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XXXXXX MAY HOLDINGS, INC.
FMCAN ACQUISITION CORP.
SECURITIES PURCHASE AGREEMENT
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AS OF OCTOBER 30, 1991
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TABLE OF CONTENTS
(( Table of Contents will generate here ))
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TABLE OF CONTENTS (Cont'd)
SCHEDULES
Schedule 1
Schedule 1(a)
Schedule 1(b)
Schedule 1(c)
Schedule 3.3
Schedule 3.6
Schedule 3.7
Schedule 3.9
Schedule 3.10
Schedule 3.11
Schedule 3.15
Schedule 3.16
Schedule 3.22
Schedule 3.28
Schedule 7.8
EXHIBITS
Exhibit A Form of Shareholders Agreement
Exhibit B Form of Subordinated Note
Exhibit C Form of Holdings Guaranty
Exhibit D Form of Subsidiary Guaranty
Exhibit E Form of Opinion of Counsel to Holdings
and FMCAN
Exhibit F Form of Duff & Xxxxxx Letter
Exhibit G Form of Confirmation and Assumption
Agreement
Exhibit H Sample Preferred Return Calculations
Exhibit I Letter Agreement
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XXXXXX MAY HOLDINGS, INC.
FMCAN ACQUISITION CORP.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is made as of this 30th day of
October, 1991 by and among XXXXXX MAY HOLDINGS, INC., a Delaware corporation
("Holdings"), FMCAN Acquisition Corp., an Illinois corporation ("FMCAN"), and
the persons listed on Schedule 1 hereto (the "Purchasers").
RECITALS
Pursuant to the Stock Purchase Agreement dated as of August 22, 1991
(as amended by the First Amendment dated as of October 30, 1991, the "Stock
Purchase Agreement") by and among Xxxxxxxxx Xxxxx Corporation (the "Company"),
its stockholders (the "Sellers") and Holdings, Holdings has arranged for FMCAN
to acquire all of the outstanding shares of the Company's common stock (the
"Stock") and certain stockholders of the Company will exchange shares of the
Company's common stock and preferred stock owned by them for a total of 1,000
shares of Holdings, 5% Senior Preferred Stock (such purchase and exchange being
the "Acquisition"). The purchase price for the Acquisition shall consist of (i)
cash in the aggregate amount of $75,000,000 and (ii) the Senior Preferred Stock
referred to above, which will have an aggregate redemption value of $10,000,000.
To provide funds for the consummation of the Acquisition, certain
persons will purchase from Holdings 294.737 shares of its common stock for a
purchase price of $294,737.
To obtain financing for the Acquisition, FMCAN desires to issue and
sell to the Purchasers $35,000,000 principal amount of its 14% Subordinated
Notes for an aggregate purchase price of $35,000,000, and Holdings desires to
sell to the Purchasers (i) 280 shares of its junior Preferred Stock for an
aggregate purchase
price of $7,000,000 and (ii) 705.263 shares of its common stock for an aggregate
purchase price of $705,263.
To obtain additional financing for the Acquisition, FMCAN desires to
issue and sell to Xxxxxxx National Life Insurance Co. $30,000,000 principal
amount of its Senior Secured Notes (the "Senior Notes") for an aggregate
purchase price of $30,000,000. Working capital financing will be provided by
the First National Bank of Chicago pursuant to a Credit Agreement dated as of
October 30, 1991 (the "Working Capital Facility"). The Senior Notes and the
Working Capital Facility will be secured on a pari passu basis by a pledge of
the stock of FMCAN and by security interests in substantially all the assets of
FMCAN.
Immediately following the consummation of the Acquisition, FMCAN will
be merged with and into the Company with the Company as the surviving entity and
each Subsidiary of the Company (other than Non-Material Subsidiaries (as
hereinafter defined)) will be merged with and into the Company with the Company
as the surviving entity. By operation of law, upon the consummation of the
merger the Company will become FMCAN's successor and will be obligated under the
terms and conditions of this Agreement applicable to FMCAN. The Company will
confirm its obligations under this Agreement and each applicable Ancillary
Agreement (as hereinafter defined) and the Notes by executing a Confirmation and
Assumption Agreement and by countersigning the Notes.
At the closing of the transactions contemplated by this Agreement (a)
Jordan, Holdings, FMCAN and each Purchaser will enter into a Shareholders
Agreement relating to, among other things, the composition of Holdings' and the
Company's boards of directors; (b) Holdings will enter into Management
Consulting and Non-Compete Agreements with Xxx. Xxxx Xxxxxx, Mr. Xxxx Xxxxxx and
Xxxxx X. Xxxxxx; (c) Holdings will enter into Employment Agreements with Mr.
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Xxxx X. Xxxxxx and Xx. Xxxxxxx X. Xxxxxx; (d) the Company will refinance certain
existing indebtedness; and (e) Holdings will enter into a guaranty of the
obligations of FMCAN under the Notes.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
As used herein, the following terms shall have the meanings set forth
below:
"Acquisition" means the acquisition of all of the issued and
outstanding stock of the Company pursuant to the Stock Purchase
Agreement.
"Affiliate" of any Person shall mean any Person that, directly or
indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, a Person
shall be deemed to be "controlled by" another Person if the other
possesses, directly or indirectly, power either (i) to vote 10% or
more of the securities having ordinary voting power for the election
of directors of such Person or (ii) to direct Or cause the direction
of the management and policies of such Person whether by contract or
otherwise.
"Agreement," "hereof" and "hereunder" and words of similar import
refer to this Securities Purchase Agreement, as it may be from time to
time amended.
"Ancillary Agreements" means the Stock Purchase Agreement, the
Shareholders Agreement, the Holdings Guaranty, the Subsidiary
Guaranty, the Senior Financing Documents, the Plans of Mergers, the
Confirmation and Assumption Agreement, the Management Consulting
Agreement, Investment Banking Fee Agreement, the Employment
Agreements, the Jordan Subscription Agreement, the Noncompetition
Agreement and the SAR Agreements.
"Book Value" means, with respect to any asset at any time, the
value of such asset, net of depreciation or amortization, as reflected
on the most recent consolidated balance sheet of the relevant Person
and its Subsidiaries.
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"Business" means the business of the Company and its subsidiaries
and shall be deemed to include any of the following incidents of such
business: income, operations, condition (financial or otherwise),
assets, properties, prospects and management.
"Capitalized Lease Obligation" means the amount of the liability
of any Person which in accordance with GAAP should be capitalized or
disclosed on the balance sheet of such Person in respect of a
Capitalized Lease.
"Capital Lease" means any agreement for the lease, hire or use of
any real or personal property required to be characterized as a
capital lease in accordance with GAAP.
"Change of Control" means any or all of the following: (i) the
persons listed on Schedule l(a) hereto and all of their Permitted
Transferees collectively ceasing to own, directly or indirectly, at
least 25% of the outstanding Common Shares, (ii) Xxxxx Xxxxxxxxx, Xxxx
X. Xxxxxx XX, Xxxx X. Max, Xxxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxx and
Xxxxxx Xxxxx collectively ceasing to have the absolute and
unconditional power to vote a majority of the Class C Common Shares or
ceasing to have the right to designate at least three members of the
Board of Directors of Holdings under the applicable provisions of the
Shareholders Agreement, in each case without having to obtain the
consent of any other Person, (iii) Xxxxx Xxxxxxxxx, Xxxxxx Xxxxx, Xxxx
X. Max and Xxxx X. Xxxxxx collectively ceasing to have the absolute
and unconditional power to vote 35% of the outstanding Class C Common
Shares, without having to obtain the consent of any other Person or
(iv) Holdings ceasing to own 100% of the issued and outstanding shares
of capital stock of FMCAN; provided that the execution of that certain
letter agreement dated as of the date hereof, a copy of which is set
forth as Exhibit I hereto, shall not constitute a Change of Control.
"Class A Common Shares" means shares of Class A Common Stock of
Holdings, par value $0.01 per share.
"Class B Common Shares" means shares of Class B Common Stock of
Holdings, par value $0.01 per share.
"Class C Common Shares" means shares of Class C Common Stock of
Holdings, par value $0.01 per share.
"Class D Common Shares" means shares of Class D Common Stock of
Holdings, par value $0.01 per share.
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"Closing" has the meaning set forth in Section 2.3 hereof.
"Closing Date" means the date on which the Closing occurs.
"Commission" means the Securities and Exchange Commission.
"Common Shares" means any or all of the Class A Common Shares,
Class B Common Shares, Class C Common Shares and/or Class D Common
Shares.
"Common Stock Equivalents" means Common Shares and any securities
of Holdings that are convertible into or exercisable or exchangeable
for Common Shares and any other options or rights to acquire Common
Shares.
"Company" means, prior to the consummation of the Mergers,
Xxxxxxxxx Xxxxx Corporation, an Illinois corporation, and, from and
after the consummation of the Mergers, Xxxxxxxxx Xxxxx Corporation, an
Illinois Corporation, as survivor of the Mergers, and its successors
and assigns.
"Confirmation and Assumption Agreement" means the Confirmation
and Assumption Agreement to be entered into on the Closing Date by and
among Holdings, the Company and the Purchasers, as such agreement may
be Company and the Purchasers, as such agreement may be from time to
time amended. A form of Confirmation and Assumption Agreement is
attached hereto as Exhibit G.
"Consolidated Interest Expense" means, for any period, total
interest expense (including, without limitation, that portion of any
Capitalized Lease obligations attributable to interest expense in
conformity with GAAP and amortization of capitalized interest) paid or
accrued with respect to all outstanding Indebtedness of Holdings and
its Subsidiaries, excluding all commissions, discounts and other fees
and charges owed with respect to letter of credit and bankers
acceptance financing and net costs under any interest rate hedging,
cap or similar agreement or arrangement, prepayment charges, agency
fees, administrative fees, commitment fees and capitalized transaction
costs allocated to interest expense, payments received under such
interest rate hedging, cap or similar agreement or arrangement, all as
determined for Holdings and its Subsidiaries on a consolidated basis
for such period in accordance with GAAP.
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"Consolidated Net Income (Loss)" means, for any period, the net
income (or loss) of Holdings and its Subsidiaries on a consolidated
basis for such period taken as a single accounting period, determined
in accordance with GAAP (but in any event without deduction of
dividends paid or payable in respect of any capital stock of
Holdings); PROVIDED that in determining Consolidated Net Income there
shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Holdings) in which any Person other than Holdings or any
of its Subsidiaries has a joint interest or partnership interest,
except to the extent of the amount of dividends or other distributions
actually paid to Holdings or any of its Subsidiaries by such Person
during such period, (ii) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of Holdings or is merged
into or consolidated with Holdings or any of its Subsidiaries or that
Person's assets are acquired by Holdings or any of its Subsidiaries,
(iii) the proceeds of any life insurance policy, (iv) gains and losses
from the sale, exchange, transfer or other disposition of property or
assets not in the ordinary course of business of Holdings and its
Subsidiaries, (v) any other extraordinary or non-recurring gains and
losses of Holdings or its Subsidiaries, and (vi) the income of any
Subsidiary of Holdings to the extent that the declaration or payment
of dividends or similar distributions by that Subsidiary of that
income is not at the time permitted by operation of the terms of its
charter or of any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that
Subsidiary.
"Consolidated Net Worth" means, as at any date of determination,
the sum at such date of (i) the aggregate par value of Holdings'
outstanding capital stock, PLUS (ii) additional paid-in capital, PLUS
(iii) retained earnings, PLUS (iv) the aggregate amount of
consolidated depreciation and amortization expenses of Holdings and
its Subsidiaries for the period from the Closing Date through the date
of determination (including, without limitation, amortization expense
related to the write-up in the Book Value of any assets due to good
will or unallocated purchase price and other amortization or
depreciation arising out of the transactions contemplated by this
Agreement and the Ancillary Agreements, to the extent such adjustments
are made pursuant to APB Nos. 16 and 17 and are deducted in
determining Consolidated Net Income during such period) (including the
non-cash portion of the expenses under the SAR Agreements and any
Permitted Stock Option Plan, reduced by the amount of any subsequent
cash payments in respect thereto) PLUS (v) the
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transaction costs expensed but not capitalized during the period from
the Closing Date through and including August 31, 1992 PLUS (vi) to
the extent not otherwise included in Consolidated Net Worth, the
cumulative redemption value of any preferred stock of Holdings issued
after the Closing Date in lieu of cash dividends in accordance with
the Certificate of Incorporation of Holdings, LESS Holdings' treasury
stock account, all as determined for Holdings and its Subsidiaries on
a consolidated basis in conformity with GAAP.
"EBITDA" means, for any period, Consolidated Net Income for such
period PLUS all amounts deducted in determining such Consolidated Net
Income on account of Consolidated Interest Expense, taxes based on or
measured by income, depreciation expense and amortization expense
(including, without limitation, amortization expense related to the
write-up in the Book Value of any assets due to goodwill or
unallocated purchase price and other amortization or depreciation
arising out of the transactions contemplated by this Agreement and the
Ancillary Agreements, to the extent such adjustments are made pursuant
to APB Nos. 16 and 17 and are deducted in determining Consolidated Net
Income for such period), the transaction costs expensed but not
capitalized during the period from the Closing Date to and including
August 31, 1992, the consulting fee payable to Xxxxxx Xxxxx and the
fees of the three directors designated by the Jordan Group (to the
extent that such consulting fee and directors' fees do not exceed, in
the aggregate, $70,000 in any fiscal year), fees and expenses paid or
payable under the Management Consulting Agreement and the Investment
Bank Fee Agreement and the non-cash portion of expenses under the SAR
Agreements and any Permitted Stock Option Plan, all as determined for
Holdings and its Subsidiaries on a consolidated basis in accordance
with GAAP.
"Employment Agreements" means the agreements set forth on
Schedule 1(b) hereto, as amended from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any corporation or other Person which is
a member of the same controlled group (within the meaning of Section
414(b) of the Internal Revenue Code) of corporations or other Persons
as FMCAN, Holdings, the Company or any of their respective
Subsidiaries (as applicable), or which is under common control (within
the meaning of Section 414(c) of the
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Internal Revenue Code) with FMCAN, Holdings, the Company or any of
their respective Subsidiaries (as applicable), or any corporation or
other Person which is a member of an affiliated service group (within
the meaning of Section 414(m) of the Internal Revenue Code) with
FMCAN, Holdings, the Company or any of their respective Subsidiaries
(as applicable), or any corporation or other Person which is required
to be aggregated with FMCAN, Holdings, the Company or any of their
respective Subsidiaries (as applicable) pursuant to Section 414(o) of
the Internal Revenue Code or the regulations promulgated thereunder
(to the extent currently effective); provided, however, that none of
the Purchasers shall be considered an ERISA Affiliate of FMCAN,
Holdings, the Company or any of their respective Subsidiaries.
"Event of Default" has the meaning set forth in Section 10.1
hereof.
"Exit Event" means any of (i) the sale, lease, transfer or other
disposition (whether directly or by merger, combination or any like
transaction other than the Mergers or pursuant to any sale-leaseback
of transaction) of a Significant Portion of the assets of Holdings and
its Subsidiaries; (ii) any recapitalization of Holdings by means of a
redemption of equity securities of Holdings or a distribution to the
shareholders of Holdings, in either case involving in excess of 50% of
the Common Shares (other than stock splits, rights issuances or
similar transactions); (iii) the issuance of equity securities by
Holdings (other than (A) dividend payments in kind in accordance with
the terms of the Seller Preferred Stock, the Junior Preferred Shares
and the Jordan Junior Preferred Stock and (B) pursuant to the
Permitted Stock Option Plan); (iv) the liquidation or dissolution of
Holdings (other than in a merger of Holdings into FMCAN); and (v) a
Change of Control.
"Financial Statements" has the meaning set forth in Section 3.16
hereof.
"Fixed Charges" shall mean, for any period, without duplication,
Consolidated Interest Expense for such period, PLUS (i) scheduled
payments of principal of all Indebtedness of Holdings and its
Subsidiaries during such period, PLUS (ii) capital expenditures made
during such period (reduced by (a) the aggregate amount of credits
received by FMCAN and its Subsidiaries in respect of motor vehicle
trade-ins during such period and (b) all amounts not in excess of
$510,000, cumulatively and in the aggregate for all periods expended
in compliance with
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Sections 10.3(F) and (G) of the Senior Note Purchase Agreement), PLUS
(iii) payments actually paid or payable in cash with respect to such
period with respect to preferred stock (including, without limitation
and without duplication, dividends paid on the common stock of FMCAN
for the purpose of funding the payment of dividends by Holdings on the
Seller Preferred Stock), all as determined for Holdings and its
Subsidiaries on a consolidated basis in accordance with GAAP.
"FMCAN" means FMCAN Acquisition Corp., an Illinois corporation
and wholly-owned subsidiary of Holdings, and its successors and
assigns, including, following the Mergers, the Company; references
herein to FMCAN or to the Company following the Mergers refer to the
same company and have the same meaning.
"GAAP" means 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 may be
approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.
"Hazardous Substances" means (but shall not be limited to)
substances that are defined or listed in, or otherwise classified
pursuant to, any applicable federal, state or local laws and
regulations, including, without limitation, 40 CFR 261 and 00 XXX 000,
as "hazardous wastes" or "toxic substances," "regulated substances,"
or any other formulation intended to define, list or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, radioactivity, carcinogenicity, reproductive
toxicity or "EP toxicity."
"Holder" means any holder or holders of Purchaser Common Shares
that are not Public Common Shares.
"Holdings" means Xxxxxx May Holdings, Inc., a Delaware
corporation, and its successors and assigns.
"Holdings Guaranty" means the Guaranty to be executed and
delivered on the Closing Date by Holdings in favor of the Purchasers.
A form of Holdings Guaranty is attached hereto as Exhibit C.
"Indebtedness" means, as applied to any Person, (i) all
indebtedness of that Person for borrowed money, (ii)
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all notes payable and drafts accepted representing extensions of
credit to such Person whether or not representing obligations for
borrowed money (other than trade drafts or notes payable issued in the
ordinary course of business), (iii) any obligation (other than trade
payables incurred in the ordinary course of business) owed by that
Person for all or any part of the deferred purchase price of property
or services which purchase price is due more than six months from the
date of incurrence of the obligation in respect thereof, (iv) that
portion of obligations with respect to Capital Leases which is
properly classified as a liability on the balance sheet of such Person
in conformity with GAAP, (v) all indebtedness of others which such
Person has directly or indirectly guaranteed, endorsed (other than for
payment in the ordinary course of business), discounted with recourse
or agreed to purchase or repurchase, and (vi) the face amount of all
outstanding bankers acceptances and of all outstanding letters of
credit issued by any Person for the account of such Person, less all
drafts drawn thereunder that have been reimbursed to the issuer.
"Initiating Holder" means a Holder or Holders of Purchaser Common
Shares which are not Public Common Shares which constitute at least
40% of the total Common Shares outstanding.
"Interest Payment Date" means each February 28 and August 31 of
each year.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Internal Revenue Service" means the United States Internal
Revenue Service and any successor or similar agency performing similar
functions.
"Investment" means, as applied to any Person, any direct or
indirect purchase or other acquisition by that Person of, or of a
beneficial interest in, stock or other securities of any other Person,
or any direct or indirect loan, advance (other than down payments,
advances to employees for moving, relocation and travel expenses,
drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by that Person to any other Person,
including all indebtedness and accounts receivable from that other
Person which are not current assets or do not arise from sales to that
other Person in the ordinary course of business.
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"Investment Banking Fee Agreement" means the Investment Banking
Fee Agreement to be entered into on the Closing Date by and between
The Jordan Company and Holdings, as such agreement is in effect on
such date.
