees. All fees and other expenses payable in connection with
----
the consummation of the Transactions and all other fees payable to GEI or its
Affiliates, in each case by the Company or any of its Subsidiaries, have been
disclosed to, and approved in writing by, the GSMP Purchasers prior to the
Initial Closing Date.
4.26. Brokerage Fees. Except as disclosed in Schedule 4.26, neither
-------------- -------------
the Company nor any of its Subsidiaries has paid, or is obligated to pay, to any
Person any brokerage or finder's fees in connection with the transactions
contemplated hereby or by any other Transaction Documents.
4.27. Documents and Procedures. The agreements, instruments and
------------------------
documents used and the procedures followed by the Company and its Subsidiaries
in the conduct of their business are sufficient to effect the transactions
purported to be effected by such agreements, instruments and documents and to
perfect the liens or security interests purported to be created by such
agreements, instruments and documents, except for failures to effect such
transactions or perfect such security interests which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
4.28. Standards and Procedures. The Company has previously
------------------------
delivered to the Purchasers or will deliver to the Purchasers upon request
copies of the credit and loan standards, procedures and guidelines employed by
the Company and its Subsidiaries. To the Company's knowledge, such standards,
procedures and guidelines are followed by the employees and personnel of the
Company and its Subsidiaries in conducting the business of the Company and its
Subsidiaries, except for failures to follow such standards, procedures and
guidelines which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
4.29. No Unrelated Liabilities. As of the Closing, neither the
------------------------
Company nor any of its Subsidiaries will have any liability unrelated to the
business or operations conducted by the Company and its Subsidiaries. Neither
the Company nor Holdings nor any of its Subsidiaries has since June 30, 1996
made, and will not prior to the Closing make, any payment with respect to any
such liability.
-47-
SECTION 5
REPRESENTATIONS OF THE PURCHASERS
---------------------------------
Each Purchaser severally and not jointly represents and warrants to
the Company as of the date hereof and as of each Closing Date as follows:
5.1. Purchase for Investment.
-----------------------
(a) Such Purchaser is acquiring the Notes for its own account, for
investment and not with a view to any distribution thereof within the meaning of
the Securities Act.
(b) Such Purchaser understands that (i) the Notes have not been
registered under the Securities Act and are being issued by the Company in
transactions exempt from the registration requirements of the Securities Act and
(ii) the Notes may not be offered or sold except pursuant to an effective
registration statement under the Securities Act or pursuant to an applicable
exemption from registration under the Securities Act.
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
(d) Such Purchaser did not employ any broker or finder in
connection with the transactions contemplated in this Agreement.
(e) Such Purchaser is an "Accredited Investor" (as defined in Rule
501 (a) under the Securities Act).
SECTION 6
COVENANTS TO PROVIDE INFORMATION
--------------------------------
The Company covenants and agrees with each Purchaser that until the
principal amount of (and premium, if any, on) all the Notes, and all interest,
Special Interest and other obligations hereunder in respect thereof, shall have
been paid in full:
-48-
6.1. Future Reports to Purchasers.
----------------------------
The Company shall deliver to each Purchaser (for so long as such
Purchaser holds any Notes or the Exchange Notes) and, except for the information
provided in clause (a) below, each Subsequent Purchaser that is an Institutional
Investor:
(a) Monthly Statements. As soon as available but in any event
------------------
within thirty (30) days after the end of each month, duplicate copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such month, and
(ii) consolidated statements of income, stockholders' equity
and cash flows of the Company and its Subsidiaries for such month and for
the portion of the fiscal year ending with such month,
in each case setting forth in comparative form the figures for the corresponding
periods in the prior fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to periodic financial statements generally, and
fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash flows,
subject to changes resulting from normal year-end adjustments that will not be
material in amount or effect, and accompanied by a certificate of the chief
financial officer to the foregoing effect.
(b) Quarterly Statements. As soon as available, but in any event
--------------------
within forty-five (45) days after the end of each quarter, duplicate copies of:
(i) a consolidated and consolidating balance sheet of the
Company and its Subsidiaries as at the end of such quarter, and
(ii) consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries,
for such quarter and for the portion of the fiscal year ending with such
quarter,
in each case setting forth in comparative form the figures for the corresponding
periods in the prior fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to periodic financial statements generally, and
fairly presenting, in all material respects, the financial position of the
companies being
-49-
reported on and their results of operations and cash flows, subject to changes
resulting from normal year-end adjustments that will not be material in amount
or effect, and accompanied by a certificate of the chief financial officer to
the foregoing effect; provided, however, that if the Company is then subject to
the reporting requirements under Section 13 or Section 15(d) of the Exchange
Act, the delivery by the Company to such Purchaser or such Subsequent Purchaser
of a Quarterly Report on Form 10-Q or any successor form within the time periods
above described shall satisfy the requirements of this Section 6.1(b). The
consolidating balance sheet and statements of income, stockholders' equity and
cash flows required by this paragraph may be in the form contained in the notes
to the financial statements included in the Company's Form 10-Q.
(c) Annual Statements. As soon as available, but in any event
-----------------
within ninety (90) days after the end of each fiscal year of the Company,
duplicate copies of:
(i) a consolidated and unaudited consolidating balance sheet
of the Company and its Subsidiaries as at the end of such year, and
(ii) consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries for
such year,
in each case setting forth in comparative form the figures for the prior fiscal
year, all in reasonable detail, prepared in accordance with GAAP, fairly
presenting, in all material respects, the financial position of the companies
being reported on and their results of operations and cash flows, subject to
changes resulting from normal year-end adjustments, and accompanied by:
(A) an opinion thereon of independent certified public
accountants of recognized national standing, which opinion (i) shall
state that such financial statements (other than consolidating
statements) present fairly, in all material respects, the financial
position of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity with
GAAP, and that the examination of such accountants in connection with
such financial statements (other than consolidating statements) has
been made in accordance with generally accepted auditing standards in
the United States, and that such audit provides a reasonable basis for
such opinion in the circumstances, and (ii) shall not contain a "going
concern" or like qualification, or
-50-
any exception or other qualification arising out of the scope of the
audit,
(B) a certificate of such accountants stating that they have
reviewed this Agreement and, if applicable, stating further that based
upon their work performed in connection with their examination of such
financial statements (other than consolidating statements), they are
not aware of any Default or Event of Default specified in Section 11
or, if applicable, the corresponding section of the Agreement, or, if
they are aware of any such Default or Event of Default, specifying the
nature thereof (it being understood that such accountants shall not be
liable, directly or indirectly, for any failure to obtain knowledge of
any such Default or Event of Default unless such accountants should
have obtained knowledge thereof in making an audit in accordance with
generally accepted auditing standards), and
(C) a certificate of the chief financial officer stating that
such financial statements have been prepared in accordance with GAAP
applicable to periodic financial statements generally and fairly
present, in all material respects, the financial position of the
companies being reported on and their results of operations and
income, retained earnings and stockholders' equity, and cash flows,
provided, however, that if the Company is then subject to the reporting
requirements under Section 13 or Section 15(d) of the Exchange Act, the delivery
by the Company to such Purchaser or such Subsequent Purchaser of an Annual
Report on Form 10-K or any successor form within the time periods above
described shall satisfy the requirements of this Section 6.1(c). The
consolidating balance sheet and statements of income, stockholders' equity and
cash flows required by this paragraph may be in the form contained in the notes
to the financial statements included in Company's Form 10-K.
(d) Chief Financial Officer Certificates. Concurrently with the
------------------------------------
delivery of the financial statements referred to in subsections (a) through (c)
of this Section 6.1, a certificate of the chief financial officer of the Company
(i) stating that, to the best of such officer's knowledge after due inquiry,
each of the Company and its respective Subsidiaries has observed or performed
all of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Transaction Documents to be observed,
performed or satisfied by it, and that such officer has obtained no knowledge of
any Default or
-51-
Event of Default except as specified in such certificate, (ii) showing in detail
as of the end of the related fiscal period the figures and calculations
supporting such statement in respect of Sections 8.2 and 8.4 of this Agreement
or, if applicable, the corresponding sections of the Indenture.
(e) Auditors' Reports. Promptly upon receipt thereof, copies of
-----------------
all final reports submitted to the Company or to any of its Subsidiaries by
independent certified public accountants in connection with each annual, interim
or special audit of the books of the Company or any of its Subsidiaries made by
such accountants, including, without limitation, any final comment letter
submitted by such accountants to management in connection with their annual
audit.
(f) Other Information. Promptly upon their becoming available,
-----------------
copies of all financial statements, reports, notices and proxy statements sent
to its securityholders or made available generally by the Company or any of its
Subsidiaries and all regular and periodic reports and all registration
statements and final prospectuses, if any, filed by the Company or any of its
Subsidiaries with any securities exchange or with the Commission or any
Governmental Authority succeeding to any of its functions and, promptly upon
request, such additional financial and other information as any Purchasers may
from time to time reasonably request.
(g) Notice of Default or Event of Default. Promptly, but in any
-------------------------------------
event within three (3) Business Days, after any officer of the Company becomes
aware of the existence of any Default or Event of Default or that any Person has
given any notice or taken any other action with respect to a claimed Default or
Event of Default, a written notice thereof specifying the nature and existence
thereof and what action the Company is taking or proposes to take with respect
thereto.
(h) Additional Information to Holders of Other Indebtedness. Prior
-------------------------------------------------------
to the first consummation of an IPO, simultaneously with the furnishing of such
information to any other holder of Indebtedness of the Company or any of its
Subsidiaries, (i) copies of all other financial statements, reports or
projections with respect to the Company or its Subsidiaries which are broader in
scope or on a more frequent basis than the Company is required to provide under
this Agreement and (ii) copies of all studies, reviews, reports or assessments
relating to environmental matters that reveal circumstances, events or other
matters that would reasonably be expected to have a Material Adverse Effect.
-52-
(i) Changes to Indebtedness. At least 10 days prior thereto,
-----------------------
written notice of any proposed extension, renewal, refinancing or modification
of any Indebtedness exceeding $250,000 of the Company or any of its
Subsidiaries.
SECTION 7
OTHER AFFIRMATIVE COVENANTS
---------------------------
The Company further covenants and agrees with each Purchaser that
until the principal amount of (and premium, if any, on) all the Notes, and all
interest, Special Interest and other obligations hereunder in respect thereof,
shall have been paid in full:
7.1. Preservation of Corporate Existence and Franchises. Subject to
--------------------------------------------------
Section 8 hereof, the Company shall do or cause to be done all things necessary
to preserve and keep in full force and effect (a) its corporate existence, and
the corporate, partnership or other existence of each of its Subsidiaries, in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Company or any such Subsidiary and (b) the
rights (charter and statutory), licenses and franchises of the Company and its
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Subsidiaries if (i) the Board shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and its Subsidiaries, taken as a whole, and (ii) the loss thereof
is not reasonably likely to result in a Material Adverse Effect.
7.2. Maintenance of Properties. The Company will cause all
-------------------------
properties used or useful in the conduct of its business or the business of any
of its Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgement of the Company may be necessary so that the
business carried on in connection therewith may properly and advantageously
conducted at all times; provided, however, that the foregoing shall not prevent
the Company from discontinuing the operation or maintenance of any of such
properties if (i) the Board determines that such discontinuance is desirable in
the conduct of its business or the business of any Subsidiary and (ii) not
reasonably likely to result in a Material Adverse Effect.
-53-
7.3 Taxes.
-----
(a) Payment of Taxes. The Company shall pay or discharge or cause
----------------
to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon the Company
or any of its Subsidiaries or upon the income, profits or property of the
Company or any of its Subsidiaries, and (ii) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any of its Subsidiaries; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings provided
that appropriate reserves therefor are established in the Company's consolidated
financial statements in accordance with GAAP.
(b) Tax Returns. The Company and Tax Subsidiaries shall timely
-----------
file or cause to be filed when due all Tax Returns that are required to be filed
by or with respect to the Company for taxable years ending after the Closing
Date and shall pay any Taxes due in respect of such Tax Returns.
(c) Contest Provisions. The Company shall promptly notify the
------------------
Purchasers in writing upon receipt by the Company or the Tax Subsidiaries or any
of their Affiliates of notice of any pending or threatened federal, state, local
or foreign income or franchise tax audits or assessments which may materially
affect the tax liabilities of the Company.
7.4. Books, Records and Access. The Company and its Subsidiaries
-------------------------
will keep complete and accurate books and records of their transactions in
accordance with good accounting practices on the basis of GAAP applied on a
consistent basis (including the establishment and maintenance of appropriate
reserves). To the extent reasonably required in connection with any resale of
the Notes and upon reasonable notice, the Company shall, and shall cause its
Subsidiaries to, subject to compliance with Applicable Laws and confidentiality
obligations to third parties, give each Purchaser (and, any sales or placement
agent or underwriter participating in such resale) and their authorized
representatives reasonable access during normal business hours to all contracts,
books, records, personnel, offices and other facilities and properties of the
Company and its Subsidiaries and their legal advisors, accountants and, to the
extent available to the Company after the Company uses reasonable efforts to
obtain them, the accountants' work papers, permit each Purchaser (and any such
sales or placement agent or underwriter) to make such copies and inspections
thereof as such Purchaser may reasonably request and furnish each
-54-
Purchaser (and any such sales or placement agent or underwriter) with such
financial and operating data and other information with respect to the business
and properties of the Company and its Subsidiaries as such Purchaser (and any
such sales or placement agent or underwriter) may from time to time reasonably
request; provided, however, that no investigation or information furnished
pursuant to this Section 7.04 shall affect any representations or warranties
made by the Company herein or the conditions to the obligations of the
Purchasers to consummate the transactions contemplated hereby. Any such visits
will be at the expense of such Purchaser.
7.5. Compliance with Law. The Company will, and will cause each of
-------------------
its Subsidiaries to, comply with all Applicable Laws and will obtain and
maintain, and will cause each of its Subsidiaries to obtain and maintain, all
Permits necessary to the ownership of their respective properties or to the
conduct of their respective businesses, in each case to the extent necessary to
ensure that any such non-compliance with Applicable Law or any failure to obtain
or maintain such Permits, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.
7.6. Insurance. The Company shall, and shall cause its Subsidiaries
---------
to, maintain, with financially sound and reputable insurers, insurance with
respect to their respective properties and business against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
estab lished reputations engaged in the same or a similar business and
similarly situated.
7.7. Offer to Repurchase Upon Change of Control.
------------------------------------------
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (a "Change of Control Offer") to each Holder to repurchase all or
-----------------------
any part (equal to $1,000 or an integral multiple thereof) of each Holder's
Notes at an offer price in cash equal to 101% of the principal amount thereof as
of the Change of Control Payment Date, plus accrued and unpaid interest and
Special Interest, if any, thereon to the Change of Control Payment Date (the
"Change of Control Payment"). The Company shall comply with the requirements of
--------------------------
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control, and the
Company shall not be in violation of this Agreement by reason of any act
required by such rule or other applicable law.
-55-
(b) Within 25 days following any Change of Control, the Company
shall mail a notice to each Holder stating:
(i) that the Change of Control Offer is being made pursuant
to this Section 7.7 and that all Notes tendered will be accepted for
payment;
(ii) the purchase price and the purchase date, which shall be
at least 30 but no more than 60 days from the date on which the Company
mails notice of the Change of Control (the "Change of Control Payment
-------------------------
Date");
----
(iii) that any Notes not tendered will continue to accrue
interest;
(iv) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer shall be required to surrender the
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Company or its designated agent for
such purpose at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date;
(vi) that Holders will be entitled to withdraw their election
if the Company or its designated agent for such purpose receives, not later
than the close of business on the second Business Day preceding the Change
of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and
(vii) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof.