"Xxxxxxx" means Xxxxxxx National Life Insurance Company in its
capacity as holder of the Senior Secured Notes due 1999 of FMCAN and
its successors and assigns.
"Xxxxxxx National" means Xxxxxxx National Life Insurance Company
in its capacity as a Purchaser hereunder and its successors and
assigns.
"Xxxxxxx National Transfer" means any transfer or transfers to no
more than a total of two transferees by Xxxxxxx National of no more
than 37.740 Purchaser Common Shares in the aggregate to Affiliates of
Xxxxxxx National within 18 months following the Closing.
"Xxxxxxx National Transferee" means any Person who acquires
securities in a Xxxxxxx National Transfer.
"Jordan Group" has the meaning ascribed to such term in the
Shareholders Agreement.
"Jordan Junior Preferred Stock" means the Junior Class B PIK
Preferred Stock of Holdings having a liquidation preference of $25,000
per share, which shall be subordinated to the Junior Preferred Shares.
"Jordan Subscription Agreement" means the Subscription Agreement
to be entered into on the Closing Date between Holdings and the
persons listed on Schedule 1(a) hereto.
"Junior Preferred Shares" means the shares of Junior Class A PIK
Preferred Stock of Holdings having a liquidation preference of $25,000
per share.
"Lien" means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest or Lien).
"Management Consulting Agreement" means the Management Consulting
Agreement to be entered into on the Closing Date by and between TJC
Management Corp. and Holdings, as such agreement is in effect on such
date.
"Material Holder" means (i) so long as it holds any Securities,
each of the original Purchasers hereunder and
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(ii) any other Person who holds any of the following: (x) at least
$4,000,000 principal amount of Notes, (y) at least 32 Junior Preferred
Shares or (z) at least 114,300 Common Shares.
"Mergers" means the merger of FMCAN with and into Xxxxxxxxx Xxxxx
Corporation, an Illinois corporation with Xxxxxxxxx Xxxxx Corporation
as the surviving corporation and the merger of each Subsidiary of
Xxxxxxxxx Xxxxx Corporation (other than any Non-Material Subsidiary)
with and into Xxxxxxxxx Xxxxx Corporation with Xxxxxxxxx Xxxxx
Corporation as the surviving corporation.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 3(37) or Section 4001(a)(3) of ERISA or Section 414(f) of the
Internal Revenue Code contributed to by Holdings, FMCAN, the Company
or any of their respective Subsidiaries or ERISA Affiliates.
"Non-Competition Agreement" means the Management Consulting and
Noncompetition Agreements to be entered into on the Closing Date
between Holdings, Xxx. Xxxx Xxxxxx and Mr. Xxxx Xxxxxx.
"Non-Material Subsidiary" shall mean any Subsidiary of the
Company, whether or not such Subsidiary is a party to any of the
Ancillary Agreements, (i) the revenues of which (directly and together
with its Subsidiaries) for the most recent fiscal year of the Borrower
were less than 0.1% of the Company's consolidated revenues for such
fiscal year and (ii) the consolidated total assets the Book Value of
which as of the last day of such fiscal year was less than 0.1% of the
Book Value of the Company's consolidated total assets as of such date.
"Notes" means the 14% Subordinated Notes Due 2000 of FMCAN to be
issued and sold to the Purchasers hereunder at the Closing. A form of
Subordinated Note is attached hereto as Exhibit B.
"Original Purchasers" means the TCW Entities, any TCW Transferee,
Xxxxxxx National, any Xxxxxxx National Transferee and Mezzanine
Capital and Income Trust 2001 PLC.
"Other Shareholders" means persons holding Common Shares other
than Purchaser Common Shares.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
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"Pension Plan" means an employee pension benefit plan, as defined
in Section 3(2) of ERISA, excluding a Multiemployer Plan, maintained
by or contributed to by Holdings, FMCAN, the Company or any of their
respective Subsidiaries or ERISA Affiliates.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or other governmental levies which, in each case,
are (x) not yet due and payable or (y) being contested in good faith
by appropriate proceedings, adequately reserved against or provided
for in conformity with GAAP and none of Holdings', FMCAN's, or any of
their respective Subsidiaries' title to use or right to use their
properties is materially adversely affected thereby; (ii) statutory
Liens of landlords and depository institutions and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen and other similar
Liens imposed by law or contract incurred in the ordinary course of
business for sums (x) not yet delinquent or (y) being contested in
good faith by appropriate proceedings, adequately reserved against or
provided for in conformity with GAAP and none of Holdings', FMCAN's,
or any of their respective Subsidiaries' title to use or right to use
their properties is materially adversely affected thereby; (iii) Liens
(other than any Lien imposed pursuant to Sections 401(a)(29) or 412(n)
of the Internal Revenue Code or by ERISA) incurred or deposits made in
the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money); (iv) leases or subleases granted to others not interfering in
any material respect with the business of the Person granting such
rights; (v) easements, rights-of-way, restrictions and other similar
charges or encumbrances not interfering in any material respect with
the business of the Person granting such rights; (vi) any interest or
title of a lessor in property subject to any lease permitted
hereunder; (vii) Liens arising out of consignment or similar
arrangements for the sale of goods entered into in the ordinary course
of business in accordance with the reasonable practices in the
industry of the Person making such arrangements; and (viii) judgment
Liens with respect to judgments that do not give rise to an Event of
Default under this Agreement.
"Permitted Stock Option Plan" means an employee stock option or
stock bonus plan which is adopted by the
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Board of Directors of Holdings and reasonably acceptable to the
Purchasers and which provides for the issuance to the employees of
Common Shares so long as (i) the number of Common Shares issued
pursuant to such plan and upon the exercise of such options does not
exceed, in the aggregate, 33 Class A Common Shares.
"Permitted Transferees" means, (x) in the case of any
Shareholder, (A) Affiliates or officers and directors of any such
Shareholder, (B) any individual that is a member of such Shareholder's
immediate family (E.G., spouses, parents and children), or any trust
established for the benefit of any such member, (y) in the case of any
TCW Entity, any TCW Transferee, and (2) in the case of Xxxxxxx, any
Xxxxxxx Transferee.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks and other
organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
"Plan" and "Plans" means any employee benefit plan as defined in
Section 3(3) of ERISA, excluding a Multiemployer Plan, established or
maintained for the benefit of employees of Holdings, FMCAN, the
Company or any of their respective Subsidiaries or ERISA Affiliates.
"Plans of Mergers" means the Plans of Mergers pursuant to which
the Mergers will be consummated.
"Pledge Agreement" means the Pledge Agreement entered into on the
Closing Date by and between Holdings, Wilmington Trust Company, a
Delaware banking corporation, as trustee and Xxxxxxx X. Xxxx as
trustee.
"Preferred Return" means, with respect to Purchaser Common Shares
required to be redeemed pursuant to Section 6.8(a), an amount,
determined as of the date of any such redemption, equal to the sum of
(A) one dollar per Common Share and (B) the product of (i) that amount
which, taking into account (x) all cash payments theretofore or
concurrently made in respect of the Notes (including principal,
premium and interest) and the Junior Preferred Shares and (y) all cash
payments theretofore received by the Original Purchasers in respect of
the Purchaser Common Shares that have previously been redeemed
pursuant to Section 6.8(a) or sold, transferred or otherwise disposed
of (except in a TCW Transfer or Xxxxxxx National Transfer), is
sufficient to provide an annual 16% internal rate of return on
$42,000,000 computed on the
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basis of semi-annual compounding, multiplied by (ii) a fraction the
numerator of which shall equal the number of Purchaser Common Shares
then being redeemed which are held by Original Purchasers and the
denominator of which shall equal the number of Common Shares then held
by all Holders. For the purposes of clause (i)(x) above, it shall be
assumed that the Notes and Junior Preferred Shares will be paid in
full as of such date of redemption (provided, that if at any time
Holdings shall redeem any Junior Preferred Shares or FMCAN shall repay
any principal amount of the Notes, certain additional redemption
payments will be made pursuant to Section 6.8(f) at the time of such
redemption or repayment). In calculating the amount required to
provide a Holder with a 16% internal rate of return, each amount taken
into account pursuant to clauses (x) and (y) above (the "Paid
Amounts") shall be discounted from the date of payment or assumed
payment, as applicable back to the Closing Date utilizing an annual
discount rate of 16% and compounded semiannually. The amounts
sufficient to provide the required return shall be that amount which,
when so discounted and when added to all Paid Amounts so discounted,
equals $42,000,000. Exhibit H illustrates the manner in which the
Preferred Return shall be calculated.
"Public Common Shares" means Common Shares that have been sold to
the public pursuant to an effective registration statement or under
Rule 144.
"Purchase Price" means the purchase price paid by each Purchaser
for each class of Securities being purchased by such Purchaser as set
forth on Schedule 1 hereto.
"Purchaser Common Shares" means Common Shares issued and sold to
the Purchasers hereunder or transferred to the TCW Transferees or
Xxxxxxx National Transferees pursuant to one or more TCW Transfers or
Xxxxxxx National Transfers, as the case may be.
"Purchasers" means, as the context requires, any or all of the
Persons identified as such on Schedule 1 hereto and their respective
successors and assigns.
"Registration" means a registration of Common Shares or other
common equity securities under the Securities Act.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder for which the 30-day
notice requirement applies.
-15-
"Requesting Holder" means a Holder or Holders of Purchaser Common
Shares which are not Public Common Shares which constitute at least
50% of such Purchaser Common Shares outstanding.
"Rule 144" means Rule 144 promulgated under the Securities Act,
or any successor provision thereto.
"SAR Agreements" means the agreements set forth on Schedule 1(c)
hereto, as in effect on the Closing Date.
"SAR Amount" means, as of any date on which Common Shares are
required to be redeemed pursuant to Section 6.8, the aggregate amount
payable by Holdings pursuant to all then existing SAR Agreements,
assuming that (i) all stock appreciation rights thereunder are
exercised on such date and (ii) that the fair market value of the
Common Shares is determined by reference to the definition of Fair
Market Value rather than pursuant to the provisions of such SAR
Agreements.
"Securities" means, as the context requires, any or all of the
Notes, the Junior Preferred Shares and the Purchaser Common Shares.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute.
"Seller Preferred Stock" means the 5% Senior Preferred Stock of
Holdings having a liquidation preference of $10,000 per share.
"Senior Financing Documents" means the Senior Note Purchase
Agreement, the Working Capital Facility and the Loan Documents (as
defined in the Senior Note Purchase Agreement).
"Senior Note Purchase Agreement" means the Note Purchase
Agreement to be entered into on the Closing Date by and among
Holdings, FMCAN and Xxxxxxx as it may be amended from time to time.
"Shareholders Agreement" means the Shareholders Agreement to be
entered into on the Closing Date by and among Jordan, Holdings, FMCAN
and each Purchaser, as it may be from time to time amended. A form of
Shareholders Agreement is attached hereto as Exhibit A.
"Significant Portion" means, with respect to assets of Holdings
and its Subsidiaries (taken as a whole), assets (other than inventory)
which, when added to all other assets (other than inventory) of
Holdings and its
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Subsidiaries sold, leased, transferred, pledged or assigned in one or
more transactions during any four consecutive calendar quarters,
accounted for 60 percent, for purposes of the definition of Exit
Event, or 25 percent, for purposes of Section 7.8, of the revenues of
Holdings and its Subsidiaries on a consolidated basis as at the end of
the calendar quarter immediately preceding the first of such four
consecutive calendar quarters.
"Stock Purchase Agreement" means the Stock Purchase Agreement
dated as of August 22, 1991 by and among Xxxxxxxxx Xxxxx Corporation,
its stockholders and Xxxxxx May Holdings, Inc. as amended by the First
Amendment dated as of October 30, 1991 and as it may be further
amended from time to time.
"Subordination Agreement" means the Subordination Agreement to be
entered into on the Closing Date by and among FMCAN, Holdings,
Xxxxxxx, the Working Capital Lender, and the Purchasers as it may be
amended from time to time.
"Subsidiary" means, with respect to any Person, any other Person,
a majority of the voting securities of which are owned by such Person.
"Subsidiary Guaranty" means the Subsidiary Guaranty to be
executed and delivered by each Subsidiary of FMCAN (other than a Non-
Material Subsidiary in accordance with Section 6.11). A form of
Subsidiary Guaranty is attached hereto as Exhibit D.
"TCW" means TCW Special Placements Fund III, a California limited
partnership.
"TCW Entities" means TCW Special Placements Fund III, a
California limited partnership, TCW Capital, a California general
partnership acting solely in its capacity as Investment Manager
pursuant to an Investment Management Agreement dated as of June 19,
1989, TCW Capital, a California general partnership acting solely in
its capacity as Investment Manager pursuant to an Investment
Management Agreement dated as of April 18, 1990 and Mezzanine Capital,
a California general partnership and their respective successors and
assigns.
"TCW Transfer" means any transfer or transfers to no more than a
total of two transferees by one or more of the TCW Entities of no more
than 113.346 Purchaser Common Shares in the aggregate to the partners
or investors of any TCW Entity within 18 months of the Closing.
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"TCW Transferee" means any Person who acquires securities in a
TCW Transfer.
"Threshold Securities" means (i) any Notes, (ii) 92 Junior
Preferred Shares or (ii) 333,000 Purchaser Common Shares which are not
Public Common Shares.
"Triggering Event" means (i) the failure of FMCAN to make any
payment in respect of principal or premium or interest on the Notes as
the same become due, including by acceleration and such failure shall
continue for a period of 90 days; (ii) the failure by Holdings to
redeem the Junior Preferred Shares in accordance with the Section 2.7
hereof and such failure shall continue for a period of 90 days; (iii)
the failure by FMCAN to repay the Notes at maturity; (iv) the failure
by Holdings to redeem the Junior Preferred Shares at their final
redemption date; or (v) after October 31, 1999, the failure by
Holdings to redeem Common Shares in accordance with Section 6.8
hereof. With respect to any Triggering Event described in clauses (i)
or (ii) above, such Triggering Event shall continue indefinitely once
it has occurred. With respect to any Triggering Event described in
clauses (iii), (iv) or (v) above, such Triggering Event shall continue
until the pertinent failure described therein has been cured by
Holdings by payment in full of the amounts required.
"Working Capital Facility" means the Credit Agreement to be
entered into on the Closing Date by and between FMCAN, Holdings, the
Working Capital Lender and the Lenders referred to therein as it may
be amended from time to time.
"Working Capital Lender" means The First National Bank of
Chicago, as agent and its successors and assigns.
SECTION 2. THE SECURITIES; CLOSING; DELIVERY
2.1 AUTHORIZATION OF SECURITIES.
(a) FMCAN has authorized the issuance and sale to the Purchasers,
pursuant to the terms and conditions hereof, of $35,000,000 principal amount of
the Notes.
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(b) Holdings has authorized the issuance and sale to the Purchasers,
pursuant to the terms and conditions hereof, of (i) 280 Junior Preferred Shares,
(ii) 544.135 Class A Common Shares, (iii) 151.128 Class B Common Shares, and
(iv) 10 Class D Common Shares.
2.2 PURCHASE AND SALE. Subject to the terms and conditions hereof, at the
Closing, (i) FMCAN will issue and sell to each Purchaser and each Purchaser will
purchase from FMCAN, the principal amount of Notes and (ii) Holdings will issue
and sell to each Purchaser, and each Purchaser will purchase from Holdings, the
number of Junior Preferred Shares and Common Shares, in each case, set forth
opposite such Purchaser's name on Schedule 1 hereto, for the respective Purchase
Prices there set forth.
2.3 CLOSING. The closing of the purchase and sale of the Notes, the Junior
Preferred Shares and the Common Shares contemplated hereby shall be held at such
time and place as the parties may agree upon. Such closing is hereinafter
referred to as the "Closing." The closing of the Acquisition shall occur
simultaneously with the Closing.
2.4 DELIVERY. Subject to the terms of this Agreement, at the Closing,
unless otherwise requested, FMCAN will deliver to each Purchaser a single
Subordinated Note evidencing the Notes acquired by such Purchaser, and Holdings
will deliver to each Purchaser a single certificate evidencing the Junior
Preferred shares acquired by such Purchaser and a single certificate evidencing
the Common Shares acquired by such Purchaser, against payment of the Purchase
Price therefor in immediately available funds.
2.5 NOTES -- MATURITY; PAYMENT OF INTEREST.
(a) The Notes mature on October 31, 2000, and on such date, or on any
accelerated maturity, the full amount of principal
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then outstanding, and all accrued and unpaid interest thereon, shall be due and
payable.
(b) The Notes shall bear interest at the rate of 14% per annum,
computed on the basis of actual days elapsed and a 360-day year. Interest shall
be payable on and to each Interest Payment Date, commencing on the first such
date to occur after the Closing, upon any prepayment of Notes (to the extent
accrued on the amount of such prepayment) and at maturity.
2.6 NOTES -- VOLUNTARY PREPAYMENTS.
(a) The Notes may not be voluntarily prepaid except as permitted by
this Section 2.6. All prepayments under this Section 2.6 shall be in a minimum
amount of $350,000 shall be made ratably among the holders of the Notes in
proportion to the amounts of principal of such Notes held by such holders, shall
be accompanied by a payment of all interest accrued to the prepayment date on
the principal being prepaid and shall be applied 50% to the payment due on
October 31, 2000 and 50% to the payment due on February 28, 2000. Section
6.8(c) sets forth certain adjustments that may apply in connection with the
prepayment in full of the Notes.
(b) In the event of a prepayment which is being made as a part of a
refunding or anticipated refunding operation excluding a refinancing in
conjunction with a redemption pursuant to Section 6.8, by the application,
directly or indirectly, of borrowed funds, FMCAN may voluntarily prepay
principal of the Notes, at any time, in whole, but not in part, by paying in
addition to such principal, to the extent permitted by law, a premium on such
principal in accordance with the following table:
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Period in Which
Prepayment Is Made Premium
------------------ -------
10/31/91 - 10/30/94 7.00%
10/31/94 - 10/30/95 6.00%
10/31/95 - 10/30/96 5.00%
10/31/96 - 10/30/97 4.00%
10/31/97 - 10/30/98 3.00%
10/31/98 - 10/30/99 2.00%
10/31/99 - 10/30/00 1.00%
Thereafter 0.00%
(c) In the event of a prepayment other than a prepayment to which
2.6(b) applies, FMCAN may voluntarily prepay principal of the Notes at any time,
in whole or in part, without premium. In order to effect a prepayment of all or
any part of the Notes pursuant to this Section 2.6(c), FMCAN shall deliver to
the holders of the Notes on or prior to the date of such prepayment a
certificate of the chief financial officer of FMCAN to the effect that such
prepayment will not reduce consolidated working capital of Holdings (determined
in accordance with GAAP) below an amount which is considered adequate (taking
into account, among other things, the seasonality of the Business) by the Board
of Directors of Holdings for the conduct of the business of Holdings and its
Subsidiaries without the necessity of creating additional Indebtedness to
replace funds used to make such prepayment.
2.7 MANDATORY PREPAYMENT AND REDEMPTION.
(a) On February 28, 2000, FMCAN shall pay an amount of principal of
the Notes equal to $l7,500,000 without premium, but with interest to the date of
repayment, to retire the Notes at maturity. Such payment shall be made ratably
among the holders of the Notes in proportion to the amounts of principal of the
Notes held by such holders.