-56-
(c) On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer and (ii) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Notes or portions thereof so tendered. The Paying Agent shall promptly mail to
each Holder of Notes so tendered the Change of Control Payment for such Notes,
and the Company shall promptly execute and mail (or cause to be transferred by
book-entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided, however, that
each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
(d) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in a manner, at the times and otherwise in compliance with the
requirements set forth in this Section 7.7 and such third party purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
7.8. Offer to Purchase by Application of Excess Proceeds.
---------------------------------------------------
(a) In the event that, pursuant to Section 8.5 hereof, the Company
shall be required to commence an offer to all Holders to purchase Notes (an
"Asset Sale Offer"), it shall follow the procedures specified in this Section
-----------------
7.8. Each Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
------------
Business Days after the termination of the Offer Period (the "Purchase Date"),
-------------
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 8.5 hereof (the "Offer Amount") or, if less than
------------
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
(b) If the Purchase Date is on or after a Regular Record Date and
on or before the next succeeding Interest Payment Date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such Regular Record Date, and no additional interest shall
be payable to the Holders of Notes tendered and purchased pursuant to the Asset
Sale Offer.
-57-
(c) Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to each of the Holders which shall contain
all instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all
Holders. The notice, which shall govern the terms of the Asset Sale Offer,
shall state:
(i) that the Asset Sale Offer is being made pursuant to this
Section 7.8 and Section 8.5 hereof and the length of time the Asset Sale
Offer shall remain open;
(ii) the Offer Amount, the purchase price and the Purchase
Date;
(iii) that any Note not tendered or accepted for payment shall
continue to accrue interest and Special Interest, if any;
(iv) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall cease
to accrue interest and Special Interest, if any, after the Purchase Date;
(v) that Holders electing to have a Note purchased pursuant
to an Asset Sale Offer may only elect to have all of such Note purchased
and may not elect to have only a portion of such Note purchased;
(vi) that Holders electing to have a Note purchased pursuant
to any Asset Sale Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed to the Company at the address specified in the notice at
least three Business Days before the Purchase Date;
(vii) that Holders shall be entitled to withdraw their election
if the Company receives, not later than the expiration of the Offer Period,
a telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Note the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to
have such Note purchased;
(viii) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall
-58-
select the Notes to be purchased on a pro rata basis (with such adjustments
as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(ix) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
(d) On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Holders an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 7.8. The Company shall promptly (but
in any case not later than five days after the Purchase Date) mail or deliver to
each tendering Holder an amount equal to the purchase price of the Notes
tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Note and deliver it to such Holder, in a
principal amount equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof.
7.9. Further Assurances. The Company shall, upon the request of the
------------------
Holders, execute and deliver such further instruments and do such further acts
as may be reasonably necessary or proper to carry out more effectively the
provisions of this Agreement.
SECTION 8
NEGATIVE COVENANTS
------------------
The Company hereby covenants and agrees with each Purchaser that until
the principal amount of (and premium, if any, on) all the Notes, and all
interest, Special Interest and other obligations hereunder in respect thereof,
shall have been paid in full:
8.1. Stay, Extension and Usury Laws. The Company covenants (to the
------------------------------
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
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any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of its obligations
under the Notes or this Agreement, and the Company hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Purchasers, but shall suffer and permit the execution of every
such power as though no such law has been enacted.
8.2. Restricted Payments.
-------------------
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) or to the direct or indirect holders of the
Company's Equity Interests in their capacity as such (other than dividends or
distributions payable solely in Equity Interests (other than Disqualified Stock)
of the Company or dividends or distributions payable to the Company or any
Wholly Owned Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate of the Company (other than
Equity Interests of a Subsidiary of the Company); (iii) make any principal
payment on, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes or any Subsidiary
Guarantee thereof, except at final maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
-------------------
the time of and after giving effect to such Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(B) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in Section 8.4(a) hereof;
and
(C) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the date
of this Agreement (excluding Restricted Payments permitted
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by clauses (ii) and (iii), and the aggregate cash proceeds referred to in
clause (iv), of the next succeeding paragraph), is less than the sum of (1)
50% of the Consolidated Net Income of the Company for the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing after the date of this Agreement to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (2) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the date of this Agreement of Equity
Interests of the Company or of debt securities of the Company that have
been converted into such Equity Interests (other than Equity Interests (or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (3) to the extent that any Restricted Investment
that was made after the date of this Agreement is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (x) the cash return
of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (y) the initial amount of such Restricted
Investment.
(b) The foregoing provisions shall not prohibit any of the following
if no Default or Event of Default shall have occurred and be continuing
immediately after any such transaction: (i) the payment of any dividend within
60 days after the date of declaration thereof, if at said date of declaration
such payment would have complied with the provisions of this Agreement; (ii) the
redemption, repurchase, retirement or other acquisition of any Equity Interests
of the Company in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Company) of other Equity
Interests of the Company (other than any Disqualified Stock); provided, however,
that the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
clause (C)(2) of the preceding paragraph; (iii) the defeasance, redemption or
repurchase of subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness or the substantially concurrent
sale (other than to a Subsidiary of the Company) of Equity Interests of the
Company (other than Disqualified Stock); provided, however, that the amount of
any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from clause (C)(2)
of the preceding paragraph; (iv) the payment of any distribution or dividend to
Holdings to enable Holdings to (A) pay its overhead expenses, (B) make any
payments it is required to make under the Management Services Agreement (or
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any agreement extending or replacing the Management Services Agreement which
contains the same terms with respect to fees and other terms no less favorable
to the Company and its Subsidiaries) or (C) repurchase, redeem or otherwise
acquire or retire for value of any Equity Interests of Holdings, the Company or
any Subsidiary of the Company held by any member of the Company's (or any of its
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement; provided, however, that the aggregate price
paid for all such repurchased, redeemed, acquired or retired Equity Interests
shall not exceed $1,000,000 in any twelve-month period plus the aggregate cash
proceeds received by the Company or any Subsidiary during such twelve-month
period from any reissu ance of Equity Interests by the Company or any Subsidiary
to members of management of the Company and its Subsidiaries plus any proceeds
received during such 12-month period under key man insurance policies with
respect to such members of management; and provided, further, that any such
aggregate cash proceeds from any such reissuance of Equity Interests shall be
excluded from clause (C)(2) of the preceding paragraph and (v) payments in an
aggregate amount not to exceed $3.0 million since the date of this Agreement in
respect of the purchase, retirement or redemption of Existing Indebtedness for
an amount less than the face amount thereof.
(c) The amount of all Restricted Payments (other than cash) shall
be the fair market value (evidenced by a resolution of the Board of Directors
set forth in an officers' certificate delivered to the Trustee) on the date of
the Restricted Payment of the asset(s) proposed to be transferred by the Company
or such Subsidiary, as the case may be, pursuant to the Restricted Payment. Not
later than the date of making any Restricted Payment, the Company shall deliver
to the Holders an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 8.2 were computed, which calculations may be based upon the
Company's latest available financial statements.
8.3. Dividend and Other Payment Restrictions Affecting Subsidiaries.
--------------------------------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to (a)(i) pay
dividends or make any other distributions to the Company or any of its
Subsidiaries (A) on its Capital Stock or (B) with respect to any other interest
or participation in, or measured by, its profits, or (ii) pay any indebtedness
owed to the Company or any of its Subsidiaries, (b) make loans or advances to
the Company or any of its Subsidiaries or (c) transfer any of its properties or
assets to the Company or any of its Subsidiaries, except for such encumbrances
or
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restrictions existing under or by reason of (i) Existing Indebtedness as in
effect on the date of this Agreement, (ii) the Credit Agreement as in effect as
of the date of this Agreement, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof; provided, however, that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings are no
more restrictive with respect to such dividend and other payment restrictions
than those contained in the Credit Agreement as in effect on the date of this
Agreement, (iii) this Agreement, the Notes, the Holdings Purchase Agreement and
the Senior Discount Notes, (iv) applicable law, (v) by reason of customary non-
assignment provisions in leases, licenses and other agreements entered into in
the ordinary course of business and consistent with past practices, (vi)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (c) above on
the property so acquired, (vii) Permitted Refinancing Indebtedness; provided,
however, that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced, or (viii) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Subsidiaries as in effect at the time of such acquisition
(except to the extent such instrument was created or such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Agreement to be incurred.
8.4. Incurrence of Indebtedness and Issuance of Preferred Stock.
----------------------------------------------------------
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, Guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with re spect to (collectively, "incur") any Indebtedness (including Acquired
-----
Debt) and the Company shall not issue any Disqualified Stock and shall not
permit any of its Subsidiaries to issue any shares of preferred stock; provided,
however, that the Company may incur Indebtedness (including Acquired Debt), and
the Guarantors may guarantee such Indebtedness, and the Company may issue shares
of Disqualified Stock, if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued (in either case,
the "Incurrence Date") would have been at least 2.0 to 1. The foregoing
---------------
-63-
ratio shall be calculated on a pro forma basis giving effect to (i) (x) the
incurrence of the Indebtedness or issuance of the Disqualified Stock giving rise
to such calculation, (y) any other incurrence of Indebtedness (other than
revolving credit borrowings) or issuance of Disqualified Stock subsequent to the
commencement of the four-quarter reference period and (z) in each such case, the
application of the net proceeds therefrom as if such incurrence, issuance and
application had occurred at the beginning of the four-quarter reference period
and (ii) any acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during such four-quarter reference period or
subsequent thereto and prior to the Calculation Date as if they occurred on the
first day of such four-quarter reference period. In addition, the Consolidated
Cash Flow for any such four-quarter reference period shall be calculated (i) to
include the Consolidated Cash Flow of the acquired entities (adjusted to include
any expense or cost reductions for which pro forma treatment would be permitted
under Article 11 of Regulation S-X promulgated under the Securities Act as of
the date of this Agreement), (ii) without giving effect to clause (iii) of the
proviso set forth in the definition of Consolidated Net Income, and (iii) to
exclude the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and to operations or businesses disposed of
prior to the Calculation Date. In calculating the Fixed Charges as of any
Calculation Date, the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and to operations or businesses disposed of
prior to the Calculation Date shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the
referent Person or any of its Subsidiaries following the Calculation Date.
(b) The foregoing provisions shall not apply to: (i) the incurrence
by the Company (and Guarantees thereof by the Guarantors) of Indebtedness (A)
for working capital purposes and letters of credit pursuant to the Credit
Agreement (with letters of credit being deemed to have a principal amount equal
to the maximum potential liability of the Company and its Subsidiaries
thereunder) in an aggregate principal amount not to exceed as of any date of
incurrence the greater of (1) $25.0 million and (2) the amount of the Borrowing
Base; (ii) the incurrence by the Company and its Subsidiaries of the Existing
Indebtedness; (iii) the incurrence by the Company and its Subsidiaries of the
Indebtedness represented by the Notes, and the Subsidiary Guarantees thereof;
(iv) the incurrence by the Company or any of its Subsidiaries of Indebtedness
represented by Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of financing all or any part
of the purchase price or cost of construction or improvement of property, plant
or equipment used in the business of the Company or such Subsidiary, in
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an aggregate principal amount not to exceed $5.0 million at any time
outstanding; (v) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund, Indebtedness
that was permitted by this Agreement to be incurred; (vi) the incurrence by the
Company or any of its Subsidiaries of intercompany Indebtedness between or among
the Company and any of its Wholly Owned Subsidiaries; provided, however, that
(i) if the Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinate to the payment in full of all Obligations with respect to
the Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than the
Company or a Wholly Owned Subsidiary and (B) any sale or other transfer of any
such Indebtedness to a Person that is not either the Company or a Wholly Owned
Subsidiary shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Subsidiary, as the case may be; (vii) the
incurrence by the Company or any of its Subsidiaries of Hedging Obligations that
are incurred for the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by the terms of this
Agreement to be outstanding; (viii) the incurrence by the Company or any of its
Subsidiaries of Indebtedness (in addition to Indebtedness permitted by any other
clause of this paragraph) in an aggregate principal amount (or accreted value,
as applicable) at any time outstanding not to exceed $10.0 million; (ix) the
incurrence by the Company or any of its Subsidiaries of Earn-out Obligations in
an aggregate amount not to exceed $5.0 million at any time outstanding; and (x)
the incurrence by the Company of any term loans under the Credit Agreement not
to exceed $90 million to the extent the proceeds thereof are used to repurchase
Senior Notes put to it pursuant to the Change of Control Offer (as defined in
the Senior Note Indenture) made as a result of the Merger.
(c) For purposes of determining compliance with this Section 8.4,
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of Indebtedness described in clauses (i) through (ix) of the
immediately preceding paragraph, the Company shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with this Section
8.4 and will only be required to include the amount and type of such
Indebtedness in one of such clauses or pursuant to Section 8.4(a). Accrual of
interest, accretion of accreted value and issuance of securities paid-in-kind
shall not be deemed to be an incurrence of Indebtedness for purposes of this
Section 8.4.
-65-
(d) Notwithstanding the foregoing, the Company shall not permit any
of its Subsidiaries to Guarantee any Indebtedness of the Company that by its
terms is pari passu or subordinated in right of payment to the Notes unless such
Guarantee is subordinated in right of payment at least to the same extent as the
Subsidiary Guarantees.
8.5. Asset Sales.
-----------
(a) The Company shall not, and shall not permit any of its
Subsidiaries to: (i) sell, lease, convey or other dispose of any assets
(including, without limitation, by way of a sale and leaseback) other than sales
of inventory in the ordinary course of business consistent with past practices
(provided that the sale, lease, conveyance or otherwise disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole shall be governed by the provisions of Section 7.1 and/or Section 8.11
hereof and not by the provisions of this Section 8.5), or (ii) issue or sell
Equity Interests of any of the Company's Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (A) that have a fair market value in excess of $1.0 million or (B)
for Net Proceeds in excess of $1.0 million (each of the foregoing, an "Asset
-----
Sale"), unless (i) the Company (or the Subsidiary, as the case may be) receives
----
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
officers' certificate delivered to the Holders) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by the Company or such Subsidiary is in the form
of cash; provided, however, that the amount of (x) any liabilities (as shown on
the Company's or such Subsidiary's most recent balance sheet) of the Company or
any Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Notes or any Guarantee thereof) that are assumed
by the transferee of any such assets pursuant to any arrangement releasing the
Company or such Subsidiary from further liability and (y) any notes or other
obligations received by the Company or any such Subsidiary from such transferee
that are immediately converted by the Company or such Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision. Notwithstanding the foregoing, Asset Sales shall not be deemed
to include (i) a transfer of assets by the Company to a Wholly Owned Subsidiary
that is a Guarantor, or by a Wholly Owned Subsidiary to the Company or to
another Wholly Owned Subsidiary that is a Guarantor, (ii) an issuance of Equity
Interests by a Wholly Owned Subsidiary to the Company or to another Wholly Owned
Subsidiary that is a Guarantor, (iii) a Restricted Payment or Permitted
Investment that is permitted by the provisions
-66-
of Section 8.2 hereof and (iv) any conversion of Cash Equivalents into any other
form of Cash Equivalents.