(b) In the event of the occurrence of an Exit Event (other than the
Exit Event involving the issuance of equity
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securities by Holdings) then, without prejudice to any other right the
Purchasers may have if any of the foregoing events violates or would violate any
provision of this Agreement, the Notes shall become immediately due and payable
with interest, but without premium, to the date of repayment, and Holdings shall
redeem all of the outstanding Junior Preferred Shares at a redemption price
equal to the liquidation preference of such Junior Preferred Shares together
with accrued dividends and dividends deemed to have accrued pursuant to their
terms.
(c) In the event Holdings issues equity securities other than (i)
dividend payments in kind in accordance with the terms of the Seller Preferred
Stock, the Junior Preferred Shares and the Jordan Junior Preferred Stock and
(ii) pursuant to a Permitted Stock Option Plan, then, without prejudice to any
other rights the Purchasers may have if such issuance of equity securities
violates any provision of this Agreement, including, without limitation, any
right that the Purchasers may have by virtue of such issuance to accelerate the
maturity of the Notes, Holdings shall apply 50% of the net proceeds from the
issuance of such securities (A) first to prepay the Notes, without premium, and,
after the Notes have been repaid in full, (B) second to redeem the Junior
Preferred Shares at a redemption price equal to the liquidation preference of
such Junior Preferred Shares together with accrued dividends and dividends
deemed to have accrued pursuant to their terms; provided, however that, if any
Seller Preferred Stock shall be outstanding, Holdings shall apply such proceeds
to redeem the Seller Preferred Stock prior to redeeming the Junior Preferred
Shares pursuant to this clause (B). All such payments shall be accompanied by
payment of all interest accrued to the prepayment date on the principal of the
Notes being prepaid. Notwithstanding the foregoing, if at any time Holdings is
required to apply the proceeds of an equity issuance as described above and such
application is prohibited by the terms of the Senior Financing Documents, then
such proceeds
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shall be applied in accordance with the terms of the Senior Financing Documents.
(d) Section 6.8(f) sets forth certain adjustments that may apply in
connection with the repayment in full of the Notes and the redemption of the
Junior Preferred Shares.
2.8 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
(a) FMCAN and Holdings shall maintain a register for the Securities,
in which it shall provide for the registration of the Securities and of
transfers of the Securities.
(b) Upon surrender for registration or transfer of any Note or
certificate evidencing Junior Preferred Shares or Common Shares, FMCAN or
Holdings, as the case may be, at its expense, shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Notes or
certificates evidencing Junior Preferred Shares or Common Shares.
(c) Notes or certificates evidencing Junior Preferred Shares or
Common Shares may be exchanged at the option of any holder thereof for Notes or
certificates evidencing Junior Preferred Shares or Common Shares of a like
aggregate principal amount or number of shares, as appropriate, in the same name
but in different denominations. Whenever any Notes or certificates evidencing
Junior Preferred Shares or Common Shares are so surrendered for exchange, FMCAN
or Holdings, as the case may be, at its expense, shall execute and deliver the
Notes or certificates evidencing Junior Preferred Shares or Common Shares which
the holder making the exchange is entitled to receive.
(d) All Notes and certificates evidencing Junior Preferred Shares or
Common Shares issued upon any registration of transfer or exchange thereof shall
(i) in the case of Notes, be the
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valid obligations of FMCAN, evidencing the same debt, and entitled to the same
benefits, as Notes surrendered upon such registration of transfer or exchange,
and (ii) in the case of certificates evidencing Junior Preferred Shares or
Common Shares, represent the same securities, duly and validly authorized and
issued, fully paid and nonassessable and free of preemptive rights or Liens, and
be entitled to the same benefits, as certificates evidencing Junior Preferred
Shares or Common Shares surrendered upon such registration of transfer or
exchange.
(e) Each Note or certificate evidencing Junior Preferred Shares or
Common Shares presented or surrendered for registration or transfer or exchange
shall (if so required by FMCAN or Holdings) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to FMCAN or Holdings,
as the case may be, duly executed by the holder thereof or its attorney duly
authorized in writing.
2.9 REPLACEMENT OF SECURITIES. Upon receipt of evidence reasonably
satisfactory to FMCAN or Holdings, as appropriate, of the loss, theft,
destruction or mutilation of a Note or certificate evidencing Junior Preferred
Shares or Common Shares and upon delivery of an unsecured indemnity agreement
reasonably satisfactory to FMCAN or Holdings, as appropriate, from any holder of
such Note or certificate evidencing Junior Preferred Shares or Common Shares or,
in the case of any such mutilation, upon the surrender of such Note or
certificate evidencing Junior Preferred Shares or Common Shares for cancellation
to FMCAN or Holdings, as appropriate, at its principal office, FMCAN or
Holdings, as the case may be, at its expense, will execute and deliver, in lieu
thereof, a new Note or certificate evidencing Junior Preferred Shares or Common
Shares of like tenor, dated in the case of a Note, so that there will be no loss
of interest. Any Note or certificate evidencing Junior Preferred Shares or
Common Shares in lieu of which any such new Note or certificate evidencing
Junior Preferred
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Shares or Common Shares has been so executed and delivered by FMCAN or Holdings,
as the case may be, shall not thereupon be deemed an outstanding Note or
certificate evidencing Junior Preferred Shares or Common Shares for any purpose
under this Agreement.
2.10 TAXES. All payments by FMCAN of principal of, and interest on, the
Notes and all other amounts payable hereunder (excluding any payments in respect
of the Common Shares and the Junior Preferred Shares) shall be made free and
clear of and without deduction for any present or future income, stamp or other
taxes, fees, duties, withholding or other charges of any nature whatsoever
imposed by any taxing authority, other than taxes imposed on or measured by any
Purchasers' net income or receipts (such non-excluded items being hereinafter
referred to as "TAXES"). In the event that any withholding or deduction from any
payment to be made by FMCAN hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then FMCAN will:
(a) pay to the relevant authority the full amount required to be
so withheld or deducted;
(b) promptly forward to the applicable Purchaser an official
receipt or other documentation satisfactory to such Purchaser
evidencing such payment to such authority; and
(c) pay to such Purchaser such additional amount or amounts as
is necessary to ensure that the net amount actually received by such
Purchaser equals the full amount such Purchaser would have received
had no such withholding or deduction been required.
Upon the request of FMCAN, each Purchaser that is organized under the laws of a
jurisdiction other than the United States or any
-25-
state thereof shall, prior to the due date of any payments under the Notes,
execute and deliver to FMCAN, on or about the first scheduled payment date in
each calendar year, a United States Internal Revenue Service Form 4224 or Form
1001 (or any successor form), appropriately completed.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF
HOLDINGS AND FMCAN
To induce the Purchasers to enter into this Agreement and to purchase
the Securities hereunder, FMCAN and Holdings hereby represent, warrant and
covenant to the Purchasers as follows:
3.1 ORGANIZATION AND STANDING; CERTIFICATE OF
INCORPORATION AND BY-LAWS.
Each of Holdings, FMCAN and the Company and its Subsidiaries is a
corporation duly organized and validly existing under, and by virtue of, the
laws of its state of incorporation and is in good standing under such laws. Each
of Holdings, FMCAN and the Company and its Subsidiaries has, and Holdings and
its Subsidiaries following the Mergers will have, the corporate power and
authority to own and operate its properties and assets and to carry on its
business as currently conducted and as proposed to be conducted. Each of
Holdings, FMCAN and the Company and its Subsidiaries is duly qualified as a
foreign corporation, and is in good standing, in each jurisdiction in which its
failure to so qualify might reasonably be expected to have a material adverse
effect on its business, operations, prospects, assets or condition (financial or
otherwise). Each of Holdings, FMCAN and the Company and its Subsidiaries has
furnished the Purchasers with copies of its Certificate of Incorporation and By-
Laws and with all of the minutes of meetings of its shareholders and of its
Board of Directors. Such copies are true, correct and complete and contain all
amendments through the date of this Agreement and will contain all amendments
through the Closing.
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3.2 CORPORATE POWER; ENFORCEABILITY.
(a) Each of Holdings and FMCAN has all requisite corporate power to
enter into this Agreement and each of the Holdings, FMCAN, and the Company and
its Subsidiaries has or will have at the Closing all requisite corporate power
to enter into the Ancillary Agreements to which it is or will be a party. At
the Closing, FMCAN will have all requisite corporate power to issue and to sell
the Notes and to make payments on the Notes when due, and Holdings will have all
requisite corporate power to issue and sell the Junior Preferred Shares and
Common Shares. Each of Holdings, FMCAN and the Company and its Subsidiaries will
have at the Closing all requisite corporate power to carry out and perform all
of its respective obligations under the terms of this Agreement and the
Ancillary Agreements. This Agreement, and each Ancillary Agreement to which any
of Holdings, FMCAN, and the Company and its Subsidiaries is a party, is, and at
the Closing this Agreement, and the Ancillary Agreements to which any of them
will be a party, will be, valid and binding obligations of each of them which is
a party thereto, enforceable against them in accordance with their respective
terms.
(b) Following the Mergers, the Company will succeed to all of the
rights, privileges, obligations, and liabilities of FMCAN, including, without
limitation, obligations and liabilities under this Agreement, the Notes and the
Ancillary Agreements to which FMCAN is or will be a party. This Agreement, the
Notes and such Ancillary Agreements will be, at such time, the valid binding
obligations of the Company and enforceable against it in accordance with their
respective terms.
3.3 SUBSIDIARIES. Except for FMCAN, Holdings does not own, never has owned
and immediately following the Mergers will not own, directly or indirectly, any
shares of capital stock of or any equity interest in any Person. Holdings owns
all of the
-27-
authorized, issued and outstanding capital stock of FMCAN, free and clear of any
Lien whatsoever except Liens pursuant to the Senior Financing Documents. Except
as set forth on Schedule 3.3, the Company does not own, never has owned, and
immediately following the Closing and the consummation of the Acquisition will
not own, directly or indirectly, any shares of capital stock of or any equity
interest in any Person. Immediately following the Mergers, each Subsidiary of
the Company will be a Non-Material Subsidiary.
3.4 CAPITALIZATION.
(a) Immediately prior to the Closing, the authorized capital stock of
Holdings will consist of 2,000 Class A Common Shares, 2,000 Class B Common
Shares, 295 Class C Common Shares, 1,000 Class D Common Shares, and 2,500 shares
of preferred stock, without par value, including 1,500 shares of Seller
Preferred Stock, 625 Junior Preferred Shares, and 62 shares of Jordan Junior
Preferred Stock, none of which will be issued and outstanding. Immediately
following the Closing and the consummation of the Mergers, the authorized
capital stock of Holdings will consist of 2,000 Class A Common Shares, of which
544.135 will be issued and outstanding, 2,000 Class B Common Shares, of which
151.128 will be issued and outstanding, 1,000 Class C Common Shares, of which
294.737 will be issued and outstanding, 1,000 Class D Common Shares, of which 10
will be issued and outstanding, 1,500 shares of Seller Preferred Stock, of which
1,000 will be issued and outstanding, 625 Junior Preferred Shares, of which 280
will be issued and outstanding, and 62 shares of Jordan Junior Preferred Stock,
of which 28 will be issued and outstanding and such shares of capital stock will
be owned by the stockholders in the amounts set forth on Schedule 3.4(a).
(b) Immediately prior to the Closing, the authorized capital stock of
FMCAN will consist of 100 shares of common stock, all of which will be issued
and outstanding and owned by Holdings.
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(c) Immediately prior to the Closing, the authorized capital stock of
the Company will consist of 25,000 shares of common stock, of which 19,200 will
be issued and outstanding and owned by the Sellers and 300,000 shares of
preferred stock of which 291,830 will be issued and outstanding and owned by the
Sellers. Immediately following the Closing and the consummation of the Mergers,
the authorized capital stock of the Company will consist of 4,210 shares of
common stock, all of which will be issued and outstanding and owned by Holdings.
(d) Schedule 3.4(d) sets forth the authorized, issued and outstanding
capital stock of each Subsidiary of the Company immediately prior to the Closing
and immediately following the Closing.
(e) Except as set forth on Schedule 3.4(e), there are, and will be at
the Closing Date, no preemptive rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any of
Holdings, FMCAN or the Company or any of its Subsidiaries or any other Person of
any shares of capital stock or other securities of Holdings, FMCAN or the
Company or any of its Subsidiaries.
3.5 AUTHORIZATION.
(a) All corporate action on the part of Holdings and FMCAN and their
respective officers, directors and shareholders necessary to authorize (i) the
execution, delivery and performance of this Agreement and the Ancillary
Agreements to which it is or will be a party and (ii) the issuance and sale of,
and performance under, the Securities has been taken or will be taken prior to
the Closing.
(b) The Common Shares and Junior Preferred Shares when issued in
compliance with this Agreement, will be duly authorized
-29-
and validly issued, fully paid, nonassessable and free of any preemptive rights
or Liens other than as provided in the Shareholders Agreement. The Notes, when
issued in compliance with this Agreement, will be duly authorized and validly
issued and free of any Liens and will be enforceable against FMCAN, except (i)
as such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and (ii) as the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any such proceeding may be brought.
(c) All corporate action on the part of Holdings and its officers,
directors and shareholders necessary for the execution, delivery and performance
of the transactions contemplated by the Stock Purchase Agreement has been taken.
(d) All corporate action on the part of Holdings, FMCAN and the
Company and its Subsidiaries and their respective officers, directors and
shareholders necessary for the execution, delivery and performance of the Plan
of Mergers and the consummation of the Mergers will have been taken by the time
of the Mergers and, immediately following the consummation of the Mergers, all
corporate action on the part of the Company necessary for the execution,
delivery and performance of the Ancillary Agreements to which it is a party will
have been taken.
3.6 BUSINESS; CONTRACTS AND OBLIGATIONS.
(a) Holdings and FMCAN were formed to acquire the Company. Neither
Holdings nor FMCAN has engaged in any business other than in connection with the
transactions contemplated by this Agreement. Neither Holdings nor FMCAN has any
intention of engaging, directly or indirectly, in any business or transaction
other than the Acquisition and the ownership and operation of the
-30-
businesses operated by the Company and its Subsidiaries prior to the
Acquisition.
(b) Except for this Agreement and the Ancillary Agreements, and
except as set forth on Schedule 3.6 hereto, neither Holdings nor FMCAN is and
immediately following the Mergers will be a party to any written or oral:
(i) contract with any labor union;
(ii) agreement or indenture relating to the borrowing of money or to
the mortgaging or pledging of, or otherwise placing a Lien (other than Permitted
Liens) on, any material asset or material group of assets of Holdings, FMCAN or
any of their Subsidiaries;
(iii) guarantee of or reimbursement obligation with respect to any
obligation;
(iv) lease or agreement under which it is lessee of or holds or
operates any property, real or personal, owned by any other party (other than
leases and agreements entered into in the ordinary course of business and
calling for annual lease payments of less than $50,000);
(v) agreement or obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its capital stock;
(vi) agreement under which it has granted any person or entity any
registration rights (including piggyback rights);
(vii) Capital Lease; or
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(viii) other agreement that is material to its business or prospects.
3.7 LICENSES, AUTHORIZATIONS, TRADEMARKS, ETC. Each of Holdings, FMCAN and
the Company and its Subsidiaries owns and possesses or is licensed to use in its
business activities, and, immediately following the consummation of the Mergers,
Holdings and each of its Subsidiaries will own and possess or will be licensed
to use in its business activities all licenses, permits and authorizations, and
all patents, copyrights, service marks, trademarks and trade names and other
intangible rights necessary or useful to enable it to carry out the business
activities currently conducted by it and the business activities proposed to be
conducted by it except, where the failure to so own and possess or be licensed
to use could not reasonably be expected, singly or in the aggregate, to have a
material adverse effect on the business, operations, prospects, assets or
condition (financial or otherwise) of Holdings and its Subsidiaries taken as a
whole. Each patent, copyright, service xxxx, registered trademark, trade name
and other intangible right is listed on Schedule 3.7 hereto and all such items
(and all licenses, permits and authorizations) are and at such time will be in
full force and effect. The businesses of Holdings, FMCAN and the Company and
its Subsidiaries as currently conducted do not, and such businesses as proposed
to be conducted following the Closing will not, conflict with the rights of any
other party pursuant to laws relating to the protection of patents, service
marks, trademarks, copyrights, trade names and trade secrets, in a manner which
might reasonably be expected to have a material adverse effect on the business,
operations, prospects, assets or condition (financial or otherwise) of Holdings
and its Subsidiaries taken as a whole.
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3.8 COMPLIANCE WITH LAWS, INSTRUMENTS, AGREEMENTS AND OBLIGATIONS; NONE
BURDENSOME, ETC.
None of Holdings, FMCAN, or the Company or its Subsidiaries is or,
immediately following the Closing and the Mergers, neither Holdings nor any of
its Subsidiaries will be, in violation of any term of its Certificate of
Incorporation. None of Holdings, FMCAN, or the Company or its subsidiaries is
or, immediately following the Closing and the Mergers, neither Holdings nor any
of its Subsidiaries will be in violation of any term of any mortgage, indenture,
contract, lease, agreement, instrument, judgment, decree, order, statute, rule
or regulation applicable to it, where, in any such case, a violation thereof
might reasonably be expected to, singly or in the aggregate, have a material
adverse effect on the business, operations, prospects, assets or condition
(financial or otherwise) of Holdings and its Subsidiaries taken as a whole.
Except for Section 11.12 of Senior Note Purchase Agreement, Section 6.1 of the
Working Capital Facility and this Agreement, immediately following the Closing
and the Mergers, neither Holdings nor any of its Subsidiaries will be a party to
any agreement which prohibits or restricts the payment of dividends by it, the
redemption by it of shares of its capital stock or the payment by it of interest
or principal on its Indebtedness. The execution, delivery and performance of and
compliance with this Agreement and the Ancillary Agreements by Holdings, FMCAN
and the Company and its Subsidiaries, the issuance and sale of the Notes, the
Junior Preferred Shares and the Common Shares pursuant hereto and the payment of
principal of and interest on the Notes will not result in (i) any violation of
or be in conflict with or constitute a default under (x) any term of the
Certificate of Incorporation or By-Laws of Holdings, FMCAN, or the Company or
any of its Subsidiaries, or, (y) any term of any mortgage, indenture, contract,
lease, agreement, instrument, judgment, decree, order, statute, rule or
regulation that is now applicable to Holdings, FMCAN, or the Company or any of
its Subsidiaries, or any of their
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assets or that will be applicable to Holdings or any of its Subsidiaries, or any
of their assets immediately following the Closing and the Mergers, where, any
such violation thereof might reasonably be expected, singly or in the aggregate,
to have a material adverse effect on the business, operations, prospects, assets
or condition (financial or otherwise) of Holdings and its Subsidiaries taken as
a whole or (ii) the creation of any Lien, other than Permitted Liens and Liens
granted pursuant to the Senior Financing Documents, upon any of the properties
or assets of Holdings or FMCAN, or the Company or any of its Subsidiaries
pursuant to any such term. There is no such term which is likely materially and
adversely to affect the business, operations, prospects, assets or condition
(financial or otherwise) of Holdings or any of it Subsidiaries.
3.9 LABOR MATTERS. Except as set forth in Schedule 3.9, during the past
five years there has been no strike, work stoppage, slowdown or other labor
dispute or grievance involving FMCAN, Holdings, the Company or any of their
respective Subsidiaries, or employees of any of such Persons, which has had or
might have a material adverse effect on the business, operations, prospects,
assets or condition (financial or otherwise) of Holdings and its Subsidiaries
taken as a whole, nor to the knowledge of FMCAN or Holdings (following diligent
investigation) is any such action, dispute or grievance currently pending or
threatened against FMCAN, Holdings, the Company or any of their respective
Subsidiaries. Except as set forth in Schedule 3.9, none of FMCAN, Holdings, the
Company or any of their respective Subsidiaries is a party to any collective
bargaining agreement and none of them has any knowledge of any pending or
threatened effort to organize any of their employees. Schedule 3.9 also
contains a true and complete list of all existing written collective bargaining
agreements, material employment agreements, severance agreements, employee
benefit plans, trusts and programs (whether funded or unfunded, and including,
without limitation, all health and welfare plans and all
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pension and profit sharing plans (excluding Multiemployer Plans), thrift plans,
stock option, stock purchase and stock bonus plans, and other bonus and
incentive plans and policies), and other material agreements and employment
policies currently in effect relating to the employment of any of the present or
former officers or employees of FMCAN, Holdings, the Company and any of their
respective Subsidiaries or ERISA Affiliates, as now in effect, copies of which
have been supplied to Purchasers except as disclosed in Schedule 3.9. Schedule
3.9 also contains a true and complete list of all Multiemployer Plans now in
effect under which any employee of FMCAN, Holdings, the Company or any of their
respective Subsidiaries or ERISA Affiliates may now or hereafter be entitled to
receive any benefits.
Except as set forth in Schedule 3.9, no present or former employee or
independent contractor of Holdings, FMCAN, the Company or any of their
respective Subsidiaries has a pending claim or charge which has been asserted or
threatened against Holdings, FMCAN, the Company or any of their respective
Subsidiaries (whether under any foreign, federal, state or common law, through a
government agency, private arbitral body, or otherwise) for (A) overtime pay,
other than overtime pay for the current period; (B) wages, salaries or profit
sharing (excluding wages, salaries or profit sharing for the current payroll
period); (C) vacations, time off or pay in lieu of vacation or time off, other
than vacation or time off (or pay in lieu thereof) earned in respect of the
employer's current fiscal year; (D) any violation of any statute, ordinance,
contract or regulation relating to minimum wages or maximum hours of work; (E)
discrimination against employees on any basis; (F) unlawful or wrongful
employment or termination practices; (G) unlawful retirement, termination or
labor relations practices, breach of contract or other claim arising under a
collective bargaining agreement, individual, express or implied contract, or
policy, practice or procedure manual or statement; (H) any violation of
occupational safety or health standards, or any
-35-
violation of the Worker Adjustment Restraining and Notification Act ("WARN").
FMCAN, Holdings, the Company and their respective Subsidiaries are in
compliance in all material respective with all applicable federal, state and
local statutes, laws, rules, ordinances, regulations, codes, licenses and orders
relating to the employment of labor, including, without limitation, any
provisions thereof relating to wages, bonuses, collective bargaining agreements,
equal pay, occupational safety and health, equal employment opportunity,
wrongful or retaliatory termination of employment, WARN or benefit plans (other
than any Plan).
3.10 COMPLIANCE WITH ERISA. Except as set forth on Schedule 3.9:
(a) no Pension Plan which is subject to Part 3 of Subtitle B of Title
1 of ERISA or Section 412 of the Internal Revenue Code had an accumulated
funding deficiency (as such term is defined in Section 302 of ERISA or Section
412 of the Internal Revenue Code), whether or not waived, as of the last day of
the most recent fiscal year of such Pension Plan heretofore ended;
(b) no liability to the PBGC (other than required insurance premiums,
all of which have been paid when due) has been incurred and is outstanding with
respect to any Pension Plan, and there has not been any Reportable Event, or any
other event or condition, which presents a material risk of involuntary
termination of any Pension Plan by the PBGC;
(c) neither any Multiemployer Plan or Plan nor any trust created
thereunder, nor any trustee or administrator thereof, has, to the knowledge of
Holdings or FMCAN, engaged in a prohibited transaction (as such term is defined
in Section 4975 of the Internal Revenue Code described in Section 406 of ERISA)
that could
-36-
subject the FMCAN, Holdings, the Company, or any of their respective
Subsidiaries or ERISA Affiliates to any material tax or penalty on prohibited
transactions imposed under said Section 4975 or Section 502(i) of ERISA;
(d) no material liability has been incurred and is outstanding with
respect to any Multiemployer Plan as a result of the complete or partial
withdrawal by FMCAN, Holdings, the Company or any of their respective
Subsidiaries or ERISA Affiliates from such Multiemployer Plan under Title IV of
ERISA, nor has FMCAN, Holdings, the Company or any of their respective
Subsidiaries or ERISA Affiliates been notified by any Multiemployer Plan that
such Multiemployer Plan is currently in reorganization or insolvency under and
within the meaning of Section 4241 or 4245 of ERISA or that such Multiemployer
Plan intends to terminate or has been terminated under Section 4041A of ERISA;
(e) FMCAN, Holdings, the Company and their respective Subsidiaries
and ERISA Affiliates are in compliance in all material respects with all
applicable provisions of ERISA and the Internal Revenue Code and the regulations
and published interpretations thereunder with respect to all Plans and
Multiemployer Plans;
(f) as of the Closing Date, the actuarial present value of all
benefit liabilities (as defined in Section 4001(a)(16) of ERISA) under all
Pension Plans that are subject to Title IV of ERISA did not exceed the fair
market value of the assets allocable to such liabilities, determined as if all
such Plans were terminated as of the Closing Date, and by using the Plan's
actuarial assumptions as set forth in the most recent actuarial report
pertaining to each Plan;
(g) the aggregate liability under Title IV of ERISA to the
Multiemployer Plans that would be incurred by FMCAN, Holdings, the Company and
any of their respective Subsidiaries and ERISA
-37-
Affiliates by reason of a complete withdrawal (within the meaning of Section
4203 of ERISA) by all such Persons from all such Multiemployer Plans following
the most recent plan years ended of such Multiemployer Plans would not exceed
$250,000;
(h) no event has occurred with respect to any Plan or with respect to
any other employee pension benefit plan (as defined in Section 3(2) of ERISA)
established or maintained at any time during the five-year period immediately
preceding the Closing Date for the benefit of employees of FMCAN, Holdings, the
Company or any of their respective Subsidiaries or ERISA Affiliates (such ERISA
Affiliates determined by reference to the relationship existing at any time
during such five-year period) which presents a risk of material liability of
FMCAN, Holdings, the Company or any of their respective Subsidiaries or ERISA
Affiliates under Sections 4064 or 4069 or Subtitle E of Title IV of ERISA;
(i) except as provided under the Non-Competition Agreements, no Plan
provides for continued medical, health, life or other welfare benefits for
employees after they leave the employment of FMCAN, Holdings, the Company or any
of their respective Subsidiaries or ERISA Affiliates (other than any such
welfare benefits required to be provided under the Consolidated Omnibus Budget
Reconciliation Act of 1985 or other similar federal or state law); and
(j) none of FMCAN, Holdings, the Company or any of their respective
Subsidiaries or ERISA Affiliates is a party in interest with respect to any
employee benefit plan (as defined in Section 3(3) of ERISA) other than any Plan
or Multiemployer Plan.
3.11 LITIGATION, ETC. There are, and immediately following the Closing
there will be, no actions, proceedings or investigations pending against any of
Holdings, FMCAN, or the Company or any of its Subsidiaries or any of their
officers,
-38-
directors or shareholders (in their capacity as such an officer, director or
shareholder) (or, to the best knowledge of Holdings and FMCAN (following
diligent investigation) any basis therefor or threat thereof), which, either in
a single case or in the aggregate, might reasonably be expected to result in any
material adverse change in the business, operations, prospects, assets or
conditions (financial or otherwise) of Holdings, FMCAN or the Company and its
Subsidiaries taken as a whole or in any material impairment of the right or
ability of each of Holdings, FMCAN or the Company or any of its Subsidiaries to
carry on its business as now conducted or as proposed to be conducted, or in any
material liability on its part and none which questions the validity of this
Agreement, any Ancillary Agreement or any action taken or contemplated in
connection herewith or therewith. Schedule 3.11 lists each legal, administrative
or other proceeding that involves a claim against Holdings, FMCAN, the Company,
or any of its Subsidiaries asserting an aggregate liability of $50,000 or more.
Schedule 3.11 includes with respect to each matter identified, if applicable,
the case title, the court, the court file number, the date filed, the law firm
representing Holdings, FMCAN, the Company or such Subsidiary, as the case may
be, and such other information as the Purchasers may reasonably request.
3.12 GOVERNMENTAL CONSENTS. No consent or authorization of, or filing
with, any governmental authority (including, without limitation, any
authorization or filing or the expiration of any waiting period under the Xxxx-
Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976) on the part of either
Holdings, FMCAN or the Company or any of its Subsidiaries or the Sellers is
required in connection with the valid execution, delivery, performance, validity
or enforceability of this Agreement or any Ancillary Agreement, the offer, sale
or issuance of the Securities or any securities to be issued pursuant to the
Ancillary Agreements, the payment of interest and principal on the Notes or the
consummation of any transaction contemplated hereby or thereby, except, if
required,
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qualifications or filings under any applicable federal securities and blue sky
laws, which qualifications or filings will have been obtained or made prior to
the Closing.
3.13 OFFERINGS. None of Holdings, FMCAN or the Company or any of its
Subsidiaries has, directly or indirectly, offered the Securities, or any part
thereof, or (within the last six months) any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, anyone other than the Purchasers and not
more than 35 other institutional investors. Assuming the accuracy of the
representations and warranties of the Purchasers contained herein, the offer,
issuance and sale of the Securities in conformity with the terms of this
Agreement constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act and comply or will comply with federal
securities and state blue sky laws applicable to such offer, sale and issuance.
3.14 USE OF PROCEEDS. Holdings and FMCAN will use substantially all of the
proceeds received therefrom to finance the transactions set forth in the
Recitals hereto, for expenses incident to such transactions and for working
capital.
3.15 CERTAIN TRANSACTIONS. Except pursuant to this Agreement or the
Ancillary Agreements, or as set forth on Schedule 3.15 hereto, immediately
following the Closing and Mergers, neither Holdings nor any of its Subsidiaries
will be indebted, directly or indirectly, to any of its respective officers,
directors or shareholders or to their respective spouses or children, except
with respect to salaries and related employee compensation accrued in the
ordinary course of business, in any amount whatsoever; and none of such
officers, directors or shareholders, or any members of their immediate families,
will be indebted to either of Holdings or any of its Subsidiaries in any amount
whatsoever or will have any
-40-
direct or indirect ownership interest in any other firm or corporation (other
than securities of publicly traded companies in which such Persons own, in the
aggregate, less than five percent of any outstanding class of securities) which
competes with Holdings or any of its Subsidiaries. Except as set forth on
Schedule 3.15 hereto, immediately following the Closing and the Mergers, no
officer, director or shareholder of Holdings or any of its Subsidiaries or any
member of their immediate families, will be, directly or indirectly, interested
in any material contract (other than this Agreement and the Ancillary
Agreements) with either of Holdings or any of its Subsidiaries.
3.16 FINANCIAL STATEMENTS.
(a) Attached hereto as Schedule 3.16 are the following financial
statements: (i) a consolidated unaudited pro forma balance sheet of the Company
as of September 30, 1991, giving effect to the transactions contemplated hereby
and by the Ancillary Agreements and (ii) an audited consolidated balance sheet
of the Company and its Subsidiaries as of August 31, 1991, together with the
related statement of income and changes in financial condition for the fiscal
year then ended (collectively, the "Financial Statements").
(b) The Financial Statements (other than the pro forma balance sheets
described in clause (i) of the preceding paragraph) fairly present the financial
position of the Company and its Subsidiaries as of the pertinent dates and the
results of its operations for the pertinent fiscal periods then ended in
accordance with GAAP applied on a consistent basis throughout the periods
involved.
(c) At the completion of the Closing and the Mergers, neither
Holdings nor any of its Subsidiaries will have any material liability of any
nature whatsoever, whether or not required to be
-41-
disclosed by GAAP, other than liabilities disclosed in the Financial Statements
or in the Stock Purchase Agreement, liabilities that have arisen after August
31, 1991 in the ordinary course of business and other liabilities expressly
disclosed in the schedules to this Agreement.
3.17 ADVERSE OR NEW DEVELOPMENTS. Except as set forth on Schedule 3.17
hereto, since August 31, 1991 there has been no material adverse change in the
business, prospects, assets, condition (financial or otherwise), affairs or
operations, present or proposed, of Holdings, FMCAN, or the Company and its
Subsidiaries taken as a whole, and none of them nor any of their Subsidiaries
has:
(a) except as provided in this Agreement and the Ancillary
Agreements, issued or agreed to issue, any bonds, notes or other debt
securities;
(b) incurred any borrowings or incurred or become subject to any
liabilities (absolute, accrued, contingent or otherwise) other than liabilities
(i) in connection with this Agreement and the Ancillary Agreements, (ii) that
are specifically disclosed elsewhere in this Agreement or in the Schedules
attached hereto or (iii) ordinary trade indebtedness arising in the ordinary
course of business;
(c) discharged or satisfied any Lien or paid any obligation or
liability;
(d) except as contemplated by this Agreement, declared or made any
payment or distribution of cash or other property to shareholders with respect
to its capital stock, or purchased or redeemed any shares of its capital stock;
-42-
(e) mortgaged or pledged any of its properties or assets, or
subjected them to any Lien except Permitted Liens;
(f) sold, assigned or transferred any of its material assets,
tangible or intangible, or cancelled any debts or claims; or
(g) suffered any extraordinary losses or waived any rights of
material value, whether or not in the ordinary course of business or consistent
with past practice.
3.18 TITLE TO PROPERTIES AND ASSETS. The Company and its Subsidiaries have
and, immediately following the consummation of the Mergers, Holdings and its
Subsidiaries will have good and valid title to, or a valid leasehold interest
in, the properties and assets (including, but not limited to, all copyrights,
patents, service marks, trademarks, trade names, know-how and other proprietary
rights) used in the Business or shown on the Financial Statements, in each case
free and clear of all Liens, except (i) as specifically disclosed in the notes
to the Financial Statements, (ii) for Permitted Liens or (iii) for assets
disposed of in the ordinary course of business. The buildings, equipment and
other tangible assets of the Company and its Subsidiaries are and, immediately
following the consummation of the Mergers, the buildings, equipment and other
tangible assets of Holdings and its Subsidiaries will be, in good operating
condition subject to ordinary wear and tear except where the failure to be in
such condition could not reasonably be expected, singly or in the aggregate, to
have a material adverse effect on the business, operations, assets or condition
(financial or otherwise) of Holdings and its Subsidiaries taken as a whole. The
Company and its Subsidiaries own and control or have a valid leasehold interest
in, all assets necessary to conduct the business conducted by the Company and
its Subsidiaries and, immediately following the consummation of the Mergers,
Holdings and its Subsidiaries will own and control, or will have a valid
leasehold interest in, all assets
-43-
necessary to conduct the business to be conducted by Holdings and its
Subsidiaries.
3.19 TAX MATTERS. Holdings and FMCAN have not been obligated to file any
material tax returns of any nature whatsoever. The Company and each of its
Subsidiaries (i) has filed all tax returns that it has been required to file
(and all such returns are true and correct in all material respects), (ii) has
timely paid all taxes due and payable on or before the date hereof and has made
adequate provision in the Financial Statements for all taxes that are not due
and payable on or before the date hereof, whether or not disputed, for all
periods through the date hereof, (iii) has timely paid all taxes which it is
obligated to withhold from amounts owing to any employee (including, but not
limited to, social security taxes), creditor or third party, and (iv) has not
waived any statute of limitations with respect to taxes or agreed to any
extension of time with respect to a tax assessment or deficiency. No
governmental entity has, during the past three years, examined or is in the
process of examining any tax return of the Company or any of its Subsidiaries.
No governmental entity has proposed (tentatively or definitively), asserted or
assessed or, threatened to propose or assert, any deficiency, assessment or
claim for taxes and there would be no basis for any such delinquency, assessment
or claim. There are no agreements, waivers or other arrangements providing for
an extension of time with respect to the assessment of any tax or deficiency
against the Company or any of its Subsidiaries or with respect to any tax return
filed or to be filed by the Company or any of its Subsidiaries. Following the
Closing, the assessment of any additional taxes for periods for which returns
have been filed is not expected to exceed the liability recorded therefor on the
Financial Statements. There are no material unresolved questions or claims
concerning the tax liability of the Company or any of its Subsidiaries.
Following the Acquisition, Holdings and its Subsidiaries will not have any
liability of any nature whatsoever
-44-
for taxes due and payable relating to the ownership or operation of the Business
or the assets thereof prior to the Closing.
3.20 ANCILLARY AGREEMENTS. Holdings has delivered to the Purchasers
complete and correct copies of the Stock Purchase Agreement in the form in which
it has been executed, and of all exhibits and schedules thereto. This
Agreement, the Securities and the Ancillary Agreements constitute (i) the only
agreements relating to the transactions to be consummated at the Closing to
which any of Holdings, FMCAN or the Company or any of its subsidiaries is a
party and (ii) the only agreements relating to the Acquisition of which
Holdings, FMCAN or the Company or any of its subsidiaries has knowledge. The
Ancillary Agreements have not been amended and none of Holdings, FMCAN or the
Company has, by action or inaction, waived any rights thereunder.
3.21 CERTAIN AGREEMENTS. Neither Holdings nor, to its knowledge, any of its
shareholders (other than the Purchasers) is party to any agreement relating to
the voting, disposition, or redemption of Holdings's capital stock, except for
this Agreement and the Ancillary Agreements.
3.22 INSURANCE. Schedule 3.22 hereto contains a list of all insurance
policies and endorsements thereto that will be in effect immediately following
the Closing with respect to Holdings and its Subsidiaries, or covering its or
their properties, inventories, equipment, furniture, fixtures, operations,
damages to the lives and property of others, or the lives of, or performance of
their duties by, its or their directors, officers and employees. All such
policies and endorsements will be in full force and effect at such time.
3.23 INDEBTEDNESS; LIENS. Immediately following the Closing, (i) neither
Holdings nor any of its Subsidiaries will have any outstanding Indebtedness
except Indebtedness permitted by Section
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7.4 hereof and (ii) no assets of either Holdings or any of its Subsidiaries will
be subject to any Liens except Permitted Liens and Liens permitted under Section
7.5.
3.24 CERTAIN ACTIVITIES. None of Holdings, FMCAN, or the Company or any of
its Subsidiaries is or will be engaged primarily, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any margin stock within the meaning of any regulation, interpretation
or ruling of the Board of Governors of the Federal Reserve System. In no event
shall Holdings or FMCAN directly or indirectly apply any part of the proceeds
from the sale of any Security hereunder to the purchasing or carrying of any
margin stock within the meaning of any such regulation, interpretation or
ruling.
3.25 GOVERNMENTAL REGULATION. None of Holdings, FMCAN, or the Company or
any of its subsidiaries is, or immediately following the Closing will be,
subject to regulation under the Public Utility Holdings Act of 1935, the Federal
Power Act, the Investment Company Act of 1940, the Interstate Commerce Act, or
to any federal or state statute or regulation limiting its ability to incur
Indebtedness for money borrowed or regulating its issuance of capital stock
(except for the Securities Act, the Securities Exchange Act of 1934, as amended,
and any applicable state securities laws).
3.26 DISCLOSURE. This Agreement (including the Exhibits and Schedules
hereto) and the Ancillary Agreements do not contain any untrue statement by
Holdings or FMCAN of a material fact and do not omit to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. There is no fact which materially adversely affects, or will
materially adversely affect, the business, prospects, assets, condition
(financial or otherwise), affairs or operations, present and proposed, of
Holdings, FMCAN, or the Company and its Subsidiaries
-46-
taken as a whole, which has not been set forth in this Agreement or otherwise
disclosed in writing to each of the Purchasers by Holdings or FMCAN.