(b) Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds (a) to permanently reduce
Senior Indebtedness or Indebtedness that ranks pari passu with the Notes (and to
correspondingly reduce commitments with respect thereto) or (b) to the
acquisition of a controlling interest in another business, the making of a
capital expenditure or the acquisition of other long-term assets, in each case,
in the same or a similar line of business as the Company was engaged in on the
date of this Agreement. Pending the final application of any such Net Proceeds,
the Company may temporarily reduce revolving credit Indebtedness under the
Credit Agreement or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Agreement. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph shall be
deemed to constitute "Excess Proceeds". When the aggregate amount of Excess
---------------
Proceeds exceeds $5.0 million, the Company shall make an Asset Sale Offer
pursuant to Section 7.8 hereof to purchase the maximum principal amount of Notes
that may be purchased out of the Excess Proceeds, at an offer price in cash in
an amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest and Special Interest, if any, thereon to the date of purchase, in
accordance with the procedures set forth in Section 7.8 hereof. To the extent
that the aggregate principal amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Company shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
8.6. Transactions with Affiliates. The Company shall not, and shall
----------------------------
not permit any of its Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make or amend any contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
---------------------
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
Person and (ii) the Company delivers to the Holders (A) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1.0 million, a resolution of the Board of
Directors set forth in an
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Officers' Certificate certifying that such Affiliate Transaction complies with
clause (i) above and that such Affiliate Transaction has been approved by a
majority of disinterested members of the Board of Directors and (B) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing; provided, however, that the following shall not be deemed to
be an Affiliate Transactions: (a) the payment of Earn-out Obligations pursuant
to agreements entered into at such time as the recipient of such payments was
not an Affiliate of the Company or such Subsidiary, (b) any employment agreement
entered into by the Company or any of its Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such
Subsidiary, (c) transactions between or among the Company and/or its
Subsidiaries, (d) Restricted Payments and Permitted Investments that are
permitted by the provisions of Section 8.2 hereof, (e) the payment of the fees,
expenses and other amounts payable by the Company and its Subsidiaries in
connection with the Transactions that were disclosed to, and approved by, the
Required Holders in writing prior to the Closing Date, (f) the payment of
reasonable and customary regular fees to, and indemnity provided on behalf of,
officers, directors, and employees of the Company or any Subsidiary of the
Company, (g) the payment of fees and other amounts payable by the Company and
its Subsidiaries under the Management Services Agreement (or any agreement
extending or replacing the Management Services Agreement which contains the same
terms with respect to fees and other terms no less favorable to the Company and
its Subsidiaries), (h) payments, advances or loans to officers and employees
that are reasonable and customary and approved by a majority of the
disinterested members of the Board in good faith and (i) the performance of any
of the Financing Documents as in effect as of the date of this Agreement or any
transaction contemplated thereby (including pursuant to any amendment thereto so
long as any such amendment is not disadvantageous to the Holders of the Notes in
any material respect). Notwithstanding anything in this Agreement to the
contrary, neither the Company nor any of its Subsidiaries shall pay any fees to
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P. or any of its Affiliates other than fees provided
for in, and paid in accordance with, Section 2 of the Management Services
Agreement (or the corresponding provisions of any agreement extending or
replacing the Management Services Agreement which contains the same terms with
respect to fees and other terms no less favorable to the Company and its
Subsidiaries).
8.7. Limitation on Ranking of Certain Indebtedness. The Company
---------------------------------------------
shall not incur any Indebtedness which by its terms is both (i) subordinate in
right of payment to any Senior Indebtedness and (ii) senior in right of payment
to the
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Notes (it being understood that Indebtedness shall not be deemed subordinate in
right of payment to other Indebtedness solely by reason of such other
Indebtedness having the benefit of a security interest in property of the
Company).
8.8. Limitation on Liens Securing Company Subordinated Indebtedness.
--------------------------------------------------------------
The Company may not, and may not permit any Subsidiary of the Company, to incur
or suffer to exist any Lien on or with respect to any property or assets now
owned or hereafter acquired to secure any Indebtedness of the Company that is
expressly by its terms subordinate or junior in right of payment to any other
Indebtedness of the Company without making, or causing such Subsidiary to make,
effective provision for securing the Notes (a) equally and ratably with such
Indebtedness as to such property or assets for so long as such Indebtedness will
be so secured or (b) in the event such Indebtedness is subordinate in right of
payment to the Notes, prior to such Indebtedness as to such property or assets
for so long as such Indebtedness will be so secured.
8.9. Limitation on Issuances and Sales of Capital Stock of
-----------------------------------------------------
Subsidiaries. The Company (a) shall not, and shall not permit any Subsidiary of
------------
the Company to, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock of any Subsidiary of the Company to any Person (other than the
Company or a Wholly Owned Subsidiary of the Company), unless (i) such transfer,
conveyance, sale, lease or other disposition is of all the Capital Stock of such
Subsidiary and (ii) the Net Proceeds from such transfer, conveyance, sale, lease
or other disposition are applied in accordance with the provisions of Section
8.5 hereof; provided, however, that this clause (a) shall not apply to any
pledge of Capital Stock of any Subsidiary of the Company securing Indebtedness
under the Credit Agreement, and (b) shall not permit any Subsidiary of the
Company to issue any of its Equity Interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Wholly Owned Subsidiary of the Company.
8.10. Payments for Consents. Neither the Company nor any of its
---------------------
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes in consideration for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Agreement or the Notes
unless such consideration is concurrently offered to be paid or is concurrently
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
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8.11. Merger, Consolidation, or Sale of Assets. The Company shall not
----------------------------------------
consolidate or merge with or into (whether or not the Company is the surviving
corporation), or directly and/or indirectly through its Subsidiaries sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of the properties and assets of the Company and its Subsidiaries taken as a
whole in one or more related transactions, to any other Person unless (a) (i)
the Company is the surviving corporation or (ii) the entity or the Person formed
by or surviving any such consolidation or merger (if other than the Company) or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (the entity or Person described in this clause (ii), the
"Successor Company") is a corporation organized or existing under the laws of
------------------
the United States, any state thereof or the District of Columbia; (b) the
Successor Company assumes all the obligations of the Company under the Notes and
this Agreement pursuant an amendment or supplement to this Agreement and each
other instrument, document or agreement entered into by the Company in
connection therewith, in each case in a form reasonably satisfactory to the
Required Holders; (c) immediately after such transaction no Default or Event of
Default exists; and (d) the Company or the Successor Company (i) will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction and (ii) will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 8.4(a) hereof.
8.12. Successor Company Substituted. Upon any consolidation of the
-----------------------------
Company with, or merger of the Company into, any other Person or any transfer,
conveyance, sale, lease or other disposition of all or substantially all of the
properties and assets of the Company and its Subsidiaries taken as a whole in
one or more related transactions in accordance with Section 8.11, the Successor
Company shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Agreement and the Notes with the same
effect as if such Successor Company had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor Company shall be
relieved of all obligations and covenants under this Agreement and the Notes.
8.13. Additional Subsidiary Guarantees. If the Company or any of its
--------------------------------
Subsidiaries shall acquire or create another domestic Subsidiary after the date
of this Agreement, then such newly acquired or created Subsidiary shall (A)
execute and deliver to the Holders a Subsidiary Guarantee of the Notes in the
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form of Exhibit C hereto and a supplemental agreement substantially in the form
---------
of Exhibit D hereto pursuant to which such Subsidiary shall unconditionally
---------
guarantee all of the Company's obligations under the Notes on the terms set
forth in such supplemental agreement; provided, however, that the foregoing
provision shall not apply to any Subsidiary to the extent that (i) in the
opinion of counsel to the Company, such Subsidiary is unable to execute a
Subsidiary Guarantee by reason of any legal or regulatory prohibition or
restriction and (ii) such Subsidiary is not, directly or indirectly, an obligor
under the Credit Agreement or any other bank facility.
SECTION 9
PROVISIONS RELATING TO RESALES OF NOTES
---------------------------------------
9.1. Private Offerings. The Company and the Purchasers agree that
-----------------
the following provisions will apply to any Private Offerings:
(a) Offers and Sales only to Institutional Accredited Investors or
--------------------------------------------------------------
Qualified Institutional Buyers. Offers and sales of the Notes will be made only
------------------------------
by the Purchasers or Affiliates thereof qualified to do so in the jurisdictions
in which such offers or sales are made. Each such offer or sale shall only be
made (i) to persons whom the offeror or seller reasonably believes to be
Qualified Institutional Buyers, (ii) to a limited number of other institutional
accredited investors (as such term is defined in Rule 501(a)(1), (2), (3) or (7)
of Regulation D) that the offeror or seller reasonably believes to be and, with
respect to sales and deliveries, that are Accredited Investors ("Institutional
-------------
Accredited Investors") or (iii) non-U.S. persons outside the United States to
--------------------
whom the offeror or seller reasonably believes offers and sales of the Notes may
be made in reliance upon Regulation S under the Securities Act.
(b) No General Solicitation. The Notes will be offered by
-----------------------
approaching prospective Subsequent Purchasers on an individual basis. No
general solicitation or general advertising (within the meaning of Rule 502(c)
under the Securities Act) will be used in the United States and no directed
selling efforts (as defined in Regulation S) will be made outside the United
States in connection with the offering of the Notes.
(c) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
---------------------------------
Subsequent Purchaser of a Note acting as a fiduciary for one or more third
parties, in connection with an offer and sale to such purchaser pursuant to
Section 9.1, each third party shall, in the judgment of the applicable
Purchaser, be
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an Institutional Accredited Investor or a Qualified Institutional Buyer or a
non-U.S. person outside the United States.
(d) Restrictions on Transfer. Upon original issuance by the
------------------------
Company, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Notes (and all securities
issued in exchange therefor or in substitution thereof, other than the Exchange
Notes) shall bear such legend as is required under Section 10.4 of this
Agreement or, if applicable, the corresponding section of the Indenture.
(e) No Future Liability. Following the sale of the Notes by the
-------------------
Purchasers to Subsequent Purchasers pursuant to the terms hereof, the Purchasers
shall not be liable or responsible to the Company for any losses, damages or
liabilities suffered or incurred by the Company, including any losses, damages
or liabilities under the Securities Act, arising from or relating to any resale
or transfer of any Note previously sold by the Purchaser in compliance with this
Section 9.1.
9.2. Offering Memorandum.
-------------------
(a) At the request of the Required Holders at any time after one
year from the Closing Date, in order to facilitate the consummation of a Private
Offering or any resales by the Purchasers of the Exchange Notes following the
completion of the Exchange Offer, the Company will prepare and deliver to each
Purchaser copies of an Offering Memorandum describing the terms of the Notes or
Exchange Notes proposed to be sold and of the Offering contemplated by such
resales and containing such other information customarily included in offering
memoranda for similar transactions. The Offering Memorandum for any Offering
will not, as of its date and as of the closing of such Offering, include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing
shall not apply to statements in or omissions from the Offering Memorandum made
in reliance upon and in conformity with information furnished to the Company in
writing by any Purchaser expressly for use in the Offering Memorandum. Without
limiting the foregoing, the Offering Memorandum for any Offering will contain
all the information specified in, and meeting the requirements of, subsection
(d)(4) of Rule 144A and all other applicable regulations. The Company will not
distribute any offering material in connection with any offering and sale of the
Notes or Exchange Notes other than the Offering Memorandum or any other offering
material required or permitted to be distributed by the Commission.
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(b) Prior to distributing, amending or supplementing the Offering
Memorandum (including any amendment or supplement effected through incorporation
by reference of any report under the Exchange Act) in connection with any
Offering, the Company shall furnish to the Purchasers for review a copy of each
such proposed Offering Memorandum, or amendment or supplement thereto, and the
Company shall not distribute, use or file the Offering Memorandum or any such
proposed amendment or supplement to which any Purchaser selling Notes or
Exchange Notes pursuant to such Offering Memorandum (each, a "Selling
-------
Purchaser") may object.
(c) The Offering Memorandum for any Offering as delivered from time
to time shall contain all information that is required to be included in such
Offering Memorandum by the Commission and that is customarily included in
offering materials of such type.
9.3. Amendments and Supplements to the Offering Memorandum. If,
-----------------------------------------------------
prior to the completion of the sale of the Notes or Exchange Notes by the
Purchasers to the Subsequent Purchasers (as evidenced by a notice in writing
from the Purchasers to the Company) in any Offering, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
related Offering Memorandum in order to make the statements therein not contain
a misstatement of a material fact or an omission of a material fact required to
make the statements therein, in the light of the circumstances when the Offering
Memorandum is delivered to a Selling Purchaser or a Subsequent Purchaser and at
the closing of the sales of the Notes or Exchange Notes covered thereby, not
misleading or if, in the opinion of the Selling Purchasers or counsel for the
Selling Purchasers, it is otherwise necessary to amend or supplement the
Offering Memorandum to comply with Applicable Law, then the Company agrees to
promptly prepare (subject to Section 9.2 hereof), and furnish at its own expense
to the Selling Purchasers, amendments or supplements to the Offering Memorandum
so that the statements in the Offering Memorandum as so amended or supplemented
will not contain a misstatement of a material fact or an omission of a material
fact required to make the statements therein, in the light of the circumstances
when the Offering Memorandum is delivered to a Selling Purchaser or a Subsequent
Purchaser and at the closing of the sales of such Notes or Exchange Notes, not
be misleading or so that the Offering Memorandum, as amended or supplemented,
will comply with Applicable Law.
Following the consummation of the Exchange Offer or the effectiveness
of an applicable shelf registration statement with respect to the Securities and
during the period that the registration statement relating to the Exchange Offer
and/or the shelf registration statement is required to remain
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effective pursuant to Section 2(a) and/or 2(b), as applicable, of the Exchange
and Registration Rights Agreement if, in the judgment of any Purchaser, such
Purchaser is required to deliver a prospectus in connection with sales of such
securities, the Company agrees (A) to periodically amend the applicable
registration statement so that the information contained therein complies with
the requirements of Section 10(a) of the Securities Act, (B) to amend the
applicable registration statement or amend or supplement the related prospectus
or the documents incorporated therein when necessary to reflect any material
changes in the information provided therein so that the registration statement
and the prospectus will not contain any untrue statement of a material fact or
omit to state any material fact required to be included or necessary in order to
make the statements therein, in the light of the circumstances existing as of
the date the prospectus is so delivered, not misleading and (C) to provide such
Purchaser with copies of each amendment or supplement filed and such other
documents as such Purchaser may reasonably request.
The Company hereby expressly acknowledges the indemnification and
contribution provisions of Sections 15.2 and 15.3 hereof are specifically
applicable and relate to each Offering Memorandum and registration statement
prepared pursuant to Section 9.2 and this Section 9.3.
9.4. Copies of the Offering Memorandum. The Company agrees to
---------------------------------
furnish to the Selling Purchasers, without charge, as many copies of the
Offering Memorandum in connection with any Offering and any amendments and
supplements thereto as they may reasonably request.
9.5. Blue Sky Compliance. In connection with any public or private
-------------------
distribution of the Notes or Exchange Notes, the Company shall cooperate with
the Selling Purchasers and counsel for the Selling Purchasers to qualify or
register the Notes or Exchange Notes, as applicable, for sale under (or to
obtain exemptions from the application of) the Blue Sky or state securities laws
of those jurisdictions designated by the Selling Purchasers, shall comply with
such laws and shall continue such qualifications, registrations and exemptions
in effect so long as required for the distribution of the Notes or Exchange
Notes, as applicable. The Company shall not be required to qualify as a foreign
corporation or to take any action that would subject it to general service of
process in any such jurisdiction where it is not then qualified or to taxation
as a foreign corporation. The Company will advise the Selling Purchasers
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Notes or Exchange Notes for offering, sale or trading
in any jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification,
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registration or exemption, the Company shall, with the cooperation of the
Selling Purchasers, use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
9.6. Ratings of the Notes. In connection with any Offering of (i)
--------------------
the Notes pursuant to the Demand Registration Statement or the Shelf
Registration Statement, (ii) the Notes pursuant to any Offering pursuant to Rule
144A in which a rating is customarily obtained or (iii) the Exchange Notes, the
Company shall, at the Company's expense, if so requested by the Purchasers, take
all reasonable action necessary to enable Standard & Poor's Ratings Services,
Inc. and ▇▇▇▇▇'▇ Investors Service, Inc. to provide their respective credit
ratings of the Notes or the Exchange Notes.
9.7 The Depositary. The Company will cooperate with the Purchasers
--------------
and use its best efforts to permit the Notes or Exchange Notes, when issued, to
be eligible for clearance and settlement through the facilities of the
Depositary.
9.8. Additional Company Information. For the benefit of holders and
------------------------------
beneficial owners from time to time of Notes or Exchange Notes, the Company
shall, upon the request of any such holder, furnish, at its expense, to holders
and beneficial owners of Notes or Exchange Notes and prospective purchasers of
such securities information ("Additional Company Information") satisfying the
------------------------------
requirements of subsection (d)(4) of Rule 144A.
9.9. Agreement Not to Offer or Sell Additional Securities. During
----------------------------------------------------
the period of 90 days following the later of (a) the date of the Offering
Memorandum in connection with any Offering pursuant to the Exchange Offer
Registration Statement, Demand Registration Statement, Shelf Registration
Statement or any Offering of Notes for an aggregate purchase price of at least
$25,000,000 pursuant to Rule 144A in which the application of this Section 9.9
is necessary in the judgment of a sales agent and (b) the date of the
consummation of such Offering, the Company will not, without the prior written
consent of the Selling Purchasers (which consent may be withheld at the sole
discretion of the Selling Purchasers), directly or indirectly, sell, offer,
contract or grant any option to sell, pledge, transfer or establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act,
or otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any debt
securities of the Company or securities exchangeable for or convertible into
debt securities of the Company (other than as contemplated by this Agreement and
other than to register the Exchange Notes).
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9.10. Exchange and Registration Rights Agreement. The Company shall
------------------------------------------
comply with all provisions and obligations of the Exchange and Registration
Rights Agreement and shall comply with all applicable federal and state
securities laws in connection therewith.
9.11. No Integration. The Company agrees that it will not and (to
--------------
the extent within its control) it will cause its Affiliates not to make any
offer or sale of securities of any class of the Company if, as a result of the
doctrine of "integration" referred to in Rule 502 under the Securities Act, such
offer or sale would render invalid (for the purpose of (a) the sale of the Notes
by the Company to the Purchasers, (b) the resale of Notes or Exchange Notes by
the Purchasers to Subsequent Purchasers or (c) the resale of Notes or Exchange
Notes by such Subsequent Purchasers to others) any applicable exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof
or by Rule 144A or Regulation S thereunder or otherwise.
9.12. Restriction on Repurchases. Until the expiration of two years
--------------------------
after the original issuance of the Notes, the Company will not, and will cause
its Affiliates not to, purchase or agree to purchase or otherwise acquire any
Notes or Exchange Notes which are "restricted securities" (as such term is
defined under Rule 144(a)(3) under the Securities Act), whether as beneficial
owner or otherwise unless, immediately upon any such purchase, the Company or
any Affiliate shall cause such Notes or Exchange Notes to be canceled or shall
not resell such Notes until the expiration of such period.
9.13. DTC Agreement. The Company will, promptly following the
-------------
request of and with the cooperation of the Required Holders, use its best
efforts to cause the Notes or Exchange Notes to be registered in book-entry form
in the name of Cede & Co., as nominee of The Depository Trust Company (the
"Depositary") pursuant to an agreement among the Company and the Depositary in
----------
the form then required by the Depositary.
9.14. PORTAL. The Company will, promptly following the request of
------
and with the cooperation of the holders of a majority of the aggregate principal
amount of the Notes and Exchange Notes, use its best efforts to cause the Notes
and Exchange Notes to be eligible for the National Association of Securities
Dealers, Inc. PORTAL market (the "PORTAL Market").
-------------
9.15. Form D. The Company will file with the Commission, not later
------
than 15 days after each Closing Date, five copies of a notice on Form D under
the Securities Act (one of which will be manually signed by a person duly
authorized by the Company) with respect to the Notes, will otherwise comply with
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the requirements of Rule 503 under the Securities Act, and will furnish promptly
to the Purchasers evidence of each such required timely filing (including a copy
thereof).
9.16. Syndication.
-----------
(a) At any time after one year from the Initial Closing Date, the
Company will, if reasonably requested by the Required Holders, assist the
Purchasers in completing any private or, at any time following the earlier to
occur of an IPO and the first anniversary of the Closing Date, public resale by
the Purchasers of the Notes or Exchange Notes or any portion thereof (including
any such resales of the Notes pursuant to any Offering and any resales of the
Exchange Notes following the completion of the Exchange Offer) in accordance
with the Purchasers' intended method of distribution. Such assistance may, in
each case, include the following:
(i) the Company's using commercially reasonable efforts to
ensure that the distribution efforts benefit materially from the Company's
existing lending relationships;
(ii) direct contact between the Company's senior management
and advisors and prospective purchasers;
(iii) responding to reasonable inquiries of, and providing
answers to, each prospective purchaser who so requests concerning the
Company and its Subsidiaries (to the extent such information is available
or can be acquired and made available to prospective purchasers without
unreasonable effort or expense and to the extent the provision thereof is
not prohibited by Applicable Law or applicable confidentiality
restrictions) and the terms and conditions of the applicable distribution;
(iv) if requested by the Required Holders in connection with
any Offering, (A) preparing an Offering Memorandum to the extent required
by Sections 9.2 and 9.3 and other materials to be used in connection with
the distribution (including assistance in completion of the Purchasers',
any sales or placement agent's, if any, or in the case of an underwritten
offering, the lead managers' and co-managers' reasonable due diligence
review of the Company and its Subsidiaries as an aid to such preparation)
and (B) complying with the procedures set forth in Section 6(d) of the
Exchange and Registration Rights Agreement (other than registration under
the Securities Act of the Notes or Exchange Notes
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being distributed) that would be applicable to such Offering if such
Offering were being made pursuant to a Shelf Registration Statement;
(v) hosting of one or more meetings of prospective
purchasers; and
(vi) promptly preparing and providing to the Purchasers (or
any sales or placement agent therefor and any underwriter thereof) all
information with respect to the Company, including projections, as the
Purchasers (or any sales or placement agent therefor and any underwriter
thereof) may reasonably request. Any such projections that will so be made
available to the Purchasers (or each placement or sales agent, if any,
therefor and each underwriter, if any, thereof) by the Company or any of
its representatives will be prepared in good faith based upon reasonable
assumptions; provided, however, that in no event shall the Company be
required to give any representations or warranties with respect to such
projections.
(b) The Company will allow the Required Holders (or any sales or
placement agent therefor or, in the case of an underwritten offering, the lead
manager and co-managers thereof, in each case, as may be selected by the
Purchasers and is reasonably acceptable to the Company), in consultation with
the Company, to manage all aspects of the distribution, including decisions as
to the selection of institutions to be approached and when they will be
approached, when their commitment will be accepted, which institutions will
participate, the allocations of the commitments among the prospective purchasers
and the amount and distribution of fees among the prospective purchasers.
9.17. Exchange Right. Upon the request of the Required Holders at
--------------
any time or from time to time, the Company will (a) exchange all or any portion
(pro rata among all the Holders) of the outstanding Notes for any other
evidences of indebtedness or debt securities of the Company ("Replacement
-----------
Notes") in the same aggregate principal amount as the then principal amount of
-----
the Notes being exchanged and (b) enter into any such agreements, whether in the
form of an amendment hereto or to any other Financing Document, an indenture, a
note purchase agreement or otherwise (the "New Documents") as the Purchaser
-------------
shall deem necessary or desirable in connection with a resale of the Notes,
whether as a private placement, registered public offering or otherwise. The
Replacement Notes will have identical terms as the Notes for which they are
exchanged except for any changes to the relative ranking, interest rate or yield
for such Replacement Notes which shall be approved by all the Holders; provided,
however, that the aggregate principal amount of all Notes
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and Replacement Notes outstanding and the aggregate cash interest and premium
expense to the Company of all Notes and Replacement Notes outstanding after
giving effect to any such exchange shall not exceed such principal amount or
cash interest and premium expense of the Notes and any Replacement Notes
outstanding immediately before such exchange. Each Replacement Note shall be
subject to the requirements of Sections 10.6 and 10.7 hereof or, if applicable,
the corresponding section of the Indenture. Notwithstanding the foregoing, the
New Documents will (a) contain such additional terms and provisions as are
customarily contained in such documents governing the issuance of debt,
including provisions governing the rights of indenture trustees and/or
administrative agents and bank set-off and sharing provisions, as applicable,
and such other additional terms and provisions as are reasonably requested by
the Purchasers in order to effectuate the resale of the Replacement Notes and
(b) be in such form and will contain such terms and provisions as are necessary
to comply with all Applicable Laws, including in the case of an indenture the
TIA. All Notes and Replacement Notes will vote together as one series on all
matters requiring the vote of the Notes or Replacement Notes except for matters
affecting one series of Notes or Replacement Notes and not affecting another
series of Notes or Replacement Notes. Unless the context otherwise requires, all
references to the Notes herein includes the Replacement Notes and all references
to the Purchasers herein includes any trustee for any indenture pursuant to
which the Replacement Notes are issued.
SECTION 10
THE NOTES
---------
10.1. Form and Execution. The Notes shall be in the form of
------------------
Exhibit A hereto. The Notes shall be executed on behalf of the Company by its
---------
President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
10.2. Terms of the Notes. The terms of the Notes shall be as set
------------------
forth in Exhibit A. Without limiting the foregoing:
---------
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(a) Stated Maturity. The Stated Maturity of the Notes shall be
---------------
December 31, 2006.
(b) Interest. The Notes will bear interest and Special Interest,
--------
if any, on their principal amount and overdue interest and Special Interest as
provided in Exhibit A.
---------
10.3. Denominations. The Notes shall be issuable only in registered
-------------
form without coupons and only in denominations of U.S. $1,000 and any integral
multiple thereof.
10.4. Form of Legend for the Notes. Unless otherwise permitted by
----------------------------
Section 10.7, every Note issued and delivered hereunder shall bear a legend in
substantially the following form:
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS. SUCH SHARES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN
COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE PURCHASE AGREEMENT, DATED
AS OF DECEMBER 18, 1998, BETWEEN DOLLAR FINANCIAL GROUP, INC., GS MEZZANINE
PARTNERS, L.P., GS MEZZANINE PARTNERS OFFSHORE, L.P., STONE STREET FUND 1998,
L.P., BRIDGE STREET FUND 1998, L.P., ARES LEVERAGED INVESTMENT FUND L.P., AND
ARES LEVERAGED INVESTMENT FUND II, L.P. A COPY OF SUCH PURCHASE AGREEMENT IS
AVAILABLE AT THE OFFICES OF THE COMPANY.
10.5. Payments and Computations. All payments of interest on the
-------------------------
Notes shall be paid to the persons in whose names such Notes are registered on
the Security Register at the close of business on the date fifteen days prior
to the related Interest Payment Date(the "Regular Record Date") and all
-------------------
payments of principal on the Notes shall be paid to the persons in whose names
such Notes are registered on the applicable Redemption Date or at Maturity, as
applicable. Principal on any Note shall be payable only against surrender
therefor, while payments of interest on Notes shall be made, in accordance with
this Agreement and subject to applicable laws and regulations, by check mailed
on or before the due date for such payment to the person entitled thereto at
such person's address appearing on the Security Register (or, in the case of a
Holder holding not less than $1,000,000 aggregate principal amount of Notes, by
wire transfer to such account as such Holder shall
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designate by written instructions received by the Company no less than 15 days
prior to any applicable Interest Payment Date, which wire instruction shall
continue in effect until such time as the Holder otherwise notifies the Company
or such Holder no longer is the registered owner of such Note or Notes).
Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
10.6. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
(a) Security Register. The Company shall maintain a register (the
-----------------
"Security Register") for the registration or transfer of the Notes. The name
------------------
and address of the Holder of each Note, records of any transfers of the Notes
and the name and address of any transferee of a Note shall be entered in the
Security Register and the Company shall, promptly upon receipt thereof, update
the Security Register to reflect all information received from a Holder. There
shall be no more than one Holder for each Note, including all beneficial
interests therein.
(b) Registration of Transfer. Upon surrender for registration of
------------------------
transfer of any Note at the office or agency of the Company, the Company shall
execute and deliver, in the name of the designated transferee or transferees,
one or more new Notes, of any authorized denominations and like aggregate
principal amount.
(c) Exchange. At the option of the Holder, Notes may be exchanged
--------
for other Notes, of any authorized denominations and of like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Company shall execute
and deliver the Notes which the Holder making the exchange is entitled to
receive.
(d) Effect of Registration of Transfer or Exchange. All Notes
----------------------------------------------
issued upon any registration of transfer of exchange of Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Agreement, as the Notes surrendered upon such registration
of transfer or exchange.
(e) Requirements; Charges. Every Note presented or surrendered for
---------------------
registration of transfer or for exchange shall (if so required by the Company)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company duly executed, by the Holder thereof
-81-
or his attorney duly authorized in writing. No service charge shall be made for
any registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 8.11 not involving any transfer.
(f) Certain Limitations. If the Notes are to be redeemed in part,
-------------------
the Company shall not be required (i) to issue, register the transfer of or
exchange any Note during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of any such Notes
selected for redemption under Section 12.2 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
10.7. Transfer Restrictions.
---------------------
(a) No Note may be sold, transferred or otherwise disposed of (any
such sale, transfer or other disposition is herein referred to as a "sale"),
----
except in compliance with this Section 10.7.
(b) A Holder may sell Notes to a transferee that is an Accredited
Investor or a Qualified Institutional Buyer; provided, however, that each of the
following conditions is satisfied:
(i) such Holder or transferee represents that it is acquiring
the Note or Notes for its own account and that it is not acquiring such
Note or Notes with a view to, or for offer or sale in connection with, any
distribution thereof (within the meaning of the Securities Act) that would
be in violation of the securities laws of the United States or any state
thereof, but subject, nevertheless, to the disposition of its property
being at all times within its control; and
(ii) such transferee agrees to be bound by the provisions of
this Section 10.7 with respect to any resale of the Notes.
(c) A Holder may sell its Notes to a transferee in accordance with
Regulation S under the Securities Act; provided, however, that each of the
following conditions is satisfied:
(i) if such Holder would be deemed to be the Company, a
distributor or any of their respective affiliates or any person acting on
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behalf of any of the foregoing for purposes of Regulation S under the
Securities Act:
(A) the Company is a "reporting issuer" as such term is defined
in Rule 902(l) under the Securities Act;
(B) any distributor (as defined in Rule 902(c) under the
Securities Act) involved in a sale of Notes has agreed in writing that
all offers and sales of Notes shall be made only in accordance with
the provisions of Rule 903 or Rule 904 under the Securities Act;
(C) all offering materials and documents (other than press
releases) used in connection with offers and sales of the Notes shall
conform to the requirements of Rule 902(h)(2) under the Securities
Act; and
(D) each distributor (as defined in (2) above) selling Notes
to a distributor, dealer (as defined in Section 2(12) of the
Securities Act), or a person receiving a selling concession, fee or
other remuneration in respect of the Notes sold sends a confirmation
or other notice to the purchaser stating that the purchaser is subject
to the same restrictions on offers and sales that apply to a
distributor prescribed by Regulation S under the Securities Act.