3.27 BROKERS. Except as set forth on Schedule 3.27, neither Holdings,
FMCAN nor any officer, agent or employee of Holdings or FMCAN has retained any
broker or finder in connection with the transaction contemplated by this
Agreement and the Ancillary Agreements other than those fees paid or payable by
Holdings pursuant to the Investment Banking Fee Agreement.
3.28 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.28 hereto,
(i) no Person (including, without limitation, any previous owner, lessor or
sublessor of property of the Company or any of its Subsidiaries) has generated,
used, treated, stored, released or disposed of or has suffered or permitted
anyone else to generate, use, transport, treat, store, release or dispose of
Hazardous Substances on any of its properties or any of the properties to be
acquired, directly or indirectly, by Holdings and FMCAN pursuant to the
transaction contemplated hereby (whether owned, leased, subleased or used by
such Person) in violation of any applicable statutes, regulations or ordinances,
including, without limitation, the Resource Conservation and Recovery Act (42
U.S.C. Section 6901, ET SEQ., "RCRA") and the regulations issued thereunder,
pertinent state or local environmental protection or toxic substances statutes
or similar legal regimes; (ii) there has been no generation, use,
transportation, handling, treatment, storage, spill, release, disposal or any
other discharge of Hazardous Substances on or from any properties owned, leased,
subleased or used by Holdings, FMCAN or the Company or any of its Subsidiaries,
or on or from any adjacent properties or facilities, that, in any such case,
could subject Holdings, FMCAN or the Company or any of its Subsidiaries or their
shareholders to liability or require reporting or notification to any
governmental entity; (iii) no asbestos which is or could become friable,
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electrical equipment containing any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per million, or underground
storage tanks or surface impoundments, are located on or under (A) any
properties leased, subleased or used by Holdings, FMCAN, or the Company or any
of its Subsidiaries which could reasonably be expected, singly or in the
aggregate, to have a material adverse effect on the business operations, assets
or condition (financial or otherwise) of Holdings and its Subsidiaries taken as
a whole or (B) any properties owned by Holdings, FMCAN, the Company or any of
its subsidiaries; (iv) Holdings, FMCAN, the Company and its Subsidiaries have
not received (A) any notice or claim to the effect that any of them may be
liable to any person as a result of the release or threatened release of any
Hazardous Substances or (B) any letter or request for information under Section
104 of the Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S. Section 9604) or comparable state laws. To the best knowledge of
Holdings and FMCAN none of the operations of the Company or any of its
Subsidiaries is the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release or a threatened
release of any Hazardous Substance at any facility of the Company or its
Subsidiaries, or at any other location; (v) Holdings, FMCAN, the Company and its
Subsidiaries have obtained all permits, licenses and other governmental
authorizations which are required with respect to the operation of their
business under all applicable laws relating to the environment, health and
safety ("Required Environmental Permits"); (vi) Holdings, FMCAN, the Company and
its Subsidiaries are in compliance with all material terms and conditions of all
Required Environmental Permits; and (vii) Holdings, FMCAN, the Company and its
Subsidiaries are not subject to any material liabilities (contingent or
otherwise) pursuant to any outstanding written order or agreement with any
governmental authority or private party respecting any environmental laws or any
environmental claims.
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3.29 SOLVENCY. Upon the consummation of all the transactions contemplated
by this Agreement and the Ancillary Agreements, based upon certain valuations
and the Financial Statements, and upon each of Holdings, and FMCAN's knowledge
of the business, operations, prospects, assets and condition (financial or
otherwise) of Holdings and its Subsidiaries:
(a) The present fair salable value of the assets of Holdings and its
Subsidiaries will exceed the amount that will be required to pay the probable
liability on the existing debts (whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent) of Holdings and its Subsidiaries,
as they become absolute and matured;
(b) The sum of the debts (whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent) of Holdings and its Subsidiaries
will not exceed all of the property of Holdings and its Subsidiaries, at a fair
valuation;
(c) The capital of Holdings and its Subsidiaries will not be
unreasonably small for Holdings and its Subsidiaries to carry on their
businesses; and
(d) Holdings and its Subsidiaries do not intend to, or believe they
will, by virtue of consummating the transactions contemplated hereby, incur
debts that will be beyond its ability to pay as they mature.
3.30 STOCK PURCHASE AGREEMENT REPRESENTATIONS. The representations and
warranties of the Company and the Sellers contained in the Stock Purchase
Agreement are true and correct in all material respects.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally and not jointly represents and warrants to
Holdings as follows:
4.1 ORGANIZATION AND STANDING; POWER; ENFORCEABILITY. Such Purchaser is
duly organized and validly existing under the laws of the state of its
organization with power and authority under such laws to enter into and perform
its obligations under this Agreement and the Ancillary Agreements to which it is
a party. Such Purchaser has the power and authority pursuant to its governing
instruments to enter into and perform its obligations under this Agreement and
the Ancillary Agreements to which it is a party. This Agreement and the
Ancillary Agreements to which such Purchaser is a party have been duly
authorized, executed and delivered by it and each of this Agreement and the
Ancillary Agreements to which it is a party is enforceable against it in
accordance with their respective terms.
4.2 INVESTMENT. Such Purchaser is purchasing the Securities with no
intention of distributing or reselling the Securities or any part thereof, or
interest therein, in any transaction which would be in violation, or cause
Holdings to be in violation, of the securities laws of the United States or any
state thereof, without prejudice, however, to such Purchaser's right at all
times to sell or otherwise dispose of all or any part of the Securities under an
effective registration statement under the Securities Act or under an exemption
from such registration requirements available under the Securities Act and any
applicable state securities laws, and subject, nevertheless, to the disposition
of such Purchaser's property being at all times within the Purchaser's control.
4.3 NO PUBLIC MARKET. Such Purchaser understands that the Securities have
not been registered under the Securities Act by reason of their issuance in a
transaction exempt from the
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registration and prospectus delivery requirements of the Securities Act pursuant
to Section 4(2) thereof, and that such Purchaser (or the Person on whose behalf
it is acting) will have to hold the Securities, and bear the economic risk of
such investment, indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from registration.
4.4 EXPERIENCE. Without in any way limiting the force or effect of (or
the allocation of risks effected by) the representations and warranties of
Holdings and FMCAN or any other party contained in this Agreement or any
Ancillary Agreement, such Purchaser acknowledges that it and its representatives
are experienced in, and capable of, evaluating the financial condition and
prospects of corporations like Holdings, FMCAN and the Company and such
Purchaser has had the opportunity to obtain the information it deems necessary
in connection with the transactions contemplated hereby.
4.5 BROKERS. Neither of such Purchaser nor any officer, agent or employee
acting on its behalf retained any broker or finder in connection with the
transactions contemplated by this Agreement and the Ancillary Agreements.
SECTION 5. CONDITIONS TO CLOSING
5.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASERS. Each Purchaser's
obligation to purchase the Securities pursuant to this Agreement is subject to
the fulfillment, at or prior to the Closing, of the following conditions, any
one or more of which may be waived by such Purchaser:
(a) The representations and warranties of Holdings and FMCAN
contained in this Agreement shall be true and correct in all material respects
when made, and shall be true and correct in all
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material respects on the Closing Date with the same force and effect as if they
had been made on and as of such date.
(b) Holdings and FMCAN shall have performed all material obligations
and conditions herein required to be performed or observed by them Under this
Agreement at or prior to the Closing.
(c) All other parties to the transactions to be consummated at the
Closing pursuant to this Agreement and the Ancillary Agreements shall be ready,
willing and able to consummate such transactions, and all such transactions,
including the Acquisition, shall be consummated simultaneously.
(d) Xxxxxxx X. Max, Esq., counsel to Holdings and FMCAN, shall have
delivered an opinion addressed to the Purchasers, dated the date of the Closing,
substantially the same, in form and content, as that attached hereto as Exhibit
E.
(e) Winston & Xxxxxx, counsel to the Sellers shall have delivered the
opinion described in Section 7.03 of the Stock Purchase Agreement (which will be
addressed to the Purchasers).
(f) The purchase of the Securities, the Acquisition, the Mergers and
the other transactions contemplated hereby shall be permitted by all laws and
regulations to which Holdings, FMCAN, the Company and its Subsidiaries, the
Purchasers and the other parties thereto are subject.
(g) All corporate and other proceedings in connection with the
transactions to be consummated at the Closing, all Ancillary Agreements and all
documents and instruments incident to such transactions, shall be satisfactory
in substance and form to the Purchasers and to special counsel to the
Purchasers.
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(h) The Shareholders Agreement shall have been executed and delivered
by all parties thereto.
(i) The Holdings Guaranty shall have been executed and delivered by
Holdings.
(j) The Confirmation and Assumption Agreement shall have been
executed by all parties thereto.
(k) If Holdings shall have been entitled, under any provision of
Article X of the Stock Purchase Agreement, to terminate the Stock Purchase
Agreement, and shall have elected not to do so, the Purchasers in their sole
discretion shall have concurred in that election.
(l) Each of Holdings and FMCAN shall have delivered to the Purchasers
a certificate, executed by its President or Vice President and Secretary or
Assistant Secretary, dated the Closing Date, certifying to the fulfillment of
the conditions specified in Sections 5.1(a), (b) and (c) hereof.
(m) Duff & Xxxxxx Financial Consulting Co. shall have delivered a
letter addressed to the Purchasers in the form attached hereto as Exhibit F.
(n) Purchasers shall have received a site assessment environmental
report with respect to all material real properties owned by the Company and its
Subsidiaries by environmental engineers satisfactory to the Purchasers and such
report shall be satisfactory to the Purchasers.
5.2 CONDITIONS TO OBLIGATIONS OF HOLDINGS AND FMCAN. The obligation of
Holdings and FMCAN to issue and sell the Securities pursuant to this Agreement
is subject to the fulfillment, at or
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prior to the Closing, of the following conditions, any one or more of which may
be waived by it:
(a) The representations and warranties of the Purchasers contained in
this Agreement shall be true and correct in all material respects when made, and
shall be true and correct in all material respects on the Closing Date with the
same force and effect as if they had been made on and as of such date; and
(b) The conditions set forth in Section 5.1(f) hereof shall have been
fulfilled.
SECTION 6. AFFIRMATIVE COVENANTS OF HOLDINGS AND FMCAN
Each of Holdings and FMCAN hereby covenants and agrees that it will
comply, and will cause each of its Subsidiaries to comply, with such of the
following provisions as are applicable to it or them:
6.1 FINANCIAL STATEMENT AND RELATED INFORMATION. Holdings and FMCAN shall
furnish or cause to be furnished to each Material Holder:
(a) as soon as available, but in any event no later than 90 days
after the end of each fiscal year (or, if Holdings has a class of securities
registered with the Commission, contemporaneously with the filing with the
Commission), a consolidated balance sheet for Holdings and its Subsidiaries as
at the end of such fiscal year, and the related statements of income,
shareholders' equity and changes in cash flows for such fiscal year, prepared in
accordance with GAAP and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and certified by
Xxxxxx Xxxxxxxx & Co. or another firm of independent public accountants of
national standing which shall be retained by Holdings;
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(b) as soon as available, but in any event no later than 45 days
after the end of each fiscal quarter of each fiscal year (including, without
limitation, the fourth quarterly period thereof) (or, if Holdings has a class of
securities registered with the Commission, contemporaneously with the filing
with the Commission), a consolidated balance sheet for Holdings as at the end of
such quarter, and the related statements of income, shareholders' equity and
changes in cash flows for such quarter and for the portion of the fiscal year
then ended, prepared in accordance with GAAP (except for the absence of year-end
adjustments) and setting forth in each case in comparative form the figures for
the corresponding periods of the previous fiscal year, all in reasonable detail
and certified, subject to changes resulting from year-end adjustments and notes,
by the principal financial officer of Holdings;
(c) as soon as available, but in any event no later than 45 days
after the end of each of the first six months following the Closing Date and no
later than 30 days after the end of each month thereafter, a consolidated
balance sheet for Holdings as at the end of such month, and the related
statements of income, shareholder's equity and changes in cash flows for such
month and for the portion of the fiscal year then ended, prepared in accordance
with GAAP (except for the absence of year-end adjustments) and setting forth in
each case in comparative form the figures from the corresponding periods to the
extent available of the previous fiscal year, all in reasonable detail and
certified, subject to changes resulting from year-end adjustments and notes, by
the principal financial officer of Holdings;
(d) no later than 60 days after the end of each fiscal year, the
operating budget or fiscal projections for Holdings and its Subsidiaries for the
succeeding fiscal year;
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(e) Together with each delivery of financial statements of Holdings
and its Subsidiaries pursuant to Sections 6.1(a) and (b) commencing with the
second fiscal quarter ending after the Closing Date, a management discussion and
analysis of the results of operations and financial condition of Holdings and
its Subsidiaries at the end of and for the period covered by such financial
statements, in reasonable detail, describing any significant events relating to
Holdings and its Subsidiaries occurring during such fiscal period and discussing
the reasons for any significant variations from the corresponding figures
contained in Holdings, financial statements for comparable periods of its
immediately preceding fiscal year.
(f) promptly after the filing thereof, copies of all reports,
documents and information, if any, filed by Holdings or its Subsidiaries with
the Commission; and
(g) as promptly as possible, copies of all statements, releases and
information, if any, sent by Holdings or its Subsidiaries to shareholders of
Holdings;
(h) promptly and in any event within 10 days after FMCAN or Holdings
knows or, in the case of a Pension Plan, has reason to know, (i) that a
Reportable Event with respect to any Pension Plan has occurred, (ii) that any
Pension Plan or Multiemployer Plan is or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA, (iii) that Holdings,
FMCAN or any of their Subsidiaries or ERISA Affiliates will or may incur any
material liability to or on account of a Pension Plan or Multiemployer Plan
under Title IV of ERISA, (iv) that any other material liability under ERISA or
the Internal Revenue Code has been asserted against Holdings, FMCAN or any of
their Subsidiaries or ERISA Affiliates, including (x) material liability under
Section 302 of ERISA or Section 412 of the Internal Revenue Code for failure to
satisfy the minimum funding standards or failure to make
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a required contribution, (y) under Sections 409, 502(c)(i) or (1) or 4071 of
ERISA, or (z) under Chapter 43 of the Internal Revenue Code; or (v) that, other
than as provided under the Non-Competition Agreements, any liability has been
incurred by Holdings, FMCAN or any of their Subsidiaries or ERISA Affiliates
with respect to any employer-provided continued welfare benefits for employees
or consultants after they leave employment of or are no longer retained by
Holdings, FMCAN or any of their Subsidiaries or ERISA Affiliates (other than any
such benefits required to be provided by the Consolidated Omnibus Budget
Reconciliation Act of 1985 or other similar federal or state law); an Officer's
Certificate of Holdings or FMCAN setting forth information as to such occurrence
and what action, if any, Holdings, FMCAN or such Subsidiary or ERISA Affiliate
is required or proposes to take with respect thereto, together with any notices
concerning such occurrences which are (a) required to be filed by Holdings,
FMCAN or such Subsidiary or ERISA Affiliate or the plan administrator of any
such Plan controlled by Holdings, FMCAN or such Subsidiary or ERISA Affiliate
with the Internal Revenue Service or the PBGC, or (b) received by Holdings,
FMCAN or such Subsidiary or ERISA Affiliate from any plan administrator of a
Plan not under their control or from a Multiemployer Plan;
(i) promptly and in any event not later than 10 days after the date
of filing thereof with the Internal Revenue Service or the PBGC or (as the case
may be) the date received by Holdings, FMCAN or their Subsidiaries or ERISA
Affiliates, a copy of each annual report (Form 5500 Series) of any Pension Plan
prepared by Holdings, FMCAN or any of their Subsidiaries or ERISA Affiliates or
of any such report of any Multiemployer Plan received by any of them; and
promptly, and in any event not later than 10 days following the deadline for the
filing of an annual report with the Internal Revenue Service or the PBGC by a
Multiemployer Plan, a copy of a written request pursuant to Section 4221(e) of
ERISA which shall be made by Holdings, FMCAN, the Company or any of their
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Subsidiaries or ERISA Affiliates that are obligated to contribute to such
Multiemployer Plan, to the plan sponsor of such Multiemployer Plan for either an
estimate of its or their potential withdrawal liability with respect to such
Multiemployer Plan or that such plan sponsor provide such general information
necessary for it or them to compute such potential withdrawal liability, and
promptly and in any event not later than 10 days after the date of receipt of
such estimate or information from such plan sponsor, either a copy of the
estimate from the plan sponsor or notice of its or their computation of such
potential withdrawal liability;
(j) promptly upon an officer of Holdings or any of its Subsidiaries
obtaining knowledge of any material adverse change in the business, assets,
financial condition or results of operations of Holdings or its Subsidiaries, a
certificate of the principal financial officer or chief operating officer of
Holdings setting forth the details thereof and what action Holdings is taking
with respect thereto.
(k) promptly upon an officer of Holdings or any of its Subsidiaries
obtaining knowledge of the occurrence thereof, a certificate of the principal
financial officer of chief operating officer of the Holdings specifying the
nature and date of any event or occurrence which constitutes an Event of Default
or which, with notice of the lapse of time, or both, would constitute an Event
of Default;
6.2 INSPECTION. As often as may be reasonably requested, each of Holdings
and FMCAN will permit any authorized representative designated by a Material
Holder to visit and inspect any of its properties or the properties of any of
its Subsidiaries, including their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss their affairs, finances and
accounts with their officers and independent public
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accountants, all upon at least three days, notice and at reasonable times during
normal business hours.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. For so long as
Threshold Securities shall remain outstanding:
(a) Holdings will engage in no business other than the ownership of
the stock of FMCAN or, after the consummation of the Mergers, the Company.
FMCAN will engage in no business other than (x) the ownership and operation of
the Business and any other businesses reasonably related thereto and (y) the
ownership of the stock of Subsidiaries of the Company.
(b) Each of Holdings and FMCAN will, and will cause its Subsidiaries
(other than Non-Material Subsidiaries) to, comply with all terms of their
respective corporate charters and bylaws and to (i) preserve, renew and keep in
full force and effect each of their corporate existences and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of their businesses, and (ii) comply with all terms of any
mortgage, indenture, contract, agreement, instrument, statute, rule or
regulation applicable to any of them or to any of their assets (excluding the
Senior Financing Documents, a breach of which shall be governed by Section
10.1(e)), except to the extent that the failure to comply with clause (i) or
(ii) hereof would be unlikely, singly or in the aggregate, to have a material
adverse effect on the business, prospects, operations, assets or condition
(financial or otherwise) of Holdings and its Subsidiaries taken as a whole.
6.4 PAYMENT OF TAXES AND CLAIMS. Each of Holdings and FMCAN will, and
will cause its Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon them or any of their properties or assets or
in respect of any of their franchises, business, income or property before any
penalty or
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interest accrues thereon, and all claims (including, without limitation, claims
for labor, services, materials and supplies) for sums which have become due and
payable and which by law have or may become a Lien upon them or their properties
or assets, prior to the time when any penalty or fine shall be incurred with
respect thereto, except to the extent the failure to comply with this Section
6.4 would be unlikely, singly or in the aggregate, to have a material adverse
effect on the business, prospects, operations, assets or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole; PROVIDED, however,
that no such tax, assessment, charge or claim need be paid if being contested in
good faith by appropriate proceedings instituted and diligently conducted, if
such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and if Holdings' and each of
its Subsidiaries' title to and right to use their properties is not materially
adversely affected thereby.
6.5 MAINTENANCE OF PROPERTIES; INSURANCE. Each of Holdings and FMCAN
will, and will cause each of its Subsidiaries to, maintain or cause to be
maintained in good repair, working order and condition, subject to ordinary wear
and tear, all material properties (subject to replacement in the ordinary course
of business) necessary for use in its businesses or the businesses of its
Subsidiaries, and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof, except to the extent
that the failure to comply with this sentence would be unlikely, singly or in
the aggregate, to have a material adverse effect on the business, prospects,
operations assets or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole. Each of Holdings and FMCAN will maintain or
cause to be maintained, with financially sound and reputable insurers, insurance
in respect of its properties and business and the properties and business of its
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of
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established reputation engaged in the same or a similar business, of such types
and in such amounts as are customarily carried under similar circumstances by
such other corporations.
6.6 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, Holdings and FMCAN shall pay or reimburse the Purchasers (other
than any Purchaser whose breach of its obligations hereunder is the sole reason
for the failure to consummate such transactions) for all expenses reasonably
incurred by the Purchasers in connection with (i) the transactions contemplated
hereby, (ii) transactions contemplated by the Ancillary Agreements and (iii) any
amendments or waivers of, or any enforcement of any rights granted under, this
Agreement or the Ancillary Agreements, including, without limitation: (x) the
cost and expenses of preparing and duplicating this Agreement, the Ancillary
Agreements and all certificates on behalf of Holdings or any of its
Subsidiaries; (y) out-of-pocket expenses, including fees, expenses and
disbursements of the Purchasers' counsel, in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements and all agreements
contemplated thereby, or in connection with any waivers or amendments relating
to or any efforts to enforce the provisions of such agreements, or in connection
with or arising out of any litigation, investigation or proceeding instituted
with respect to such agreements or any transaction contemplated thereby; and (z)
all documentary, stamp, transfer and similar taxes, including interest and
penalties and any recording fees and filing fees at any time payable in respect
of the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, or the issuance of any of the Securities. Holdings and
FMCAN also agree to save the Purchasers harmless from all claims in respect of
the fees and expenses of brokers and finders, or any depositaries or transfer
and other agents retained in connection with the transactions contemplated
hereby.
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6.7 SHAREHOLDERS AGREEMENT. Holdings shall comply with the terms of the
Shareholders Agreement, and shall use its best efforts to ensure that its
Certificate of Incorporation and By-Laws do not at any time contain any
provision which is contrary to or inconsistent with the provisions of the
Shareholders Agreement.
6.8 CERTAIN REDEMPTION RIGHTS.
(a) At any time, or from time to time, after the earlier of (x)
December 10, 1998, (y) the date immediately preceding the date of the
consummation of an Exit Event or (z) the first date as of which the Notes shall
have been paid in full and all Junior Preferred Shares have been redeemed, at
the request of a Requesting Holder, Holdings shall redeem the number of Common
Shares held by such Requesting Holder which such Holder requests to be redeemed.
Any notice of redemption by a Holder shall be in writing and shall also state
the number of Common Shares to be redeemed. Upon receipt of any such request by
a Requesting Holder, Holdings shall promptly give notice of such proposed
redemption to all other Holders. Each such other Holder may elect to include
its Common Shares in the redemption to be made pursuant to this Section 6.8(a)
by so notifying the Company within 15 days after receipt of the notice referred
to in the immediately preceding sentence. Holdings shall notify all Holders in
writing of the proposed occurrence of an Exit Event as soon as reasonably
practicable but in no event later than 45 days prior to the consummation of such
Exit Event. In the case of any redemption in connection with an Exit Event, any
Requesting Holder shall notify Holdings of its desire to cause a redemption
under Section 6.8(a) as soon as it is reasonably practicable but in no event
shall such notice be provided later than 15 days prior to the consummation of
such Exit Event. Notwithstanding the foregoing, Holdings shall not be required
to redeem Common Shares pursuant to this Section 6.8(a) (i) if the request for
such redemption is made after the date on which Holdings shall have consummated
one or more registered public
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offerings of its equity securities with aggregate net proceeds to Holdings and
the selling shareholders of at least $15,000,000 or (ii) if any request for
redemption occurs within 365 days of any previous request for redemption and
Holdings shall have redeemed all Common Shares covered by such previous request.
(b) The redemption price payable by Holdings upon any redemption of
Common Shares pursuant to Section 6.8(a) shall be equal to (x) in the case of
Common Shares held by Holders other than Original Purchasers, the product of the
Fair Market Value of Holdings and a fraction, the numerator of which is the
number of such Common Shares being redeemed and the denominator of which is the
number of Common Stock Equivalents then outstanding, and (y) in the case of
Common Shares held by an Original Purchaser, the greater of the amount referred
to clause (x) and the Preferred Return in respect of such Common Shares.
(c)(1) If a redemption is requested in connection with an Exit Event
involving a sale, lease, transfer or other disposition of assets described in
clause (i) of the definition of Exit Event, then the Fair Market Value of
Holdings shall equal the fair market value of the equity of Holdings as
determined by the Board of Directors of Holdings, reasonably and in good faith,
on the basis of the aggregate net proceeds received by Holdings for such assets
reduced by the outstanding indebtedness, preferred shares and other liabilities
of Holdings (including without limitation any liabilities in respect of any SAR
Agreements).
(c)(2) If a redemption is requested in connection with an Exit Event
involving the issuance by Holdings of Common Shares (i.e., clause (iii) of the
definition of Exit Event), then the Fair Market Value of Holdings shall equal
the fair market value of the equity of Holdings as determined by the Board of
Directors of Holdings, reasonably and in good faith, on the basis of the price
per share at which such Common Shares are sold.
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(c)(3) If a redemption is requested other than in connection with an
Exit Event described in Section 6.8(c)(1) or (c)(2), then the Fair Market Value
of Holdings shall be determined in accordance with Section 6.8(d).
(d) Within 10 days of receipt of any notice of redemption in
connection with any event described in Section 6.8(c)(3), Holdings shall notify
the Requesting Holder either (i) of its election to determine the Fair Market
Value of Holdings on the basis of an appraisal (in which case it shall equal the
fair market value of the equity of Holdings valued as a going concern) or (ii)
its election, in lieu of an appraisal, to arrange for a sale of substantially
all of the assets of Holdings and its Subsidiaries or of all of Holdings
outstanding Common Shares to any Person other than an Affiliate of Holdings (a
"Sale") in order to determine the Fair Market Value of Holdings.
(1) If Holdings does not promptly notify the Requesting Holder
pursuant to the immediately preceding sentences, a nationally recognized
investment banking firm selected by the Requesting Holder shall determine
the Fair Market Value of Holdings.
(2) If Holdings shall have elected the appraisal option, Holdings
shall in such notice select a nationally recognized investment banking
firm, and within 10 days of receipt of such notice the Requesting Holder
shall select a nationally recognized investment banking firm, and the two
investment banking firms shall select a third nationally recognized
investment banking firm to determine the Fair Market Value of Holdings.
(3) If Holdings shall have elected to pursue a Sale and such Sale is
consummated within one year of the date of notice of such election, then
the Fair Market Value of Holdings shall
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equal (A) in the case of a Sale of all or substantially all of the assets
of Holdings, the aggregate net proceeds received by Holdings in connection
therewith reduced by any outstanding indebtedness, preferred shares and
other liabilities (including without limitation any liabilities in respect
of the SAR Agreements) of Holdings and (B) in the case of a Sale of all of
the outstanding Common Shares of Holdings, the price per Common Share paid
in connection therewith multiplied by the aggregate number of Common Stock
Equivalents.
(4) If Holdings shall have elected to pursue a Sale and such effort
is abandoned or such Sale has not been consummated within one year of the
notice by Holdings of such election, then Holdings shall, within 10 days of
the earlier to occur of such abandonment or the expiration of such one-year
period, select a nationally recognized investment banking firm, and within
10 days thereafter the Requesting Holder shall select a nationally
recognized investment banking firm, and the two investment banking firms
shall select a third nationally recognized investment banking firm to
determine the Fair Market Value of Holdings.
If Holdings does not make the selection of an investment banking firm within the
time periods specified above, the investment banking firm selected by the
Requesting Holder shall determine the Fair Market Value of Holdings. Holdings
shall pay the fees and expenses of the investment banking firms selected to
determine the Fair Market Value of Holdings.
If any Holder which has elected to include any Common Shares held by
it in a redemption to be made pursuant to a redemption notice described in the
first sentence of this Section 6.8(d) refuses to permit, or otherwise to
participate in, a proposed Sale, and such proposed Sale was not consummated
solely by means of such refusal, then such Holder shall be deemed to have
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withdrawn its election to include its Common Shares in such redemption.
(e) Any purchase pursuant to this Section 6.8 shall (i) if based on
Fair Market Value of Holdings as determined in accordance with an appraisal, be
made no later than 90 days following such determination, and (ii) if based on
Fair Market Value of Holdings as determined by reference to an Exit Event
described in Sections 6.8(c)(1) or (2) or to a Sale, simultaneously with the
consummation of such Exit Event or Sale.
(f) Anything in this Section 6.8 to the contrary notwithstanding,
Holdings shall not be required to redeem Common Shares to the extent that
Holdings is prohibited by applicable statutes relating to insolvency or to the
maintenance of adequate stated or legal capital or transfers for equivalent
value from (i) effecting such a redemption and (ii) revaluing its assets or
otherwise generating or creating surplus sufficient to permit such a redemption.
In the event that Holdings is so prohibited from effecting such a redemption,
Holdings shall use all funds that are legally available to effect such a
purchase ratably from the Holders in proportion to the aggregate number of
Common Shares proposed to be redeemed. Any Holder may, with respect to all
Common Shares proposed to be redeemed but not redeemed by reason of this Section
6.8(e), elect either (i) to rescind such Holder's request that Holdings redeem
the Common Shares (in which event the Holders shall have no liability for the
expenses of Holdings) or (ii) to leave such request in place, in which case
Holdings shall, as soon as funds are legally available, pay to such Holder the
redemption price for the Common Shares redeemed by such Holder, together with
interest thereon at a rate of 16% per annum, compounded semi-annually, from the
date redemption would have been required but for this Section 6.8(f).
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(g) In the event that any Common Shares shall have been redeemed
pursuant to Section 6.8(a) for a redemption price equal to the Preferred Return
and any Notes or Junior Preferred Shares shall have remained outstanding after
the date on which such redemption was consummated, then on each subsequent date
(an "Additional Payment Date") on which Holdings shall redeem any Junior
Preferred Shares or FMCAN shall repay any principal in respect of the Notes,
Holdings shall simultaneously therewith pay to each Original Purchaser that had
previously redeemed any Common Shares pursuant to Section 6.8(a) for a
redemption price equal to the Preferred Return an amount equal to the
"Additional Redemption Price" (as defined below) multiplied by a ratio, the
numerator of which shall equal the aggregate number of Common Shares previously
redeemed by such Original Purchaser pursuant to Section 6.8(a) for a redemption
price based on the Preferred Return, and the denominator of which shall equal
the aggregate number of Common Shares previously redeemed by all Original
Purchasers pursuant to Section 6.8(a) for a redemption price based on the
Preferred Return.
"Additional Redemption Price" means, with respect to any Additional
Payment Date, an amount determined as of such date equal to that amount which,
taking into account (x) the product of (i) all cash payments theretofore or
concurrently made (or assumed to be made) in respect of the Notes (including
principal, premium and interest) and the Junior Preferred Shares and (ii) the
Preferred Return Redemption Ratio and (y) all cash payments theretofore or
concurrently received by all Original Purchasers in respect of any Common Shares
previously redeemed pursuant to Section 6.8(a) for a redemption price based on
the Preferred Return, is sufficient to provide an annual 16% internal rate of
return, computed on the basis of semi-annual compounding, on the product of (i)
$42,000,000 and (ii) the Preferred Return Redemption Ratio. For the purpose of
the foregoing calculation it shall be assumed that the Notes and Junior
Preferred Shares will be repaid in full as of such Additional Payment Date, and
such calculations shall be performed
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in a manner consistent with the procedures described in the final sentence of
the definition of Preferred Return.
"Preferred Return Redemption Ratio" means as of any Additional Payment
Date, a ratio, the numerator of which shall equal the aggregate number of Common
Shares previously redeemed pursuant to Section 6.8(a) for a price based on the
pertinent Preferred Return, and the denominator of which shall equal the
aggregate number of Purchaser Common Shares as of the Closing Date.
6.9 BOARD REPRESENTATION. Subject to the terms and conditions of the
Shareholders Agreement, the Boards of Directors of each of Holdings and FMCAN
shall include two directors nominated by TCW. Upon the occurrence and during
the continuance of a Triggering Event, unless the holders of the Seller
Preferred Stock shall have elected a director pursuant to Section 1.6 of the
Certificate of Designation for the Seller Preferred Stock and such director
shall continue to serve as a director of Holdings, the holders of Class D Common
Shares shall be entitled to elect a director who shall have 51% of the total
voting power of the Board of Directors of Holdings.
6.10 ERISA COVENANTS. Holdings and FMCAN will, so long as any Notes
or at least 92 Junior Preferred Shares shall remain outstanding, (i) continue to
meet the ERISA representations and warranties set forth under Section 3.10 of
this Agreement, (ii) not grant any increase in compensation or pay or agree to
pay or accrue any bonus or like benefit to or for the credit of any director,
officer or employee except for normal increases in the ordinary course of
business and consistent with prudent business practices, not establish or adopt
an employee benefit plan as defined in Section 3(3) of ERISA that is subject to
Title IV of ERISA, Section 302 of ERISA, or Section 412 of the Code, and (iii)
not establish or adopt an employee welfare benefit plan as defined in Section
3(1) of ERISA other than as provided under the Non-Competition
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Agreements that provides for employer-provided continued welfare benefits for
employees or consultants after they leave the employment of or are no longer
retained by FMCAN, Holdings or any of their Subsidiaries (other than any such
benefits required to be provided by the Consolidated Omnibus Budget
Reconciliation Act of 1985 or other similar federal or state law).
6.11 FUTURE FMCAN SUBSIDIARIES. For so long as any of the Notes shall
remain outstanding, promptly upon any Person becoming a direct or indirect
Subsidiary of FMCAN (other than a Subsidiary that immediately thereafter on a
pro forma basis is a Non-Material Subsidiary), or upon any direct or indirect
Subsidiary of FMCAN no longer meeting the criteria for being a Non-Material
Subsidiary, such Subsidiary shall execute and deliver to each holder of Notes a
Subsidiary Guaranty substantially in the form of Exhibit D hereto.
Holdings covenants that it will not incorporate, organize or acquire
any Subsidiary other than FMCAN and the direct Subsidiaries of FMCAN.
SECTION 7. NEGATIVE COVENANTS OF HOLDINGS AND FMCAN
Each of Holdings and FMCAN hereby covenants and agrees that it will
comply, and will cause each of its Subsidiaries to comply, with such of the
following provisions as are applicable to it or them:
7.1 RESTRICTED PAYMENTS. For so long as any of the Notes or at least 92
Junior Preferred Shares shall remain outstanding, Holdings and FMCAN will not,
and will not permit any of their Subsidiaries to, directly or indirectly,
declare, make or pay any cash dividends on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, retirement or other acquisition of, any shares of any
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class of stock of any of them, whether now or hereafter outstanding, or make any
other distribution in respect thereof, whether in cash or property or in
obligations of Holdings or any of its Subsidiaries or purchase or otherwise
acquire any such shares from any Person; provided that (i) any wholly-owned
Subsidiary of FMCAN may make distributions to FMCAN and FMCAN may make
distributions to Holdings; (ii) for so long as no Event of Default shall have
occurred and be continuing, Holdings may pay cash dividends on Seller Preferred
Stock in accordance with its terms as in effect on the Closing Date; and (iii)
Holdings may redeem Purchaser Common Shares to the extent required by Section
6.8 of this Agreement.
7.2 CERTAIN TRANSACTIONS. For so long as Threshold Securities shall
remain outstanding, Holdings and FMCAN will not, and will not permit any of
their Subsidiaries to, directly or indirectly, enter into any transaction with,
any of its officers, directors or shareholders, or any member of their immediate
families, or any firm, corporation, trust, or other entity in which such persons
have an ownership interest or any Affiliate of the foregoing; provided, however,
that Holdings shall not be in violation of this Section 7.2 by virtue of (i) the
transactions consummated pursuant to this Agreement and the Ancillary
Agreements; (ii) compensation accrued in the ordinary course of business; (iii)
advances to employees of Holdings or its Subsidiaries for moving, relocation and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business; (iv) other advances to employees which in the aggregate
shall not at any time exceed $300,000 for all employees; (v) for so long as no
Event of Default shall have occurred and be continuing, any
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payments made during the period ending on the sixth anniversary of the Closing
pursuant to the terms of the Management Consulting Agreement as in effect on the
date hereof without giving any effect to any amendments thereto; (vi) for so
long as no Event of Default under Section 10.1(a) shall have occurred and be
continuing, any payments made pursuant to the terms of the Investment Banking
Agreement as in effect on the date hereof without giving effect to any
amendments thereto; (vii) consulting fees to Xxxxxx Xxxxx not in excess of
$40,000 per year (subject to reasonable increases) and reasonable directors'
fees in the ordinary course or (viii) transactions described in Schedule 3.15
hereto.
7.3 FUNDAMENTAL CHANGES. Subsequent to the Closing, and for so long as
Threshold Securities shall remain outstanding, Holdings and FMCAN will not, and
will not cause or permit any of their Subsidiaries to, (i) sell, pledge, assign,
transfer or otherwise dispose of, or cause or permit the sale, pledge,
assignment, transfer or other disposition of, any of the capital stock of any of
its Subsidiaries other than pursuant to the Pledge Agreement, (ii) liquidate or
dissolve (other than in connection with a merger permitted under clause (iii)),
or (iii) merge into or consolidate with any Person (other than a merger of any
Subsidiary of FMCAN into FMCAN with FMCAN as the surviving corporation or a
merger of a Subsidiary of FMCAN into a wholly-owned Subsidiary of FMCAN with
such wholly-owned Subsidiary as the surviving corporation); provided, however
that nothing in this Section 7.3 shall prohibit (x) the grant or creation of any
Lien permitted under Section 7.5 or (y) the Mergers.
7.4 INDEBTEDNESS. For so long as any Notes or at least 92 Junior
Preferred Shares shall remain outstanding, Holdings and FMCAN will not, and will
not permit any of their Subsidiaries to, directly or indirectly create, incur,
assume, guarantee or otherwise become or remain directly or indirectly liable
with respect to any Indebtedness except:
(a) Indebtedness in respect of the Note;
(b) Indebtedness in respect of the Senior Note Purchase Agreement or
the Working Capital Facility or, in each case, any
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refinancing thereof, in an aggregate principal amount not to exceed $47,500,000
reduced by all actual payments made in respect of Indebtedness under the Senior
Note Purchase Agreement or in respect of any agreement respecting term
Indebtedness incurred to refinance all or a portion of the Indebtedness under
this Section 7.4(b) (other than any payments made from the proceeds of any such
refinancing);
(c) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business, provided
that such Indebtedness is extinguished within five business days of its
incurrence;
(d) Indebtedness of a Subsidiary of FMCAN owing to FMCAN or to
another Subsidiary of FMCAN;
(e) Indebtedness existing on the Closing Date and listed on Schedule
7.4;
(f) Other Indebtedness, including, without limitation, Indebtedness
incurred in respect of Capital Leases, purchase money security interests and
capital expenditures permitted by Section 7.7; provided that the aggregate
principal amount of such indebtedness incurred during any fiscal year shall not
exceed $1,000,000;
(g) Obligations under the Management Consulting Agreements, the
Investment Banking Fee Agreement and the SAR Agreements.