(ii) if such exercise and/or sale by a Holder is not governed
by (i) above:
(A) the offer of Notes is not made to a person in the United
States;
(B) either:
(1) at the time the buy order is originated, the
transferee is outside the United States or the Holder and any person
acting on its behalf reasonably believes that the transferee is
outside the United States, or
(2) the transaction is executed in, on or through the
facilities of a designated offshore securities market and neither the
Holder nor any person acting on its behalf knows that the transaction
was pre-arranged with a buyer in the United States;
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(C) no directed selling efforts are made in contravention of
the requirements of Rule 903(b) or 904(b) of Regulation S under the
Securities Act, as applicable; and
(D) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(d) In the event of a proposed exercise or sale that does not
qualify under either Section 10.7(b) or 10.7(c) above, a Holder may sell
its Notes only if:
(i) such Holder gives written notice to the Company of its
intention to exercise or effect such sale, which notice (A) shall describe
the manner and circumstances of the proposed transaction in reasonable
detail and (B) shall designate the counsel for such Holder, which counsel
shall be reasonably satisfactory to the Company;
(ii) counsel for the Holder shall render an opinion, to the
effect that such proposed sale may be effected without registration under
the Securities Act or under applicable Blue Sky laws; and
(iii) such Holder or transferee complies with Sections
10.7(b)(i) and 10.7(b)(ii).
10.8. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated
-------------------------------------------
Note is surrendered to the Company, the Company shall executed and deliver in
exchange therefor a new Notes of the same principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company (a) evidence to its
satisfaction of the destruction, loss or theft of any Note and (b) such security
or indemnity as may be required by then to save each of it and any agent
harmless, then, in the absence of notice that such Note has been acquired by a
bona fide purchaser, the Company shall execute and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of a like principal amount and
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
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Upon the issuance of any new Note this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
10.9. Persons Deemed Owners. Prior to due presentment of a Note for
---------------------
registration of transfer, the Company and any agent of the Company may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note be overdue and neither
the Company nor any agent of the Company shall be affected by notice to the
contrary.
10.10. Cancellation. All Notes surrendered for payment, redemption,
------------
registration of transfer or exchange shall, if surrendered to any Person other
than the Company, be delivered to the Company and shall be promptly canceled by
it. The Company shall cancel any Notes previously issued and delivered
hereunder which the Company may have reacquired.
10.11. Home Office Payment. So long as any Purchaser or its nominee
-------------------
shall be the holder of any Note, and notwithstanding anything contained in this
Agreement or such Note to the contrary, the Company will pay all sums becoming
due on such Note for principal, premium, if any, and interest by such method and
at such address as such Purchaser shall have from time to time specified to the
Company in writing for such purpose, without the presentation or surrender of
such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, such Purchaser shall surrender such
Note for cancellation reasonably promptly after any such request, to the Company
at its principal executive office. Prior to any sale or other disposition of
any Note held by such Purchaser or its nominee such Purchaser will, at its
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election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 10.6. The
Company will afford the benefits of this Section 10.11 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by such
Purchaser under this Agreement and that has made the same agreement relating to
such Note as such Purchaser made in this Section 10.11.
SECTION 11
EVENTS OF DEFAULT
-----------------
11.1. Events of Default. An Event of Default shall exist upon the
-----------------
occurrence of any of the following specified events (each an "Event of
--------
Default"):
(a) the Company defaults in the payment when due of interest or
Special Interest, if any, on the Notes and such default continues for a period
of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at its
Maturity;
(c) the Company fails to comply with any of the provisions of
Section 7.7, 7.9 or 8.2 through 8.11, inclusive, hereof or Section 7.8 of the
Holdings Purchase Agreement, or the Merger is not consummated by the Closing
Date;
(d) the Company fails to observe or perform any other covenant or
other agreement in this Agreement or the Notes and such failure continues for a
period of 60 days after the Company has received a notice of such failure from
any Holder, which notice must specify the failure, demand that it be remedied
and state that the notice is a "Notice of Default";
(e) any representation, warranty, certification or statement made
or deemed to have been made by or on behalf of Holdings, the Company or any
Subsidiary of Holdings or by any officer of Holdings, the Company or any
Subsidiary of Holdings in respect of any Transaction Document or in any
statement or certificate at any time given by or on behalf of Holdings, the
Company or any Subsidiary of Holdings or by any officer of Holdings, the Company
or any Subsidiary of Holdings in writing pursuant hereto or in
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connection herewith or therewith shall be false in any material respect on the
date as of which made;
(f) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
payment of which is Guaranteed by the Company or any of its Subsidiaries),
whether such Indebtedness or Guarantee now exists, or is created after the date
of this Agreement, which default (i) constitutes a failure to pay any portion of
the principal of or premium, if any, or interest on such Indebtedness when due
and payable after the expiration of any applicable grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (ii) shall
---------------
have resulted in such Indebtedness being accelerated or otherwise becoming or
being declared due and payable prior to its stated maturity and, in each case,
the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $5.0
million or more;
(g) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the Company
or any of its Subsidiaries and such judgment or judgments remain unpaid and
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $5.0 million;
(h) the Company or any of its Significant Subsidiaries or any group
of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of a decree or order for relief
against it in an involuntary case or proceeding or to the commencement of
any case or proceeding against it,
(iii) consents to the filing of a petition or to the
appointment of or taking possession by a Custodian of it or for all or any
substantial part of its property,
(iv) makes or consents to the making of a general assignment
for the benefit of its creditors,
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(v) generally is not paying, or admits in writing that it is
not able to pay, its debts as they become due, or
(vi) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, in an involuntary
case or proceeding;
(B) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, or for all or any
substantial part of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, or approves as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of any of the foregoing; or
(C) orders the winding up or liquidation of the Company or
any of its Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary, or
adjudges any of them a bankrupt or insolvent;
and any such order or decree remains unstayed and in effect for 60
consecutive days.
The term "Custodian" means any custodian, receiver, trustee, assignee,
---------
liquidator, sequestrator or similar official under any Bankruptcy Law.
11.2. Remedies. If an Event of Default (other than an Event of
--------
Default specified in Section 11.1(h)) occurs and is continuing, then and in
every such case the Holders of (i) more than 50% in principal amount of the
Notes at the time outstanding until the earlier of (x) the Exchange Offer having
been consummated by the Company or (y) a registration statement permitting the
resales of the Notes having been declared effective by the Commission, and (ii)
thereafter, 25% or more in principal amount of the then outstanding Notes may
declare the principal amount of all the Notes to be due and payable immediately,
by a notice in writing to the Company, and upon any such declaration such
principal amount and any accrued interest and Special Interest,
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if any, shall become immediately due and payable. For the avoidance of doubt, if
any Payment Default or acceleration that constitutes an Event of Default under
Section 11.1(f) shall have occurred and prior to any acceleration under this
Section 11.2 such Payment Default shall have been cured or waived or such
acceleration shall have been rescinded, then from and after such cure, waiver or
rescission, such Event of Default shall no longer be deemed to be continuing. If
an Event of Default specified in Section 11.1(h) occurs and is continuing, the
principal amount of and any accrued interest and Special Interest, if any, on
the outstanding Notes shall automatically, and without any declaration or other
action on the part of any Holder, become immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained, the
Holders of a majority in principal amount of the outstanding Notes, by written
notice to the Company, may rescind and annul such declaration and its
consequences if:
(a) the Company has paid a sum sufficient to pay
(i) all overdue interest and Special Interest on all Notes;
(ii) the principal of (and premium, if any, on) any Notes
which have become due otherwise than by such declaration of acceleration
(including any Notes required to have been purchased pursuant to an offer
to purchase that the Company is required to make hereunder) and any
interest and Special Interest thereon at the rate borne by the Notes; and
(iii) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue Special Interest at the rate
provided therefor in the Notes;
and
(b) all Events of Default, other than the nonpayment of the
principal amount of Notes and interest and Special Interest thereon which have
become due solely by such declaration of acceleration, have been cured or waived
as provided in Section 11.3.
11.3. Waiver of Past Defaults. The Required Holders may on behalf of
-----------------------
the Holders of all the Notes waive any past default hereunder and its
consequences, except a default:
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(a) in the payment of the principal (or premium, if any) or
interest or Special Interest on any Note (including any Note which is required
to have been purchased pursuant to an offer to purchase that the Company is
required to make hereunder), or
(b) in respect of a covenant or provision hereof which under
Section 16.4 cannot be modified or amended without the consent of the Holder of
each outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Agreement; provided, however, no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 12
REDEMPTION
----------
12.1. Right of Redemption. The Notes may be redeemed at the election
-------------------
of the Company at such times, in such amounts and at the Redemption Prices
(together with any applicable accrued interest and any Special Interest to the
Redemption Date) specified in the form of Note attached as Exhibit A hereto.
---------
12.2. Partial Redemptions. In case the Company elects to redeem less
-------------------
than all of the Notes, the Company shall redeem the Notes pro rata from each
Holder. For all purposes of this Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Notes redeemed or to be redeemed only in part, to the portion of
the principal amount of such Notes which has been or is to be redeemed.
12.3. Notice of Redemption. Notice of redemption shall be given by
--------------------
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date, to each Holder of Notes to be redeemed, at his
address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
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(c) if less than all the Outstanding Notes are to be redeemed, the
portion of each Note to be redeemed,
(d) that on the Redemption Date the Redemption Price will become
due and payable upon each such Note to be redeemed and that interest and any
Special Interest thereon will cease to accrue on and after said date, and
(e) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company and at the expense of the Company.
12.4. Deposit of Redemption Price. Prior to any Redemption Date, the
---------------------------
Company shall segregate and hold in trust an amount of money sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) any applicable accrued interest and Special Interest on, all the
Notes which are to be redeemed on that date.
12.5. Notes Payable on Redemption Date. If notice of redemption shall
--------------------------------
have been given as provided above, the Notes so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in the
payment of the Redemption Price and any applicable accrued interest and Special
Interest) such Notes shall not bear interest. Upon surrender of any such Note
for redemption in accordance with said notice, such Note shall be paid by the
Company at the Redemption Price, together with any applicable accrued interest
and Special Interest to the Redemption Date; provided, however, that instalments
of interest or Special Interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Notes, or one or more
Predecessor Notes, registered as such at the close of business on the relevant
Record Dates according to their terms and the provisions of this Agreement.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate provided by the Note.
12.6. Notes Redeemed in Part. Any Note which is to be redeemed only
----------------------
in part shall be surrendered at the principal offices of the Company (with, if
the Company so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company duly executed by, the Holder thereof
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or his attorney duly authorized in writing), and the Company shall execute and
deliver to the Holder of such Note without service charge, a new Note or Notes,
of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
SECTION 13
SUBORDINATION OF NOTES
----------------------
13.1. Notes Subordinate to Senior Indebtedness. The Company covenants
----------------------------------------
and agrees, and each Holder of a Note, by his acceptance thereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Section 13, the payment of the principal of (and premium, if any)
and interest and any Special Interest on each and all of the Notes are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness of the Company. The provisions of this
Section 13 shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Senior Indebtedness is rescinded or
must otherwise be returned by a holder of Senior Indebtedness upon any
Proceeding or otherwise, all as though such payment had not been made.
13.2. Payment Over of Proceeds Upon Dissolution, Etc. In the event
-----------------------------------------------
of (a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company, then and in any such event
specified in clause (a), (b) or (c) above (each such event, if any, herein
sometimes referred to as a "Proceeding") the holders of Senior Indebtedness
----------
shall be entitled to receive or retain payment in full in cash or Cash
Equivalents of all amounts due or to become due on or in respect of all Senior
Indebtedness, before the Holders of the Notes are entitled to receive any
payment or distribution of any kind or character, whether in cash, property or
securities, on account of principal of (or premium, if any) or interest or any
Special Interest on or other obligations in respect of the Notes (including any
interest accruing on or after the filing of any Proceeding relating to the
Company, whether or not allowed in such Proceeding) or on account of any
purchase or other acquisition of Notes by the Company or any Subsidiary of the
Company (all such payments, distributions, purchases and
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acquisitions herein referred to, individually and collectively, as a "Notes
-----
Payment"), and to that end the holders of Senior Indebtedness shall be entitled
-------
to receive, for application to the payment thereof, any Notes Payment which may
be payable or deliverable in respect of the Notes in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section 13.2, the Holder of any Note shall have received any Notes Payment
before all Senior Indebtedness of the Company is paid in full in cash or Cash
Equivalents, then and in such event such Notes Payment shall be paid over or
delivered forthwith to the trustee in bankruptcy or other person making payment
or distribution of assets of the Company for the application to the payment of
all Senior Indebtedness remaining unpaid, to the extent necessary to pay the
Senior Indebtedness in full in cash or Cash Equivalents, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
For purposes of this Section 13 only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or securities
of the Company provided for by a plan of reorganization or readjustment
authorized by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment which
stock or securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent as, or to a greater extent
than, the Notes are so subordinated as provided in this Section 13. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of all or substantially all of its properties and assets as an
entirety to another Person upon the terms and conditions set forth in Section
8.11 shall not be deemed a Proceeding for the purposes of this Section 13.2 if
the Person formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer such properties and assets,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, complies with the conditions set forth in Section 8.11.
13.3. No Payment When Senior Indebtedness in Default. In the event
----------------------------------------------
that any Senior Payment Default (as defined below) shall have occurred and be
continuing, then no Notes Payment shall be made unless and until such Senior
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 in cash or Cash Equivalents. "Senior Payment Default" means
----------------------
any default in the payment of principal of (or premium, if any) or
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interest on Designated Senior Indebtedness when due, whether at the due date of
any such payment or by declaration of acceleration, call for redemption.
Upon the occurrence of a Senior Nonmonetary Default and receipt of
written notice by the Company of the occurrence of such Senior Nonmonetary
Default from any holder of Designated Senior Indebtedness (or any trustee, agent
or other representative for such holder) which is the subject of such Senior
Nonmonetary Default, no payments on account of principal of, premium, if any, or
Notes Payment may be made during a period (the "Payment Blockage Period")
-----------------------
commencing on the date of the receipt by the Company of such notice and ending
the earlier of (i) the date on which such Senior Nonmonetary Default shall have
been cured or waived or ceased to exist or all Designated Senior Indebtedness
which was the subject of such Senior Nonmonetary Default shall have been paid in
full in cash or Cash Equivalents and (ii) the 179th day after the date of the
receipt of such notice. No Senior Nonmonetary Default that existed or was
continuing on the date of the commencement of a Payment Blockage Period may be
made the basis of the commencement of a subsequent Payment Blockage Period
whether or not within a period of 360 consecutive days, unless such Senior
Nonmonetary Default shall have been cured for a period of not less than 90
consecutive days; provided, however, any breach of any financial covenant for a
period commencing after the expiration of a Payment Blockage Period that would
give rise to a new event of default, even though such breach is a breach of a
provision under which a prior event of default previously existed, shall
constitute a new event of default for this purpose. In any event,
notwithstanding the foregoing, no more than one Payment Blockage Period may be
commenced during any 360-day period and there shall be a period of at least 181
days during each 360-day period when no Payment Blockage Period is in effect.
"Senior Nonmonetary Default" means the occurrence or existence and continuance
---------------------------
of an event of default with respect to Senior Indebtedness, other than a Senior
Payment Default, that permits the holders of the Designated Senior Indebtedness
(or a trustee or other agent on behalf of the holders thereof) then to declare
such Designated Senior Indebtedness due and payable prior to the date on which
it would otherwise become due and payable.
The failure to make any payment on the Notes by reason of the
provisions of this Section 13.3 will not be construed as preventing the
occurrence of an Event of Default with respect to the Notes arising from any
such failure to make payment. Upon termination of any period of Payment Blockage
Period the Company shall resume making any and all required payments in respect
of the Notes, including any missed payments.
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In the event that, notwithstanding the foregoing, the Company shall
make any Notes Payment to any Holder prohibited by the foregoing provisions of
this Section 13.3, then and in such event such Notes Payment shall be paid over
and delivered forthwith to the holders of the Senior Indebtedness of the Company
in the same form received and, until so turned over, the same shall be held in
trust by such Holder as the property of the holders of the Senior Indebtedness.
By reason of such subordination, in the event of insolvency by the
Company, unsubordinated creditors of the Company who are not holders of Senior
Indebtedness or of the Notes may recover less, ratably, than holders of Senior
Indebtedness and more, ratably, than Holders of the Notes.
The provisions of this Section 13.3 shall not apply to any Notes
Payment with respect to which Section 13.2 would be applicable.
13.4. Payment Permitted If No Default. Nothing contained in this
-------------------------------
Section 13 or elsewhere in this Agreement or in any of the Notes shall prevent
the Company, at any time except during the pendency of any Proceeding referred
to in Section 13.2 or under the conditions described in Section 13.3, from
making Notes Payments.
13.5. Subrogation to Rights of Holders of Senior Indebtedness. Only
-------------------------------------------------------
after the payment in full in cash or Cash Equivalents of all amounts due or to
become due on or in respect of Senior Indebtedness of the Company and, unless
the holders of Senior Indebtedness shall have the ability to terminate such
commitments, the termination of all commitments in respect thereof, the Holders
of the Notes shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to such Senior Indebtedness until the principal of (and
premium, if any) and interest and any Special Interest on the Notes shall be
paid in full. For purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of the Company of any cash, property or
securities to which the Holders of the Notes would be entitled except for the
provisions of this Section 13, and no payments over pursuant to the provisions
of this Section 13 to the holders of Senior Indebtedness by Holders of the
Notes, shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness of the
Company.
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13.6. Provisions Solely to Define Relative Rights. The provisions of
-------------------------------------------
this Section 13 are and are intended solely for the purpose of defining the
relative rights of the Holders on the one hand and the holders of Senior
Indebtedness on the other hand. Nothing contained in this Section 13 or
elsewhere in this Agreement or in the Notes is intended to or shall (a) impair,
as among the Company, its creditors other than holders of Senior Indebtedness
and the Holders of the Notes, the obligation of the Company, which is absolute
and unconditional (and which, subject to the rights under this Section 13 of the
holders of Senior Indebtedness, is intended to rank equally with all other
general unsecured obligations of the Company), to pay to the Holders of the
Notes the principal of (and premium, if any) and interest and any Special
Interest on the Notes as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of the Notes and creditors of the Company other than the
holders of Senior Indebtedness; or (c) prevent the Holder 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 13 of the
holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to such Holder.
13.7. No Waiver of Subordination Provisions. No right of any present
-------------------------------------
or future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Agreement, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Holders of the Notes, without incurring
responsibility to the Holders of the Notes and without impairing or releasing
the subordination provided in this Section 13 or the obligations hereunder of
the Holders of the Notes to the holders of Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or other wise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; (iv) settle or compromise any such Senior Indebtedness or
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any other liability of any obligor of such Senior Indebtedness to such holder or
any security therefor or any liability issued in respect thereof and apply any
sums by whomsoever paid and however realized to any liability (including,
without limitation, payment of any of the Senior Indebtedness) in any manner or
order; (v) fail to take or to record or otherwise perfect, for any reason or for
no reason, any lien or security interest securing such Senior Indebtedness by
whomsoever granted, exercise or delay in or refrain from exercising any right or
remedy against any obligor or any guarantor or any other Person, elect any
remedy and otherwise deal freely with any obligor and any security for such
Senior Indebtedness or any liability of any obligor to the holders of such
Senior Indebtedness or any liability issued in respect of such Senior
Indebtedness; and (vi) exercise or refrain from exercising any rights against
the Company and any other Person.
13.8. Reliance on Judicial Order or Certificate of Liquidating Agent.
--------------------------------------------------------------
Upon any payment or distribution of assets or securities of the Company referred
to in this Section 13, the Holders of the Notes shall be entitled to rely upon
any order or decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Holders of
Notes, for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Section 13.
13.9. Reliance by Holders of Senior Indebtedness on Subordination
-----------------------------------------------------------
Provisions. Each Holder of a Note, by accepting such Note, acknowledges and
----------
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Note, to acquire and continue to hold, or to continue to hold,
such Senior Indebtedness, and such holder of such Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such Senior Indebtedness.
If a proper claim or proof of debt in the form required in such
proceeding is not filed by or on behalf of all Holders prior to 30 days before
the expiration of the time to file such claims or proofs, then the holders or a
representative of any Senior Indebtedness are hereby authorized, and shall have
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the right (without any duty), to file an appropriate claim on behalf of the
Holders of the Notes.
SECTION 14
SUBSIDIARY GUARANTEES
---------------------
14.1. Subsidiary Guarantees. Each of the Guarantors hereby, jointly
---------------------
and severally, unconditionally guarantees, on a senior subordinated basis, to
each Holder of a Note executed and delivered by the Company, irrespective of the
validity and enforceability of this Agreement, the Notes or the obligations of
the Company hereunder or thereunder, that: (a) the principal of and premium and
interest, including any Special Interest, if any, on the Notes shall be promptly
paid in full when due, whether at Stated Maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of (and any premium) and
interest and Special Interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders hereunder or thereunder shall be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same shall be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at Stated Maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Guarantors shall be jointly and severally obligated to
pay the same immediately. The Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Agreement, the absence of any action to
enforce the same, any waiver or consent by any Holder with respect to any
provisions hereof or thereof, the recovery of any judgment against the Company,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. Each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenant that this Subsidiary Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Agreement. If any Holder is required by any court or otherwise
to return to the Company or Guarantors, or any Custodian, trustee, liquidator or
other similar official acting in relation to either the Company or Guarantors,
any amount paid by such Holder, this Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.
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Each Guarantor agrees that it shall not be entitled to any right of subrogation
in relation to the Holders of Notes in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders, on the other hand, (a) the Maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 11 for the purposes of this
Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby and
(b) in the event of any declaration of acceleration of such obligations as
provided in Section 11, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Subsidiary Guarantee. The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders under the Subsidiary Guarantees.
14.2. Execution and Delivery of Subsidiary Guarantees. To evidence
-----------------------------------------------
its Subsidiary Guarantee set forth in Section 14.1, each Guarantor hereby agrees
that this Agreement shall be executed on behalf of such Guarantor by its
President or one of its Vice Presidents and, to the extent not a party to this
Agreement on the date hereof, each Guarantor shall execute and deliver to the
Holders a Subsidiary Guarantee in the form of Exhibit C hereto and a
---------
supplemental agreement substantially in the form of Exhibit D hereto, pursuant
---------
to which such Subsidiary shall become a Guarantor under this Section 14 and
shall guarantee the Obligations of the Company under this Agreement and the
Notes. Concurrently with the execution and delivery of such Subsidiary
Guarantee and such supplemental agreement, such Guarantor shall deliver to the
Holders an opinion of counsel reasonably acceptable to the Purchasers that the
foregoing have been duly authorized, executed and delivered by such Guarantor
and that such Guarantor's Subsidiary Guarantee is a valid and legally binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms.
If an officer whose signature is on this Agreement or on a Subsidiary
Guarantee no longer holds that office at the time the Company executes and
delivers the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary
Guarantee shall be valid nevertheless. The execution and delivery of any Note by
the Company shall constitute due delivery of the Subsidiary Guarantee set forth
in this Agreement on behalf of the Guarantors.
14.3. Guarantors May Consolidate, Etc. On Certain Terms. No Guarantor
-------------------------------------------------
may consolidate with or merge with or into (whether or not such
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Guarantor is the surviving Person), another corporation, Person or entity (other
than the Company or another Guarantor) unless:
(a) subject to the provisions of Section 14.4 hereof, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) unconditionally assumes all the obligations of such Guarantor under
the Notes and this Agreement pursuant to a supplemental agreement, in form and
substance reasonably satisfactory to the Holders;
(b) immediately after giving effect to such transaction, no Default
or Event of Default exists;
(c) such Guarantor, or any Person formed by or surviving any such
consolidation or merger, would have Consolidated Net Worth (immediately after
giving effect to transaction), equal to or greater than the Consolidated Net
Worth of such Guarantor immediately preceding the transaction; and
(d) the Company would be permitted immediately after giving effect to
such transaction, to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in Section 8.4 hereof.
Notwithstanding the foregoing, no Guarantor shall be permitted to consolidate
with or merge with or into (whether or not such Guarantor is the surviving
Person), another corporation, Person or entity pursuant to the preceding
sentence if such consolidation or merger would not be permitted by Section 8.11
hereof.
In case of any such consolidation or merger and upon the assumption by the
successor corporation, by supplemental agreement, executed and delivered to the
Holders and satisfactory in form to the Holders, of the Subsidiary Guarantee
endorsed upon the Notes and the due and punctual performance of all of the
covenants and conditions of this Agreement to be performed by the Guarantor,
such successor corporation shall succeed to and be substituted for the Guarantor
with the same effect as if it had been named herein as a Guarantor. Such
successor corporation thereupon may cause to be signed any or all of the
Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company. All the Subsidiary
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Agreement as the Subsidiary Guarantees theretofore and thereafter
issued in accordance with the terms of this Agreement as though all of such
Subsidiary Guarantees had been issued at the date of the execution hereof.
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Except as set forth in Section 8 hereof, nothing contained in this
Agreement or in any of the Notes shall prevent any consolidation or merger of a
Guarantor with or into the Company, or shall prevent any sale or conveyance of
the property of a Guarantor as an entirety or substantially as an entirety to
the Company.
14.4. Releases of Subsidiary Guarantees. In the event of (i) a sale
---------------------------------
or other disposition of all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, (ii) a sale or other disposition of all of the
capital stock of any Guarantor or (iii) a distribution of all of the capital
stock of any Guarantor to stockholders of the Company in a transaction that
complies with the provisions of Section 8.2 hereof, such Guarantor (in the event
of a sale or other disposition, by way of such a merger, consolidation,
distribution or otherwise, of all of the capital stock of such Guarantor) or the
corporation acquiring the property (in the event of a sale or other disposition
of all of the assets of such Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee; provided that the Net Proceeds of
such sale or other disposition shall be applied in accordance with the
provisions of Section 8.5 hereof. Any Guarantor not released from its
obligations under its Subsidiary Guarantee shall remain liable for the full
amount of principal of and interest on the Notes and for the other obligations
of any Guarantor under this Agreement as provided in this Section 14.
14.5. Subordination of Subsidiary Guarantees. The Obligations of each
--------------------------------------
Guarantor under its Subsidiary Guarantee pursuant to this Section 14 shall be
junior and subordinated to the Guarantor Senior Indebtedness of such Guarantor
on the same basis as the Notes are junior and subordinated to Senior
Indebtedness of the Company. For the purposes of the foregoing sentence, the
Holders shall have the right to receive and/or retain payments by any of the
Guarantors only at such times as they may receive and/or retain payments in
respect of the Notes pursuant to this Agreement, including Section 13 hereof.
14.6. Limitation on Guarantor Liability. Each Guarantor, and by its
---------------------------------
acceptance of the Notes, each Holder, hereby confirms that it is the intention
of all such parties that the Subsidiary Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any Subsidiary
Guarantee. To effectuate the foregoing intention, the Holders and the Guarantors
hereby irrevocably agree that the obligations of such Guarantor under its
Subsidiary Guarantee and this Section 14 shall be limited to the maximum amount
as will, after giving effect to such maximum amount and all other contingent and
fixed
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liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Section 14, result in the
obligations of such Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.
14.7. Endorsement of Subsidiary Guarantees. To evidence its Subsidiary
------------------------------------
Guarantee set forth in Section 14.01, each Guarantor hereby agrees that a
notation of such Subsidiary Guarantee substantially in the form of Exhibit F
---------
to this Agreement shall be endorsed by an officer of such Guarantor on each Note
authenticated and delivered by the Company.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth
in Section 14.1 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
SECTION 15
EXPENSES, INDEMNIFICATION AND CONTRIBUTION
------------------------------------------
15.1. Expenses. Whether or not the transactions contemplated hereby
--------
are consummated, the Company will pay all costs and expenses (including
reasonable and documented attorneys' and accountants' fees and disbursements)
incurred by the Purchasers or any holder of a Security or Exchange Note in
connection with the Transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement, the Financing Documents or
the Securities (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the Purchaser's reasonable and
documented out-of-pocket expenses in connection with the Purchaser's
examinations and appraisals of the Company's properties, books and records, (b)
the costs and expenses incurred in enforcing, defending or declaring (or
determining whether or how to enforce, defend or declare) any rights or remedies
under this Agreement, the Financing Documents or the Securities or Exchange
Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement, the Financing
Documents or the Securities, or by reason of being a holder of any Security or
Exchange Note; (c) the costs and expenses, including reasonable and documented
consultants' and advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary of the Company or in connection with
any work-out or restructuring of the
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transactions contemplated hereby, by the Financing Documents or by the
Securities. The Company will pay, and will save the Purchasers and each other
holder of a Security harmless from, all claims in respect of any fees, costs or
expenses if any, of brokers and finders in relation to the Transactions.
15.2. Indemnification.
---------------
(a) Indemnification by the Company. The Company agrees to indemnify
------------------------------
and hold harmless (i) each Purchaser and each Person who participates as a
placement or sales agent or as an underwriter in any Offering, including but not
limited to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., (ii) each Person, if any, who controls (within
the meaning of Section 15 or Section 20 of the Exchange Act) any such Person
referred to in clause (i) (any of the Persons referred to in this clause (ii)
being referred to herein as a "Controlling Person") and (iii) the respective
------------------
officers, directors, managing directors, stockholders, partners, employees,
representatives, trustees, fiduciaries, and agents of any Person referred to in
clause (i) or any such Controlling Person (any such Person referred to in clause
(i), (ii) or (iii), a "Purchaser Indemnified Person") against any losses,
----------------------------
claims, damages or liabilities, joint or several, to which such Purchaser
Indemnified Person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in any Offering Memorandum, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact necessary to make the
statements therein, not misleading, (ii) in whole or in part upon any inaccuracy
in any of the representations and warranties of the Company contained herein as
of the date hereof or on and as of the Closing Date as if made on such date,
(iii) in whole or in part upon any failure of the Company to perform its
obligations hereunder or under Applicable Law, including any violation of
Applicable Law resulting from any Offering, (iv) any act or failure to act or
any alleged act or failure to act by any Purchaser Indemnified Person in
connection with, or relating in any manner to, each Offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage or liability (or actions in respect thereof) arising out of or based upon
any matter covered by clause (i) above, (v) the failure of any of the
consolidated balance sheets included in the Company Financial Statements
(including the related notes and schedules) to fairly represent the consolidated
financial position of the Company and its Subsidiaries as of its date, or
failure of any of the consolidated statements of income, stockholders' equity
and cash flows of the Company and its Subsidiaries included in the Company
Financial Statements (including any related notes and schedules) to fairly
represent the results of operations and
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income, retained earning and stockholders' equity or cash flows, as the case may
be, of the Company and its Subsidiaries for the periods set forth therein, in
each case in accordance with GAAP consistently applied during the periods
involved, except as may be noted therein and subject in the case of any interim
financial statements, to normal year-end adjustments that are not material in
amount or effect; (vi) any change in the financial condition, operations,
business, properties or prospects of the Company and its Subsidiaries during the
period from the Audit Date to the Closing Date, inclusive, that, individually or
in the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect that has not been disclosed in writing to the Purchaser
Indemnified Persons; or (vii) the Transactions or the Purchasers' financing
thereof, and will reimburse each such Purchaser Indemnified Person for any legal
and other expenses reasonably incurred by such Purchaser Indemnified Person in
connection with investigating or defending any such action or claims as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in any Offering Memorandum, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by such Purchaser Indemnified Person
expressly for use therein. The indemnity agreement set forth in this Sec tion
15.2(a) shall be in addition to any liabilities that the Company may otherwise
have.