7.5 LIENS. For so long as any of the Notes or at least 92 Junior Preferred
Shares shall remain outstanding, Holdings and FMCAN will not, and will not
permit any of their Subsidiaries to,
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directly or indirectly, create, grant, suffer to exist or permit the creation of
any Lien on any of its properties or assets except:
(a) Permitted Liens;
(b) Liens specifically described and identified on Schedule 3.6
hereto;
(c) Liens in respect of Indebtedness permitted by Section 7.4(f);
(d) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(e) Liens securing Indebtedness permitted under Section 7.4(b).
7.6 INVESTMENTS. For so long as any Notes or at least 92 Junior Preferred
Shares shall remain outstanding, except as set forth on Schedule 7.6, Holdings
and FMCAN will not, and will not permit any of their Subsidiaries to, directly
or indirectly, make or own any Investment except Investments in (i) short-term
obligations of the Treasury of the United States of America or of any agency of
the United States government, (ii) certificates of deposit of any domestic
commercial bank having capital and surplus in excess of $100,000,000, (iii) open
market commercial paper, maturing within 270 days after the acquisition thereof,
which has the highest credit rating of either Standard & Poor's Corporation or
Xxxxx'x Investors Service, Inc., issued by a corporation (other than Holdings or
any of its Subsidiaries) organized under the laws of any State of the United
States of America or of the District of Columbia, (iv) any capital stock of or
loan or advance to or guaranty of, the obligations of FMCAN or any of its
Subsidiaries, (v) deposits with insurance companies in connection with self-
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insurance and (vi) Investments in municipal bonds in existence on the Closing
Date.
7.7 CAPITAL EXPENDITURES. For so long as any Notes or at least 92 Junior
Preferred Shares shall remain outstanding, Holdings and FMCAN will not, and will
not permit any of their Subsidiaries to, directly or indirectly, make any
capital expenditures during any fiscal year in an aggregate amount for Holdings
and its Subsidiaries in excess of $2,750,000 plus (a) the amount by which
$2,750,000 exceeds the actual capital expenditures in the preceding fiscal year
and (b) the aggregate amount of credits received by FMCAN and its Subsidiaries
in such fiscal year in respect of motor vehicle trade-ins. Notwithstanding the
foregoing, there shall be excluded from the calculation of capital expenditures
under this Section 7.7 for the period from the Closing Date through October 31,
1992 all amounts not in excess of $510,000 in the aggregate actually expended in
compliance with Sections 10.3(F) and (G) of the Senior Note Purchase Agreement.
7.8 SALE OF ASSETS. Notwithstanding anything to the contrary herein, so
long as any of the Notes or at least 92 Junior Preferred Shares shall remain
outstanding, Holdings and FMCAN will not, and will not permit any of their
Subsidiaries to, directly or indirectly, sell, convey, lease, transfer or
otherwise dispose of, any of its assets, except:
(a)sales of inventory in the ordinary course of it business;
(b) sales of obsolete or worn out property in the ordinary course of
business, in an amount not to exceed, in the aggregate, $250,000 in any fiscal
year (provided that there shall be excluded from any determination of such
amount the aggregate amount of credits received by FMCAN and its Subsidiaries in
such fiscal year in respect of motor vehicle trade-ins);
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(c) sales of assets listed on Schedule 7.8 hereto; and
(d) sales of asset at a price not less than fair market value that,
in the aggregate, do not constitute a Significant Portion of the assets of
Holdings or any of its Subsidiaries; provided however that the aggregate
consideration for such assets received by Holdings and its Subsidiaries is in
the form of cash or cash equivalents, and provided further that any proceeds
from any such sale that constitute cash sale proceeds are used within six months
of their receipt (x) either to prepay Indebtedness in respect of the Senior
Financing Documents or for purposes of adding to the property, plant or
equipment of the business of Holdings and its Subsidiaries as conducted on the
date hereof; and (y) thereafter to prepay the Notes.
7.9 CAPITAL STOCK. Subsequent to the Closing, and so long as Threshold
Securities shall remain outstanding, Holdings and FMCAN will not, and will not
permit any of their Subsidiaries to, issue, directly or indirectly, additional
capital stock (common or preferred), capital stock equivalents, securities
convertible into capital stock, or options, warrants or other rights to acquire
capital stock except the payment of in-kind dividends on the Seller Preferred
Stock, the Junior Preferred Shares and the Jordan Junior Preferred Shares and
the issuance of equity securities by Holdings pursuant to the Permitted Stock
Option Plan.
7.10 FINANCIAL COVENANTS.
(a) For so long as any Note or at least 92 Junior Preferred Shares
shall remain outstanding, Holdings shall not permit its Consolidated Net Worth
as at the end of each fiscal year of Holdings set forth below to be less than
the amounts corresponding to such period set forth below:
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FISCAL YEAR ENDED AUGUST 31 CONSOLIDATED NET WORTH
--------------------------- ----------------------
1992 $18,830,700
1993 $22,575,600
1994 $28,498,500
1995 $32,152,500
1996 and thereafter $39,030,300
(b) For so long as any Note or at least 92 Junior Preferred Shares
shall remain outstanding, Holdings shall not permit the ratio of its EBITDA to
its Fixed Charges, measured as of any date set forth below for the period of
four full fiscal quarters of Holdings set forth opposite such date, to be less
than the ratio corresponding to such period set forth below; provided, however,
that for the dates set forth below occurring prior to November 30, 1992, the
applicable measuring period shall be the period from the Closing Date to and
including such date:
DATE RATIO
---- -----
May 31, 1992 1.44 : 1.00
the last day of each 1:00 : 1.00
subsequent fiscal quarter
SECTION 8. RESTRICTIONS ON TRANSFER
(a) Each Note shall be endorsed with the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAW AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING
SUCH SECURITIES UNLESS SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT OR THE SALE IS MADE IN ACCORDANCE WITH RULE
144 UNDER THE ACT.
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(b) Each certificate evidencing Junior Preferred Shares or Purchaser
Common Shares shall be endorsed with the following legend (the "Securities
Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAW AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING
SUCH SECURITIES UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THE SECURITIES REASONABLY SATISFACTORY TO THE ISSUER
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT OR THAT THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER
THE ACT.
Holdings need not register a transfer of legended certificates evidencing Junior
Preferred Shares or Purchaser Common Shares, and may instruct its transfer agent
not to register the transfer of such Securities, unless the conditions specified
in the Securities Legend are satisfied. The Securities Legend shall be removed,
and Holdings shall issue a certificate evidencing Junior Preferred Shares or
Purchaser Common Shares without a Securities Legend to the holder of such
Security, (i) if such Security is registered under the Securities Act and a
prospectus meeting the requirements of Section 10 of the Securities Act is
available, or (ii) if such holder provides Holdings with an opinion of counsel
for such holder, reasonably satisfactory to Holdings to the effect that a public
sale, transfer or assignment of such Security may be made without registration
under the Securities Act or any applicable state securities law.
(c) All transfers of Notes shall be in a minimum principal amount
equal to the lesser of $2,000,000 or the aggregate amount held by such
transferring holder; provided that any transfer of Notes by the TCW entities or
TCW Transferees to any Person shall be aggregated for the purposes of this
Section 8(c).
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SECTION 9. REGISTRATION RIGHTS.
9.1 HOLDINGS REGISTRATION.
(a) If at any time Holdings determines to effect a Registration for
its own account or for the account of Other Shareholders, Holdings shall:
(i) give each Holder 30 days written notice thereof (which
notice shall include, to the extent available, a list of the jurisdictions in
which Holdings intends to attempt to qualify such Common Shares under applicable
blue sky or other state securities laws); and
(ii) use its best efforts to include in any such Registration all
Purchaser Common Shares which Holders, within 20 days of receipt of such notice,
request in writing to be registered.
(b) If the Registration of which Holdings gives notice is for a
public offering involving an underwriting, Holdings shall so advise the Holders
as a part of the written notice given pursuant to Section 9.1(a) hereof. In such
event, any Holder desiring to exercise its right to Registration pursuant to
this Section 9.1 shall include within its Registration request a statement as to
whether such Holder desires to (i) participate in such underwriting or (ii)
register Purchaser Common Shares without participating in such underwriting (in
which event the Holder shall inform Holdings, as part of such request, of the
method by which the Holder intends to distribute such shares). All Holders
proposing to distribute their Common Shares through such underwriting shall
(together with Holdings and the Other Shareholders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such
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underwriting by Holdings. All Holders proposing to distribute their Common
Shares other than through such underwriting shall, if the underwriter determines
that marketing factors so require and advises Holdings in writing, agree to
refrain from distributing such shares for 90 days after the effective date of
the applicable registration statement, on the condition that all Other
Shareholders proposing to distribute their Common Shares other than through such
underwriting who own or have rights to acquire a number of Common Shares equal
to five percent or more of the outstanding Common Shares also agree to so
refrain.
(c) Notwithstanding any other provision of this Section 9.1, if the
managing underwriter or underwriters determine that marketing factors require a
limitation on the number of outstanding shares to be underwritten and so advise
Holdings in writing, the number of the Common Shares included in the
underwriting must be limited, in which case the Holders' rights to participate
in the underwriting and the rights of all Other Shareholders desiring to
participate in the underwriting shall be limited in proportion to the number of
Common Shares requested to be registered by each such Holder or Other
Shareholder. Any Common Shares excluded from the underwriting by reason of the
underwriter's marketing limitation may nonetheless, at the option of the Holder,
be included in the registration subject to Section 9.1(d) hereof. If any Holder
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to Holdings and the managing underwriter or
underwriters, in which event the Common Shares so withdrawn from the
underwriting may nonetheless, at the option of the Holder, be included in the
registration.
(d) Notwithstanding any other provision of this Section 9.1, if the
managing underwriter or underwriters determine that marketing factors require
that the registration be limited to shares included in the underwriting and so
advise Holdings in writing, the Holders will have no right to register Common
Shares
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without participating in the underwriting. In such event, (i) Common Shares
excluded from the underwriting by reason of Section 9.1(c) hereof shall also be
excluded from the registration, and (ii) any Common Shares withdrawn from the
underwriting as provided in Section 9.1(c) hereof shall also be withdrawn from
the registration.
(e) Holdings shall pay all expenses in connection with each
registration pursuant to this Section 9.1; provided, however, that the Holders
who include Common Shares in a registration pursuant to this Section 9.1 shall
bear the cost of any underwriters' discount or commission relating to their
Common Shares which are sold and of any incremental filing or similar fees,
including but not limited to incremental fees related to any blue sky filing,
relating to their Common Shares which are registered, and shall bear the costs
of any legal counsel they retain for themselves.
(f) Holdings shall not be required by this Section 9.1 to file a
registration statement at any time or to prosecute a filing to effectiveness.
9.2 DEMAND REGISTRATION.
(a) From and after the earlier of the sixth anniversary of the
Closing, or 90 days after the date Holdings shall have first sold equity
securities in a public offering registered under the Securities Act, upon a
request in writing by an Initiating Holder that Holdings effect a registration
of at least 100.000 Purchaser Common Shares, Holdings shall:
(i) promptly given written notice of the proposed registration
to all other Holders; and
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(ii) use its best efforts to effect the registration as soon as
practical of the Common Shares which (x) the Initiating Holder has requested to
be registered and (y) the other Holders have, within 20 days of such notice,
requested in writing to be registered.
(b) Notwithstanding Section 9.2(a) hereof, Holdings shall not be
required to file a registration statement pursuant to Section 9.2(a) if Holdings
has already effected two or more registrations pursuant to Section 9.2(a) hereof
unless the Initiating Holder requesting such registration shall have agreed to
pay the expenses of such registration.
(c) If the registration of which the Initiating Holder gives notice
is for a public offering involving an underwriting, Holdings shall so advise the
Holders as a part of the written notice given pursuant to Section 9.2(a) hereof.
In such event, any Holder desiring to exercise its right to registration
pursuant to this Section 9.2 shall include within its registration request a
statement as to whether such Holder desires to (i) participate in such
underwriting or (ii) register Common Shares without participating in such
underwriting (in which event the Holder shall inform Holdings, as part of such
request, of the method by which the Holder intends to distribute such shares).
All Holders proposing to distribute their Common Shares through such
underwriting shall (together with Holdings and any Other Shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by Holdings with the consent of the Initiating
Holder, which consent shall not be unreasonably withheld. All Holders proposing
to distribute their Common Shares other than through such underwriting shall, if
the underwriter determines that marketing factors so require and advises
Holdings in writing, agree to refrain from distributing such shares for 90 days
after the
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effective date of the applicable registration statement, on the condition that
all Other Shareholders proposing to distribute their Common Shares other than
through such underwriting who own or have rights to acquire a number of Common
Shares equal to five percent or more of the outstanding Common Shares also agree
to so refrain.
(d) Notwithstanding any other provisions of this Section 9.2, if the
managing underwriter or underwriters determine that marketing factors require a
limitation on the number of shares to be underwritten and so advise Holdings in
writing, and if, as a result of such limitation, the number of the Common Shares
included in the underwriting must be limited, the Holders' right to participate
in the underwriting shall be limited in proportion to the number of Common
Shares requested to be registered by each Holder and Holdings. Any Common
Shares excluded from the underwriting by reason of the underwriter's marketing
limitation may nonetheless, at the option of the Holder, be included in the
registration. If any Holder disapproves of the terms of any such underwriting,
it may elect to withdraw therefrom by written notice to Holdings and the
managing underwriter or underwriters, in which event the Common Shares so
withdrawn from the underwriting may nonetheless, at the option of the Holder, be
included in the registration.
(e) Notwithstanding any other provision of this Section 9.2, if the
managing underwriter or underwriters determine that marketing factors require
that the registration be limited to shares included in the underwriting and so
advise Holdings in writing, the Holders will have no right to register Common
Shares without participating in the underwriting. In such event, (i) Common
Shares excluded from the underwriting by reason of Section 9.2(d) hereof shall
also be excluded from the registration, and (ii) any Common Shares withdrawn
from the underwriting as provided in Section 9.2(d) hereof shall also be
withdrawn from the registration.
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(f) Holdings may include Common Shares for its own account, or Common
Shares for the account of Other Shareholders having rights to participate in
registrations of Holdings, in any registration and underwriting pursuant to this
Section 9.2; provided, however, that Holdings include shares for its own account
or for the account of such Other Shareholders only if the managing underwriter
or underwriters so agree and if the number of Common Shares which would
otherwise have been included in the underwriting will not thereby be limited.
(g) Except as otherwise provided in Section 9.2(b), Holdings shall
pay all expenses in connection with each registration pursuant to this Section
9.2; provided, however, that the Holders who include Common Shares in a
registration pursuant to this Section 9.2 shall bear the cost of any
underwriters' discount or commission relating to their Common Shares which are
sold and of any incremental filing or similar fees relating to their Common
Shares which are registered, and shall bear the costs of any legal counsel they
retain for themselves.
9.3 INDEMNIFICATION.
(a) Holdings will indemnify each Holder, its agents, each of their
respective officers, directors and partners, and each Person controlling such
Holder within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, with respect to whose shares registration has been effected
pursuant to this Section 9, and each underwriter, if any, and each Person who
controls any underwriter against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on (i) any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus
(including without limitation preliminary and supplemental prospectuses), or
other similar document (including any related registration statement) incident
to any such registration, or based on any omission (or
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alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) any
violation by Holdings of any federal, state or common law rule or regulation
applicable to Holdings and relating to action or inaction required of Holdings
in connection with any such registration, and will reimburse each such Holder,
its agents, each of their respective officers, directors and partners, and each
Person controlling such Holder, each such underwriter and each Person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action; provided, however, that Holdings will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission made in a
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to Holdings
by such Holder or underwriter specifically for use therein; and provided,
further, that, with respect to any untrue statement or omission or alleged
untrue statement or omission made in any preliminary prospectus, Holdings will
not be liable to any Holder to the extent that any loss, claim, damage,
liability or expense results from the fact that a current copy of the prospectus
was not sent or given to the Person asserting any such loss, claim, damage,
liability or expense at or prior to the written confirmation of the sale of the
Common Shares concerned to such Person if it is determined that it was the
responsibility of such Holder to provide such Person with a current copy of the
prospectus and such current copy of the prospectus would have cured the defect
giving rise to such loss, claim, damage, liability or expense.
(b) Each Holder will, if Common Shares held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify Holdings, each of its directors and
officers, each
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underwriter, if any, of the securities of Holdings covered by such a
registration statement, each Person who controls Holdings or such underwriter
within the meaning of the Securities Act, and each other such Holder, each of
its officers and directors and each Person controlling such Holder, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular, or other similar document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they are made, and will reimburse Holdings, such Holders, such directors,
officers, Persons, underwriters, or control Persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to Holdings by such Holder
specifically for use therein; provided, however, that, with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity agreement contained in this Section 9.3(b)
shall not apply to the extent that any loss, claim, damage, liability or expense
results from the fact that a current copy of the prospectus was not sent or
given to the Person asserting any such loss, claim, damage, liability or expense
at or prior to the written confirmation of the sale of the Common Shares
concerned to such Person if it is determined that it was the responsibility of
Holdings, any of its directors, officers or agents, or any underwriter to
provide such Person with a current copy of the prospectus and such current copy
of the prospectus would have cured
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the defect giving rise to such loss, claim, damage, liability or expense.
(c) Each party entitled to indemnification under this Section 9.3
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 9.3 unless such failure to give notice shall
materially adversely affect the Indemnifying Party in the defense of any such
claim or any such litigation. With respect to any claim or litigation being
conducted by the Indemnifying Party, no Indemnified Party shall, except with the
consent of such Indemnifying Party, consent to entry of any judgment or enter
into any settlement of any claim as to which indemnity may be sought. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect of such claim or litigation.
9.4 RULE 144 REPORTING.
(a) With a view to making available to the Holders the benefits
of certain rules and regulations of the Commission
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which may permit the sale of Common Shares to the public without registration,
Holdings agrees, following an initial public offering of the Common Shares or
after Holdings otherwise becomes subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act, to:
(1) make and keep public information available as those terms
are understood and defined in Rule 144;
(2) file with the Commission in a timely manner all reports and
other documents required of Holdings under the Securities Act and the Exchange
Act; and
(3) furnish to the Holders forthwith upon request a written
statement by Holdings as to its compliance with the reporting requirements of
Rule 144, and of the Securities Act and the Exchange Act, a copy of the most
recent annual or quarterly report of Holdings filed with the Commission, if any,
and such other reports and documents of Holdings and other information in the
possession of or reasonably obtainable by Holdings as the Holders may reasonably
request in availing themselves of any rule or regulation of the Commission
allowing the Holders to sell securities without registration.
(4) Holdings agrees to provide to the Holders such information as is
reasonably available to Holdings in order to permit the Holders to sell
Purchaser Common Shares pursuant to Rule 144A of the Securities Act.