(b) Indemnification by the Purchasers. Each Purchaser agrees,
---------------------------------
severally and not jointly, to indemnify and hold harmless (i) the Company, (ii)
each Controlling Person of the Company and (iii) the respective officers,
directors, employees, representatives and agents of the Company or any such
Controlling Person (any such Person referred to in clause (i), (ii) or (iii), a
"Company Indemnified Person") against any losses, claims, damages or
--------------------------
liabilities, joint or several, to which such Company Indemnified Person may
become subject, under the Securities Act or otherwise insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of a material fact
contained in any Offering Memorandum, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Offering Memorandum, or any amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company by such
Purchaser expressly for use therein; and will reimburse the Company Indemnified
Persons
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for any legal and other expenses reasonably incurred by the Company
Indemnified Persons in connection with investigating or defending any such
actions or claims as such expenses are incurred; provided, however, that the
liability of any Purchaser pursuant to this clause 15.2(b) shall not exceed the
net proceeds that such Purchaser receives in any sale of the Securities or
Exchange Notes pursuant to the Offering in which such Offering Memorandum was
delivered. The indemnity agreement set forth in this Section 15.2(b) shall be
in addition to any liabilities that each Purchaser may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
--------------------------------------------------
receipt by a Purchaser Indemnified Person or a Company Indemnified Person (each,
an "Indemnified Person") of notice of the commencement of any action, such
------------------
Indemnified Person shall, if a claim in respect thereof is to be made against an
indemnifying party under Section 15.2(a) or 15.2(b), as applicable, notify such
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to any Indemnified Person otherwise than under Section 15.2(a) or
15.2(b), as applicable, or to the extent it is not prejudiced as a proximate
result of such failure. In case any such action is brought against any
Indemnified Person and it shall notify an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it shall elect within 30 days after receiving any such
notification, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such Indemnified Person
(who shall not, except with the consent of the Indemnified Person, which consent
shall not be unreasonably withheld, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such Indemnified Person of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such Indemnified Person under such paragraph for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
Indemnified Person, in connection with the defense thereof other than reasonable
costs of investigation. Notwithstanding the foregoing, any Indemnified Person
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Person unless the Indemnified Person
shall have been advised by counsel that representation of the Indemnified Person
by counsel provided by the indemnifying party would be inappropriate due to
actual or potential conflicting interests between the indemnifying party and the
Indemnified Person, including situations in which there are one or more legal
defenses available to the Indemnified Person that are different from or
additional to those available to the indemnifying party; provided, however, that
the indemnifying party shall not,
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in connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all Indemnified Persons, except to the extent that
local counsel, in addition to their regular counsel, is required in order to
effectively defend against such action or proceeding. No indemnifying party
shall, without the written consent of the Indemnified Person, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnified Person is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the Indemnified Person from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any Indemnified Person.
15.3. Contribution. If the indemnification provided for in Section
------------
15.2 is unavailable to or insufficient to hold harmless an Indemnified Person
under paragraph (a), (b) or (c) of Section 15.2 in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the Indemnified Person on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party on the one hand or the
Indemnified Person on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The parties agree that it would not be just and equitable if
contributions pursuant to this Section 15.3 were determined by pro rata
allocation (even if the Indemnified Persons were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 15.3. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
Section 15.3 shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Person in connection with investigating or
defending any such action or claim. Notwithstanding the
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provisions of this Section 15.3, no Purchaser shall be required to contribute
any amount which, when taken together with any amounts paid by such Purchaser
under Section 15.2(b) exceeds the net proceeds that such Purchaser receives in
any sale of the Securities or Exchange Notes pursuant to any Offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
The obligations of the Company and the Purchasers under this Section
15.3 shall be in addition to any liability which the Company and the respective
Purchasers may otherwise have.
15.4. Survival. The obligations of the Company under this Section 15
--------
will survive the payment or transfer of any Note or Exchange Note, the
enforcement, amendment or waiver of any provision of this Agreement and the
termination of this Agreement.
SECTION 16
MISCELLANEOUS
-------------
16.1. Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number set out below if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), (c) the day following the day on which the same has
been delivered prepaid to a reputable national overnight air courier service or
(d) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to the respective
parties at the address set forth below, or at such other address as such party
may specify by written notice to the other party hereto:
(i) if to a GSMP Purchaser or its nominee, to the Purchaser or
its nominee at the address specified for such communications in Schedule A,
----------
with a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, or at such other address as the
Purchaser or its nominee shall have specified to the Company in writing;
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(ii) if to Ares, to it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: ▇▇▇▇ ▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ or at such other address as
Ares shall have specified to the Company in writing;
(ii) if to any other Holder of any Note, to such Holder at the
address of such Holder appearing in the Security Register or such other
address as such other holder shall have specified to the Company in
writing; or
(iv) if to the Company, to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: Chief Executive Officer, President
and Chief Financial Officer, with a copy to GEI, c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Partners, L.P., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, attention: ▇▇▇▇ Annick and Irell & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or at
such other address as the Company shall have specified to the holder of
each Note in writing.
16.2. Benefit of Agreement; Assignments and Participations. Except as
----------------------------------------------------
otherwise expressly provided herein, all covenants, agreements and other
provisions contained in this Agreement by or on behalf of any of the parties
hereto shall bind, inure to the benefit of and be enforceable by their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note or Exchange Note) whether so expressed or not; provided,
however, that the Company may not assign and transfer any of its rights or
obligations without the prior written consent of the other parties hereto and
each such holder.
Nothing in this Agreement or in the Notes or Exchange Notes, express
or implied, shall give to any Person other than the parties hereto, their
successors and assigns and the holders from time to time of the Notes or
Exchange Notes any benefit or any legal or equitable right, remedy or claim
under this Agreement.
16.3. No Waiver; Remedies Cumulative. No failure or delay on the part
------------------------------
of any party hereto or any Holder in exercising any right, power or privilege
hereunder or under the Notes or Exchange Notes and no course of dealing between
the Company and any other party or Holder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under the Notes or Exchange Notes preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein and in the Notes and
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Exchange Notes are cumulative and not exclusive of any rights or remedies which
the parties or Holders would otherwise have. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
the other parties hereto or the Holders to any other or further action in any
circumstances without notice or demand.
16.4. Amendments, Waivers and Consents. This Agreement may be
--------------------------------
amended, and the observance of any term hereof may be waived (either
retroactively or prospectively) with (and only with) the written consent of the
Company and the Required Holders; provided, however, that no such amendment or
waiver may, without the prior written consent of the Holder of each Note and
Exchange Note then outstanding and affected thereby (i) subject any Holder to
any additional obligation, (ii) reduce the principal of (or premium, if any) or
rate of interest or Special Interest on any Note or Exchange Note, (iii)
postpone the date fixed for any payment of principal of (or premium, if any) or
interest or Special Interest on any Note or Exchange Note, (iv) change the
ranking or the priority of the Notes or the percentage of the aggregate
principal amount of the Notes the Holders of which shall be required to consent
or take any other action under this Section 16.4 or any other provision of this
Agreement, (v) amend or waive the provisions of Sections 7.7, 7.8 or 8.5 or any
of the definitions used in such Sections. No amendment or waiver of this
Agreement will extend to or affect any obligation, covenant, agreement, Default
or Event of Default not expressly amended or waived or thereby impair any right
consequent thereon. As used herein, the term this "Agreement" and references
---------
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.
16.5. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
16.6. Reproduction. This Agreement, the other Transaction Documents
------------
and all documents relating, hereto and thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Purchasers at the Closing (except the Securities
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished in connection herewith, may be reproduced by
any photographic, photostatic, microfilm, microcard, miniature
-109-
photographic or other similar process and any original document so reproduced
may be destroyed. The Company agrees and stipulates that, to the extent
permitted by Applicable Law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. This Section 16.06 shall not prohibit the Company, any
other party hereto or any holder of Securities from contesting any such
reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
16.7. Headings. The headings of the sections and subsections hereof
--------
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
16.8. Survival of Covenants and Indemnities. All covenants and
-------------------------------------
indemnities set forth herein shall survive the execution and delivery of this
Agreement, the issuance of the Notes and Exchange Notes, and, except as
otherwise expressly provided herein with respect to covenants, the payment of
principal of the Notes and the Exchange Notes and any other obligations
hereunder.
16.9. Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------
(a) THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.
(b) If any action, proceeding or litigation shall be brought by any
Purchaser or any holder of a Security in order to enforce any right or remedy
under this Agreement or any of the Securities, the Company hereby consents and
will submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent jurisdiction sitting
within the area comprising the Southern District of New York on the date of this
Agreement. The Company hereby irrevocably waives any objection, including, but
not limited to, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
--------------------
such action, proceeding or litigation in such jurisdiction. The Company further
agrees
-110-
that it shall not, and shall cause its Subsidiaries not to, bring any action,
proceeding or litigation arising out of this Agreement or the Securities in any
state or federal court other than any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of New
York on the date of this Agreement.
(c) The Company hereby irrevocably designates CT Corporation System
at an address in New York City designated at the Closing as the designee,
appointee and agent of the Company to receive, for and on behalf of the Company,
service of process in such jurisdiction in any action, proceeding or litigation
with respect to this Agreement, the Notes or any of the other Transaction
Documents. It is understood that a copy of such process served on such agent
will be promptly forwarded by mail to the Company at its address set forth
opposite its signature below, but the failure of the Company to have received
such copy shall not affect in any way the service of such process. The Company
further irrevocably consents to the service of process of any of the
aforementioned courts in any such action, proceeding or litigation by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Company at its said address, such service to become effective thirty (30)
days after such mailing.
(d) Nothing herein shall affect the right of any holder of a Security
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other jurisdiction.
If service of process is made on a designated agent it should be made by either
(i) personal delivery or (ii) mailing a copy of summons and complaint to the
agent via registered or certified mail, return receipt requested.
(e) THE COMPANY HEREBY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE SECURITIES.
16.10. Severability. If any provision of this Agreement is
------------
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable to the extent of such illegality, invalidity or unenforceability
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
16.11. Entirety. This Agreement together with the other Transaction
--------
Documents represents the entire agreement of the parties hereto
-111-
and thereto, and supersedes all prior agreements and understandings, oral or
written, if any, relating to the Transaction Documents or the transactions
contemplated herein or therein.
16.12. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made by the Company herein shall survive the execution and
delivery of this Agreement, the issuance and transfer of all or any portion of
the Notes and Exchange Notes and the payment of principal of the Notes and the
Exchange Notes and any other obligations hereunder issuance and delivery of the
Notes hereunder, regardless of any investigation made at any time by or on
behalf of the Purchasers or any other holder that is Affiliated with the
Purchasers. All statements contained in any certificate delivered by or on
behalf of the Company pursuant to this Agreement shall be deemed representations
and warranties of the Company under this Agreement.
16.13. Construction. Each covenant contained herein shall be
------------
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person, whether or not expressly specified in such provision.
16.14. Incorporation. All Exhibits and Schedules attached hereto are
-------------
incorporated as part of this Agreement as if fully set forth herein.
-112-
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
DOLLAR FINANCIAL GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
GS MEZZANINE PARTNERS, L.P.
By: GS Mezzanine Advisors, L.P.,
its general partner
By: GS Mezzanine Advisors, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Attorney-in-fact
GS MEZZANINE PARTNERS OFFSHORE, L.P.
By: GS Mezzanine Advisors (Cayman), L.P.,
its general partner
By: GS Mezzanine Advisors, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Attorney-in-fact
STONE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: ▇▇▇▇▇▇▇▇-▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, L.P.
By: Stone Street Advantage Corp.
Managing General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Attorney-in-fact
ARES LEVERAGED INVESTMENT FUND, L.P.
By: ARES Management, L.P.
By: ARES Operating Member, LLC,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
ARES LEVERAGED INVESTMENT
FUND II, L.P.
By: ARES Management II, L.P.
By: ARES Operating Member II, LLC,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
---------
[Form of Face of Note]
--------------------
THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
WHILE A REGISTRATION STATEMENT IS IN EFFECT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
THE HOLDER OF THIS NOTE IS SUBJECT TO THE TERMS OF THE PURCHASE AGREEMENT, DATED
AS OF DECEMBER 18, 1998 (THE "AGREEMENT"), AMONG DOLLAR FINANCIAL GROUP, INC.,
---------
GS MEZZANINE PARTNERS, L.P., GS MEZZANINE PARTNERS OFFSHORE, L.P., STONE STREET
FUND 1998, L.P., BRIDGE STREET FUND 1998, L.P., ARES LEVERAGED INVESTMENT FUND,
L.P. AND ARES LEVERAGED INVESTMENT FUND II, L.P.
10 7/8% SENIOR SUBORDINATED NOTES DUE 2006
No. __________ $________
Dollar Financial Group, Inc., a corporation duly organized and
existing under the laws of New York (herein called the "Company", which term
includes any successor Person under the Agreement), for value received, hereby
promises to pay to __________________, or registered assigns, the principal sum
of _____________________ Dollars on December 31, 2006 (the "Stated Maturity
---------------
Date"), and to pay interest thereon from _________, 199 __* or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually in arrears on December 30 and June 30 in each year commencing
__________** and, if different, the date of the Stated Maturity of this Note
(each, an "Interest Payment Date") at the rate of 10 7/8% per annum, until the
---------------------
principal hereof is paid or made available for payment; provided, however, that
(to the extent that the payment of such interest shall be legally enforceable)
any principal of, or premium or installment of interest or Special Interest on,
this Note which is overdue shall bear interest at the rate of 11 7/8% per annum
from the date such amounts are due until they are paid or made available for
payment, and such interest shall be payable on demand; and provided, further,
that if (a) a registration statement under the Securities Act of
---------------------
* Insert original issue date.
** Insert first Interest Payment Date after original issue date.
A-1
1933, as amended (the "Securities Act"), registering this Note for resale (a
--------------
"Resale Registration Statement") shall not have been filed with the Securities
------------------------------
and Exchange Commission (the "Commission") or a registration statement under
----------
the Securities Act (the "Exchange Offer Registration Statement") registering
-------------------------------------
a note substantially identical to this Note (an "Exchange Note") pursuant to
-------------
an exchange offer (the "Exchange Offer") upon the terms and conditions set
--------------
forth in the Exchange and Registration Rights Agreement, dated December 18,
1998 (the "Exchange and Registration Rights Agreement"), among the Company
-------------------------------------------
and GS Mezzanine Partners, L.P., GS Mezzanine Partners Offshore, L.P., Stone
Street Fund 1998, L.P., Bridge Street Fund, 1998, L.P., Ares Leveraged
Investment Fund, L.P. and Ares Leveraged Investment Fund II, L.P. (collectively,
the "Purchasers") shall not have been filed with the Commission, in each case by
----------
the date which is 45 days after the date on which a written request therefore by
the Purchasers in accordance with the terms of the Exchange and Registration
Rights Agreement (the "Request Date"), (b) the Resale Registration Statement has
------------
not become or been declared effective by the date which is 120 days after the
Request Date or the Exchange Offer Registration Statement has not been declared
effective by the date which is 120 days after the Request Date,(c) the Exchange
Offer has not been consummated within 45 business days after the initial
effective date of the Exchange Offer Registration Statement (if the Exchange
Offer is then required to be made) or (d) any Resale Registration Statement or
Exchange Offer Registration Statement required by Section 2(a) or 2(b) of the
Exchange and Registration Rights Agreement is filed and declared effective but
shall thereafter cease to be effective or usable for transfers of Notes during
the periods referred to in such Section 2(a) or 2(b), as applicable, without
being succeeded immediately by an additional registration statement filed and
declared effective (each such event referred to in clauses (a) through (d), a
"Registration Default"), then the Company shall pay, in addition to the interest
---------------------
provided for above, cash interest on the principal amount of this Note ("Special
-------
Interest") to the Holder hereof in an amount equal to 0.5% per annum, which
--------
amount shall increase to 1.0% per annum after the first 120-day period following
the occurrence of the first Registration Default, for the period from and
including the date of occurrence of the first Registration Default until such
time as no Registration Default is in effect (after which such Special Interest
shall cease to be payable). Accrued Special Interest shall be paid semi-
annually on the Interest Payment Dates; and the amount of accrued Special
Interest shall be determined on the basis of the number of days actually
elapsed. Upon the issuance of an Exchange Note in exchange for this Note, any
accrued and unpaid interest (including Special Interest) on this Note shall
cease to be payable to the Holder hereof but such accrued and unpaid interest
(including Special Interest) shall be payable on the next Interest Payment Date
for such Exchange Note to the Holder thereof on the related Regular Record Date.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Note Purchase Agreement, be paid
to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the "Regular Record Date" for such
-------------------
interest, which shall be
A-2
the fifteenth calendar day (whether or not a Business
Day) immediately preceding such Interest Payment Date. Notwithstanding the
foregoing if this Note is issued after a Regular Record Date and prior to an
Interest Payment Date, the record date for such Interest Payment Date shall be
the original issue date.
Payment of the principal of (and premium, if any) and any such
interest or Special Interest on this Note will be made at the principal place of
business of the Company, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest and Special Interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instru ment to be
duly executed under its corporate seal.
Dated:
DOLLAR FINANCIAL GROUP, INC.
By:_______________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
A-3
[Form of Reverse of Note]
-----------------------
This Note is one of a duly authorized issue of Securities of the
Company designated as its 10 % Senior Subordinated Notes Due 2006 (herein called
the "Notes"), limited in aggregate principal amount to $20,000,000, issued and
to be issued pursuant to the Purchase Agreement, dated as of December 18, 1998
(herein called the "Agreement"), among the Company, GS Mezzanine Partners, L.P.,
---------
GS Mezzanine Partners Offshore, L.P., Stone Street Fund 1998, L.P., Bridge
Street Fund 1998, L.P., Ares Leveraged Investment Fund, L.P. and Ares Leveraged
Investment Fund II, L.P. (collectively, the "Purchasers"), to which Purchase
----------
Agreement and all amendments thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company and the Holders of the Notes and of the terms upon which the
Notes are, and are to be, issued and delivered.
The Notes are subject to redemption, upon not less than 30 nor more
than 60 days' notice by mail, as a whole or in part, at any time on or after
December 31, 2001 at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed during
the 12-month period beginning December 31 of the years indicated,
Year Redemption Price
------- -----------------
--------------------------
2001 105.500%
--------------------------
2002 103.667%
--------------------------
2003 101.833%
--------------------------
2004 100.000%
--------------------------
2005 100.000%
--------------------------
, together in the case of any such redemption with accrued interest and any
Special Interest to the Redemption Date, but interest instalments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Notes, or one or more Predecessor Notes, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Purchase Agreement.
Notwithstanding the foregoing, at any time prior to December 31, 2001
the Company may redeem, in one or more redemptions, up to an aggregate of $6
million principal amount of the Notes from the proceeds of an IPO, upon not less
than 30 nor more than 60 days' notice by mail, at a Redemption Price equal to
110.875% of their principal amount, together with any
A-4
accrued and unpaid interest and Special Interest to the Redemption Date, but
interest instalments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Notes, or one or more Predecessor
Notes, of record at the close of business on the relevant Record Dates referred
to on the face hereof, all as provided in the Purchase Agreement.
If less than all the Notes are to be redeemed, the Notes shall be
redeemed pro rata from each Holder.
The Notes do not have the benefit of any sinking fund obligations.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Note in part only, a new Note or Notes for the unredeemed or
unpurchased portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
The indebtedness evidenced by this Note is, to the extent provided in
the Agreement, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Note is issued subject to the
provisions of the Agreement with respect thereto. Each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions.
If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared due and payable in the manner and with the effect
provided in the Agreement. Upon payment of (i) the principal so declared due
and payable and any overdue installment of interest, (ii) any overdue principal
and premium payable upon redemption or repurchase of this Note, and (iii) as
provided on the face hereof, interest on any overdue principal of, and any
premium, interest and Special Interest on, this Note (in each case to the extent
that the payment of such interest shall be legally enforceable), all of the
Company's obligations in respect of the payment of the principal of, and
interest and Special Interest on, this Note shall terminate.
The Agreement provides that, subject to certain conditions, if (i)
certain Excess Proceeds are available to the Company as a result of Asset Sales
or (ii) a Change of Control occurs the Company shall be required to make an
Offer to Purchase for all or a specified portion of the Notes.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and certain rights of the Holders of the Notes under the Agreement at
any time by the Company with the consent of the Holders of a majority in
aggregate principal amount of the Notes at the time outstanding. The Agreement
also contains provisions permitting the Holders of specified percentages in
aggregate principal amount of the Notes at the time outstanding, on behalf of
the Holders of all the Notes, to waive compliance by the Company
A-5
with certain provisions of the Agreement and certain past defaults under the
Agreement and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Security
Register, upon surrender of this Note for registration of transfer at the
principal offices of the Company, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Agreement and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company and any agent of the Company may treat the Person in whose name this
Note is registered as the owner hereof for all purposes, whether or not this
Note be overdue, and neither the Company nor any such agent shall be affected by
notice to the contrary.
Interest on this Note shall be computed on the basis of a 360-day year
of twelve 30-day months.
All terms used in this Note which are defined in the Agreement shall
have the meanings assigned to them in the Agreement.
THE AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
A-6
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its entirety by
the Company pursuant to Section 7.7 or 7.8 of the Agreement, check the box:
[_]
If you want to elect to have only a part of the principal amount of
this Note purchased by the Company pursuant to Section 7.7 of the Agreement,
state the portion of such amount: $_________
Dated: Your Signature:____________________
(Sign exactly as name appears
on the other side of this Note)
Signature Guarantee:___________________________________
(Signature must be guaranteed by a financial institution
that is a member of the Securities Transfer Agent Medallion
Program ("STAMP"), the Stock Exchange Medallion Program
-----
("SEMP"), the New York Stock Exchange, Inc. Medallion
----
Signature Program ("MSP") or such other signature guarantee
---
program as may be determined by the Security Registrar in
addition to, or in substitution for, STAMP, SEMP or MSP, all
in accordance with the Securities Exchange Act of 1934, as
amended.)
A-7
Exhibit B - Exchange and Registration Rights Agreement to come
B-1
EXHIBIT C
FORM OF SUBSIDIARY GUARANTEE
THE OBLIGATIONS OF THE GUARANTORS TO THE HOLDERS OF NOTES PURSUANT TO
THIS SUBSIDIARY GUARANTEE AND THE PURCHASE AGREEMENT, DATED AS OF DECEMBER 18,
1998, AMONG THE COMPANY, GS MEZZANINE PARTNERS, L.P., GS MEZZANINE PARTNERS
OFFSHORE, L.P., STONE STREET FUND 1998, L.P., BRIDGE STREET FUND 1998, L.P.,
ARES LEVERAGED INVESTMENT FUND, L.P. AND ARES LEVERAGED INVESTMENT FUND II, L.P.
(THE "PURCHASE AGREEMENT") ARE EXPRESSLY SET FORTH IN SECTION 14 OF THE PURCHASE
AGREEMENT, AND REFERENCE IS HEREBY MADE TO SUCH PURCHASE AGREEMENT FOR THE
PRECISE TERMS OF THIS SUBSIDIARY GUARANTEE. THE TERMS OF SECTION 14 OF THE
PURCHASE AGREEMENT ARE INCORPORATED HEREIN BY REFERENCE.
Each of the Guarantors hereby, jointly and severally, unconditionally
guarantees, on a senior subordinated basis, to each Holder of a Note executed
and delivered by the Company, irrespective of the validity and enforceability of
the Purchase Agreement, the Notes or the obligations of the Company hereunder or
thereunder, that (a) the principal of and premium and interest, including any
Special Interest, if any, on the Notes shall be promptly paid in full when due,
whether at Stated Maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of (and any premium) and interest and Special
Interest on the Notes, if any, if lawful, and all other obligations of the
Company to the Holders hereunder or thereunder shall be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Notes or any of such other
obligations, that same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same immediately.
Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or the Purchase Agreement, the absence of any action to enforce the same,
any waiver or consent by any Holder with respect to any provisions thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenants
that, subject to Section 14 of the Purchase Agreement, this Subsidiary Guarantee
shall not be discharged
C-1
except by complete performance of the obligations contained in the Notes and the
Purchase Agreement.
If any Holder is required by any court or otherwise to return to the
Company or Guarantors, or any Custodian, trustee, liquidator or other similar
official acting in relation to either the Company or Guarantors, any amount paid
by such Holder, this Subsidiary Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor agrees that it
shall not be entitled to any right of subrogation in relation to the Holders of
Notes in respect of any obligations guaranteed hereby. Each Guarantor further
agrees that, as between the Guarantors, on the one hand, and the Holders, on the
other hand, (a) the Maturity of the obligations guaranteed hereby may be
accelerated as provided in Section 11 of the Purchase Agreement for the purposes
of this Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby and (b) in the event of any declaration of acceleration of
such obligations as provided in Section 11 of the Purchase Agreement, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Subsidiary Guarantee.
The obligations of each Guarantor under this Subsidiary Guarantee are
junior and subordinated to the Guarantor Senior Indebtedness of such Guarantor
on the same basis as the Notes are junior and subordinated to Senior
Indebtedness of the Company. For the purposes of the foregoing sentence, the
Trustee and the Holders shall have the right to receive and/or retain payments
by any of the Guarantors only at such times as they may receive and/or retain
payments in respect of the Notes pursuant to the Purchase Agreement, including
Section 13 thereof.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that this Subsidiary
Guarantee not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Subsidiary Guarantee. To effectuate the foregoing intention, the Holders and
the Guarantors hereby irrevocably agree that the obligations of each Guarantor
under this Subsidiary Guarantee and Section 14 of the Purchase Agreement shall
be limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under
Section 14 of the Purchase Agreement, result in the obligations
C-2
of such Guarantor under this Subsidiary Guarantee not constituting a fraudulent
transfer or conveyance.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon each Guarantor and its respective
successors and assigns to the extent set forth in the Purchase Agreement until
full and final payment of all of the Company's obligations under the Notes and
the Purchase Agreement and shall inure to the benefit of the Holders of Notes
and their successors and assigns and, in the event of any transfer or assignment
of rights by any Holder of Notes, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof and of Section 14 of
the Purchase Agreement. Notwithstanding the foregoing, any Guarantor that
satisfies the provisions of Section 14.4 of the Purchase Agreement shall be
released of its obligations hereunder. This is a Subsidiary Guarantee of
payment and not a guarantee of collection.
The terms of this Subsidiary Guarantee shall be governed by and
construed in accordance with the internal laws of the State of New York.
Capitalized terms used herein have the same meanings given in the
Purchase Agreement unless otherwise indicated.
[Guarantor]
By: __________________________________
Name:
Title:
C-3
EXHIBIT D
FORM OF SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT (this "Supplemental Agreement"), dated as of
_______________, between ____________________ (the "Guarantor"), a direct or
indirect subsidiary of Dollar Financial Group, Inc. (or its successor), a New
York corporation (the "Company"), GS Mezzanine Partners, L.P., a limited
partnership organized under the laws of Delaware ("GS Mezzanine"), GS Mezzanine
------------
Partners Offshore, L.P., an exempted limited partnership organized under the
laws of the Cayman Islands ("GS Mezzanine Offshore"), Stone Street Fund 1998,
---------------------
L.P., a limited partnership organized under the laws of Delaware ("Stone
-----
Street"), and Bridge Street Fund 1998, L.P., a limited partnership organized
------
under the laws of Delaware (collectively with GS Mezzanine, GS Mezzanine
Offshore and Stone Street, the "GSMP Purchasers"), Ares Leveraged Investment
---------------
Fund, L.P., a limited partnership organized under the laws of Delaware ("Ares
----
I") and Ares Leveraged Investment Fund II, L.P., a limited partnership organized
-
under the laws of Delaware ("Ares II" and, collectively with Ares I, "Ares" and,
------- ----
collectively with the GSMP Purchasers, the "Purchasers").
----------
W I T N E S S E T H
WHEREAS, the Company and the Purchasers have each heretofore executed
and delivered to each other a Purchase Agreement (the "Purchase Agreement"),
dated as of December 18, 1998, providing for the issuance and sale by the
Company to the Purchasers of an aggregate principal amount of up to $20,000,000
of 10 % Senior Subordinated Notes Due 2006 (the "Notes"); and
WHEREAS, Section 14.2 of the Purchase Agreement provides that under
certain circumstances the Company is required to cause the Guarantor to execute
and deliver to the Trustee a supplemental agreement pursuant to which the
Guarantor shall unconditionally guarantee all of the Company's obligations under
the Notes pursuant to a Subsidiary Guarantee on the terms and conditions set
forth herein;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor covenants and agrees for the equal and ratable benefit of the Holders
of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Purchase Agreement.
D-1
2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly and
severally with all other Guarantors, to unconditionally guarantee the Company's
obligations under the Notes on the terms and subject to the conditions set forth
in Section 14 of the Purchase Agreement and to be bound by all other applicable
provisions of the Purchase Agreement.
3. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Guarantor, as such, shall have any liability
for any obligations of the Company or any Guarantor under the Notes, any
Subsidiary Guarantees, the Purchase Agreement or this Supplemental Agreement or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes by accepting a Note waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Securities and
Exchange Commission that such a waiver is against public policy.
4. EFFECTIVENESS. This Supplemental Agreement shall be effective
upon execution by the parties hereto.
5. RECITALS. The recitals contained herein shall be taken as the
statements of the Company and the Guarantors assume no responsibility for their
correctness.
6. NEW YORK LAW TO GOVERN. THE INTERNAL LAWS OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL AGREEMENT.
7. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement.
8. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
[Guarantor]
By: __________________________________
Name:
Title:
D-2
EXHIBIT E
Management Services Agreement
E-1
EXHIBIT F
FORM OF NOTATION OF SUBSIDIARY GUARANTEE
The undersigned have guaranteed this Note on a subordinated basis as
provided in the Agreement.
[Name of Subsidiary Guarantors]
By: ____________________________
Name:
Title:
F-1
SCHEDULE A
----------
INFORMATION RELATING TO PURCHASERS
----------------------------------
Percentage of
Aggregate Principal
Amount of the Notes
to
Name and Address of Purchaser be Purchased
----------------------------- ---------------------
GS MEZZANINE PARTNERS, L.P. 50.2288%
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, Esq.
GS MEZZANINE PARTNERS 26.9721%
OFFSHORE, L.P.
c/o GS Mezzanine Partners L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, ▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, L.P. 2.1502%
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, ▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, L.P. 0.6489%
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, Esq.
ARES LEVERAGED INVESTMENT 10.0000%
FUND, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Percentage of
Aggregate Principal
Amount of the Notes
to
Name and Address of Purchaser be Purchased
----------------------------- ---------------------
ARES LEVERAGED INVESTMENT 10.0000%
FUND II, L.P.
1999 Avenue of the ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