9.5 REGISTRATION PROCEDURES.
(a) If and whenever Holdings is required to use its best efforts to
include in any registration any Purchaser Common Shares under this Section 9,
Holdings will promptly, at its expense:
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(i) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement current and
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
until such time as all of such securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof set
forth in such registration statement, but in no event for a period of more than
five months after such registration statement becomes effective;
(ii) furnish to each seller of such securities such reasonable
number of copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such reasonable number
of copies of the prospectus included in such registration statement (including
each preliminary prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as such seller may reasonably request
in order to facilitate the disposition of the securities owned by such seller;
(iii) use its best efforts to register or qualify such securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States (including territories and
commonwealths thereof) as each seller shall reasonably request, and do any and
all other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that Holdings shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified, to subject itself to
taxation in any such jurisdiction, or to consent to general service of process
in any such jurisdiction;
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(iv) notify each seller of any such securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act within the period mentioned in
Section 9.5(a)(i), of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the request
of any such seller prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(v) Advise each seller, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(vi) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to holders
of Purchaser Common Shares, earning statements satisfying the provisions of
Section 11(a) of the Securities Act, no later than forty-five (45) days after
the end of any twelve (12) month period (or ninety (90) days, if such a period
is a fiscal year) (i) commencing at the end of any fiscal quarter in which
Purchaser Common Shares are sold to underwriters in an
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underwritten offering, or, if not sold to underwriters in such an offering, (ii)
beginning with the first month of Holdings' first fiscal quarter commencing
after the effective date of a registration statement; and
(vii) Not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such holders has
objected on the grounds that such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act or the rules and
regulations thereunder, after having been furnished with a copy thereof at least
five (5) business days prior to the filing thereof; provided, however, that the
failure of such holders or their counsel to review or object to any amendment or
supplement to such registration statement or prospectus shall not affect the
rights of such holders or any controlling person or persons thereof or any
underwriter or underwriters therefor under the provisions of this Agreement.
(b) Holdings may require each seller of any securities as to which
any registration is being effected to furnish promptly to Holdings such
information regarding such seller and the distribution of such securities as
Holdings may from time to time reasonably request in writing or as shall be
required by law in connection therewith.
SECTION 10. EVENTS OF DEFAULT
10.1 EVENTS OF DEFAULT; REMEDIES. If any one or more of the following
events ("Events of Default") shall occur:
(a) FMCAN shall fail to make any payment in respect of (i) the
principal of or premium on any of the Notes as the same shall become due,
whether at maturity or by acceleration or otherwise, or (ii) interest on any of
the Notes as the same shall
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become due and such failure to pay interest shall continue for a period of five
business days;
(b) Either Holdings or FMCAN shall fail to perform or observe any
covenant, agreement or provision required to be performed or observed by it
under Section 6.8 or Section 7 hereof;
(c) Either Holdings or FMCAN shall fail to perform or observe any
covenant, agreement or provision required to be performed or observed by it
under this Agreement or the Holdings Guaranty other than those described in
Sections 10.1(a), (b), or (h) hereof, and such failure shall not be rectified,
cured or waived in writing within 45 days after any officer of Holdings or any
Subsidiary of Holdings has received written notice from any Holder of the Notes
of such failure.
(d) Any representation or warranty made by Holdings, FMCAN or the
Company in or in connection with this Agreement or any Ancillary Agreement,
including, without limitation, any such representation or warranty incorporated
by reference in any of the foregoing, shall prove to have been false or
misleading in any material respect as of any date as of which it was made;
(e) Holdings or any of its Subsidiaries shall fail to make any
required payment under any other Indebtedness with respect to which the
aggregate principal amount outstanding exceeds $500,000, or shall fail to
perform or observe any other covenant or provision required to be performed or
observed by it or them pursuant to any Senior Financing Document or any other
agreement in respect of borrowed money with respect to which the aggregate
principal amount outstanding exceeds $500,000, and, in any such case involving a
failure to make required payments or perform or observe any other such covenant
or provision (i) such failure shall continue, without having been duly cured,
beyond the period of grace, if any, therein specified, the effect of which is to
result
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in the acceleration of any such Indebtedness or to cause any such Indebtedness
to remain unpaid following its final maturity, or (ii) any security interest in
or Lien on any property securing any such Indebtedness shall be enforced;
(f) A final judgment which, in the aggregate with other final
judgments then outstanding against Holdings or any of its Subsidiaries, exceeds
$500,000 shall be rendered against Holdings or any of its Subsidiaries if,
within 45 days after entry thereof, such judgment shall not have been discharged
or stayed pending appeal, or within 45 days after expiration of such stay such
judgment shall not have been discharged;
(g) any Reportable Event shall occur which could constitute grounds
for termination by the PBGC of any Plan or for the appointment by the
appropriate United States District Court of a trustee to administer any Plan and
such Reportable Event is not corrected and such determination is not revoked
within thirty (30) days after the administrator of any Plan (if FMCAN, Holdings,
the Company or any of their Subsidiaries or ERISA Affiliates is the
administrator) or Holdings, FMCAN, the Company or any of their Subsidiaries or
ERISA Affiliates, as the case may be, has knowledge, or has reason to have
knowledge, thereof; or any proceedings shall be instituted by the PBGC to
terminate any Plan or to appoint a trustee to administer any Plan; or a trustee
shall be appointed by the appropriate United States District Court to administer
any Plan; or any Plan shall be terminated by its sponsor; or there shall occur a
complete or partial withdrawal from any Multiemployer Plan by Holdings, FMCAN,
the Company or any of their respective Subsidiaries or ERISA Affiliates
(including any transaction described in, and meeting the requirements of,
Section 4204 of ERISA); where in any such case the aggregate liability of
Holdings, FMCAN, the Company and their respective Subsidiaries and ERISA
Affiliates for all such terminations or withdrawals exceeds or is reasonably
likely to exceed $500,000;
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(h) any breach or breaches of the covenants set forth in Section 6.10
shall occur which singly or in the aggregate would result in liability in excess
of $500,000 or would otherwise reasonably be expected to have a material adverse
effect on the business, operations, prospects, assets or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole;
(i) Holdings or any of its Subsidiaries (other than any Non-Material
Subsidiary) shall be involved in financial difficulties as evidenced:
(i) by its commencement of a voluntary case under Title 11 of
the United States Code as from time to time in effect, or by its
authorizing, by appropriate proceedings of its Board of Directors or other
governing body, the commencement of such a voluntary case;
(ii) by the filing against it of a petition commencing an
involuntary case under said Title 11 and such petition shall not be
dismissed or stayed pending appeal within 60 days;
(iii) by its seeking relief as a debtor under any applicable law,
other than said Title 11, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the
rights of creditors, or by its consenting to or acquiescing in such relief;
(iv) by the entry of an order by a court of competent
jurisdiction (a) finding it to be bankrupt or insolvent, (b) ordering or
approving its liquidation, reorganization or any modification or alteration
of the rights of its creditors, or (c) assuming custody of, or appointing a
receiver or other custodian for, all or a substantial part of its property;
or
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(v) by its making a general assignment for the benefit of, or
entering into a composition with, its creditors, or appointing or
consenting to the appointment of a receiver or other custodian for all or a
substantial part of its property;
then (A) in the case of an Event of Default other than an Event of Default under
Section 10.1(a) hereof, the holders of at least 50 percent of the aggregate
principal amount outstanding under the Notes may, by written notice to Holdings
(unless there shall have occurred an Event of Default under Section 10.1(i) with
respect to the Company, in which case the unpaid principal and interest of the
Notes automatically shall become due and payable), declare all or any part of
the unpaid principal amount of the Notes then outstanding to be forthwith due
and payable and (B) in the case of an Event of Default under Section 10.1(a)
hereof, the holders of at least 10 percent of the aggregate principal amount
outstanding under the Notes may, by written notice to Holdings, declare all or
any part of the unpaid principal amount of the Notes held by such holders to be
forthwith due and payable, and in either case such unpaid principal amount or
part thereof, together with interest accrued thereon, and to the extent
permitted by law, any premium shall become so due and payable without
presentation, presentment, protest or further demand or notice of any kind, all
of which are hereby expressly waived, and such holder or holders may proceed to
enforce payment of such amount or part thereof in such manner as it or they may
elect, provided, however, that any declaration in clause (B) above shall be
automatically rescinded (i) if the Event of Default giving rise to such
declaration shall have been cured within 15 days of such Declaration and (ii)
the holders of at least 50 percent of the aggregate principal amount outstanding
under the Notes shall have elected to rescind such declaration; provided
further, that so long as any holder of Notes or any Affiliate of such holder
shall hold any notes or other securities evidencing
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Indebtedness to which the Notes are subordinated, such holder shall have no
right to exercise any rights set forth in this paragraph.
10.2 WAIVERS. Holdings and FMCAN hereby waive to the extent not prohibited
by applicable law which cannot itself be waived (a) all presentments, demands
for performance, notices of nonperformance (except to the extent required by the
provisions hereof), (b) any requirement of diligence or promptness on the part
of any holder of Securities in the enforcement of its rights under the
provisions of this Agreement, (c) any and all notices of every kind and
description which may be required to be given by any statute or rule of law
(except to the extent required by the provisions of this Agreement), and (d) any
defense of any kind (other than payment) which it may now or hereafter have with
respect to its liability under the Notes.
10.3 COURSE OF DEALING; REMEDIES CUMULATIVE. No course of dealing between
Holdings or FMCAN and any holder of the Securities shall operate as a waiver of
any of the rights of any holder of the Securities under this Agreement. No
delay or omission in exercising any right under this Agreement shall operate as
a waiver of such right or any other right. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any other
occasion. No waiver or statement of satisfactory cure or consent shall be
binding upon any holder of any Security unless it is in writing. The remedies
provided in this Section 10 are in addition to all rights and remedies available
to the Purchasers and the holders of any Security under this Agreement, the
Ancillary Agreements or any other document or by law or equity.
10.4 LIMITATION ON REMEDIES. The Purchasers acknowledge that Holdings and
FMCAN have obtained a substantial portion of their knowledge and information
regarding the Business in the course of the negotiation of the Stock Purchase
Agreement and related investigations. In consequence, notwithstanding anything
to the
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contrary herein, the Purchasers' sole remedy for any breach of any
representation or warranty made in Section 3 hereof relating exclusively to the
Business, or the assets acquired from the Company shall be to accelerate the
maturity of the Notes pursuant to Section 10 hereof and to receive costs and
expenses if (x) such representation or warranty was based solely on information
furnished to Holdings and FMCAN by the Company or the former shareholders of the
Company and (y) Holdings and FMCAN neither knew nor should, in the exercise of
reasonable care and diligence, have known of such breach at the time such
representation or warranty was made or at the Closing.
SECTION 11. MISCELLANEOUS
11.1 WAIVERS AND AMENDMENTS. This Agreement may not be amended,
supplemented, waived, discharged or terminated except in writing. The written
consent of holders of a majority of (i) the principal amount of the Notes then
outstanding, (ii) aggregate number of Junior Preferred Shares and (iii) the
aggregate number of Purchaser Common Shares which are not Public Common Shares
then outstanding shall be required for any amendment, supplement, waiver,
discharge or termination hereof; provided, however, that (x) if the provisions
to be amended, supplemented, waived, discharged or terminated by their terms
apply only to the Notes or Junior Preferred Shares or are effective only so 1ong
as Notes or at least 92 Junior Preferred Shares remain outstanding, then such
provisions may be amended, supplemented, waived, discharged or terminated by the
written consent of the holders of a majority of the principal amount of the
Notes of the Junior Preferred Shares then outstanding, (y) if the provisions to
be amended, supplemented, waived, discharged or terminated are contained in
Section 9, then such provisions may be amended, supplemented, waived, discharged
or terminated by the written consent of the holders of a majority of the total
number of Purchaser Common Shares that are not Public Common Shares then
outstanding and (z)
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without the written consent of 80% of the aggregate principal amount of the
Notes then outstanding and each Original Purchaser which holds any Notes, no
amendment, supplement, waiver, discharge or termination shall extend the fixed
maturity of the Notes, change the dates on which interest or any premium is
payable, reduce the principal amount thereof, reduce the rate of interest
thereon, reduce any premium payable on prepayment thereof or amend this clause
(iii) of Section 11.1.
11.2 INDEMNITY. In addition to the payment of expenses pursuant to Section
6.6 hereof, whether or not the transactions contemplated hereby shall be
consummated, Holdings and FMCAN agree jointly and severally to indemnify,
exonerate and hold the Purchasers and each of their respective partners,
investors, officers, directors, trustees, advisory committee members, employees
and agents (collectively the "indemnities") free and harmless from and against
any and all actions, causes of action, suits, losses, liabilities and damages,
and reasonable expenses in connection therewith, including, without limitation,
reasonable attorneys' fees and disbursements (the "indemnified liabilities"),
reasonably incurred in any capacity by the indemnities or any of them as a
result of, or arising out of, or relating to (a) any transaction financed or to
be financed in whole or in part directly or indirectly with proceeds from the
sale of any of the Securities or the arranging of all or any part of the
financing for such transactions, or (b) the execution, delivery, performance or
enforcement of this Agreement or any instrument contemplated hereby by any of
the indemnities; provided, however, that neither Holdings nor FMCAN shall have
any obligation to an indemnitee hereunder with respect to indemnified
liabilities arising out of or resulting from the gross negligence or willful
misconduct of that indemnitee. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, Holdings and FMCAN shall
contribute the maximum portion which they are permitted to pay and
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satisfy under applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the indemnities or any of them.
11.3 CONFIDENTIALITY. Should any Person receive confidential information
hereunder or under any Ancillary Agreement, it shall hold such information in
strict confidence, unless compelled to disclose it by judicial or administrative
process or, in the opinion of its counsel, by other requirements of law (except
to the extent that such information (x) can be shown to have been (i) previously
known to the Person to which it was furnished, (ii) in the public domain through
no fault of such Person, or (iii) 1ater lawfully acquired from other sources by
the Person to which it was furnished, (y) is requested by any applicable
regulatory authority, including the National Association of Insurance
Commissioners or (z) is provided to a rating agency, including without
limitation, Duff & Xxxxxx, to obtain a rating for securities issued by Holdings
or FMCAN); provided, however, that any such Person may disclose such information
to any Affiliate, or to any other Person in connection with a possible sale of
Securities if such Person agrees in writing to keep such information
confidential substantially in accordance with the terms hereof. Each such Person
shall be deemed to have satisfied its obligation to hold confidential
information received hereunder if it exercised the same care as it takes to
preserve confidentiality for its own similar information.
11.4 GOVERNING LAW. This Agreement is made and shall be governed by and
construed in all respects in accordance with the laws of the State of New York,
without regard to the principles of conflicts of laws thereof which might refer
such interpretation to the laws of a different state or jurisdiction.
11.5 SURVIVAL. The representations and warranties made herein shall
survive the Closing of the transactions pursuant hereto and the Ancillary
Agreements, notwithstanding any investigation made by the Purchasers. All
statements as to factual matters contained in
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any certificate or other instrument delivered by or on behalf of Holdings and
FMCAN pursuant hereto or in connection with the transactions contemplated hereby
shall be deemed to be representations and warranties by Holdings and FMCAN
hereunder as of the date of such certificate or instrument and not of any
individual executing the same.
11.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, transferees, heirs, executors and administrators
of the parties hereto including, without limitation, any transferee of the
Securities, and any such transferee shall, upon such transfer, have the rights
of a Purchaser hereunder relating to the purchased Security and be deemed a
Purchaser for purposes of this Agreement.
11.7 ENTIRE AGREEMENT. This Agreement, the exhibits and schedules hereto
and the Ancillary Agreements constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and thereof.
11.8 LIMITED LIABILITY OF PARTNERS. Each of Holdings and FMCAN agrees that
it will not seek, or permit any of its Subsidiaries to seek, and agrees that it
and its Subsidiaries shall have no right to recourse against (i) any of the
partners of TCW, (ii) any assets of TCW Capital, a California general
partnership, (iii) any assets of investors whose assets are managed pursuant to
the Investment Management Agreement dated June 19, 1989 or the Investment
Management Agreement dated April 18, 1990, other than assets managed pursuant to
such agreements, and (iv) any of the partners of TCW Capital.
11.9 NOTICES. All notices and other communications (other than payments of
principal, interest, dividends and other amounts with respect to the Securities)
required or permitted hereunder
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shall be in writing and shall be delivered by facsimile, courier or first class
mail, postage prepaid, addressed (a) if to the Purchasers, to the addresses set
forth on Schedule 1 hereto, and (b) if to Holdings, FMCAN or any of their
affiliates to:
Xxxxxx May Holdings, Inc.
c/o Jordan Company
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Max,
Vice President
With copies to: Xxxxxxx X. Max
c/x Xxxxxxxx Xxxxxxx Xxxxx
Brodsky & Frischling
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
11.10 PAYMENTS. All payments to the Purchasers pursuant to this
Agreement shall be made as set forth on Schedule 1 hereto.
11.11 SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
11.12 INTERPRETATION. The titles of the Sections of this Agreement are
for convenience of reference only and are not to be considered in construing
this Agreement. Whenever reference is made herein to specific numbers of shares
of stock (as opposed to percentages, proportions and like ratable computations),
such numbers shall, in the event of any stock split, stock dividend,
reclassification or similar event, be appropriately adjusted to reflect the
impact, if any, of such event upon such number of shares. All references in the
definitions in Section 1 to the singular shall be deemed to include the plural
and all references to the plural shall be deemed to include the singular.
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11.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11.14 CHANGES IN ACCOUNTING PRINCIPLES. If any changes in accounting
principles from those used in the preparation of the financial statements
referred to in this Agreement are hereafter occasioned by the promulgation of
rules, regulations, pronouncements or opinions of or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions), or there
shall occur any change in Holdings' or any of its Subsidiaries' fiscal or tax
years and, as a result of any such changes, there shall result in a change in
the method of calculating any of the financial covenants, negative covenants,
standards, or other terms or conditions found in this Agreement, then the
parties hereto agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes with the desired result that
the criteria for evaluating the financial condition of Holdings and its
Subsidiaries shall be the same after such changes as if such changes had not
been made.
11.15 SUBORDINATION. The provisions of this Agreement are subject to
the applicable provisions of the Subordination Agreement.
11.16 WAIVER OF RIGHT TO TRIAL BY JURY. EACH OF HOLDINGS, FMCAN AND
EACH PURCHASER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR THE TRANSACTIONS RELATED HERETO, IN EACH
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CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE. EACH OF HOLDINGS, FMCAN AND EACH PURCHASER HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
-102-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
XXXXXX MAY HOLDINGS, INC.
By: /s/ Xxxx X. Max
-------------------------------
Its: Vice President
-------------------------------
FMCAN ACQUISITION CORP.
By: /s/ Xxxx X. Max
-------------------------------
Its: Vice President
-------------------------------
TCW SPECIAL PLACEMENTS FUND III
By: TCW Capital
Its: General Partner
By: TCW Asset Management
Company
Its: Managing General Partner
By: /s/ Xxxxxx Xxxxxxxx
----------------------
Its: Vice President
---------------------
TCW CAPITAL, as Investment Manager
pursuant to an Investment
Management Agreement dated as of
June 30, 1989
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Its: Vice President
--------------------------
-103-
TCW CAPITAL, as Investment Manager
pursuant to an Investment
Management Agreement dated as of
April 18, 1990
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Its: Vice President
--------------------------
MEZZANINE CAPITAL
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Its: Vice President
--------------------------
XXXXXXX NATIONAL LIFE INSURANCE
COMPANY
By: /s/ Xxxx X. Xxxxxxx
---------------------------
Its: Senior Vice President
--------------------------
MEZZANINE CAPITAL AND INCOME TRUST
2001 PLC
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Its: Director
--------------------------
-104-
SCHEDULE 1
--------------------------------------------------------------------------------
Purchase
Purchaser Securities Purchased Price
--------------------------------------------------------------------------------
TCW Special $19,502,428 Principal Amount $19,502,428
Placements Fund III of Notes
156.0194 Junior Preferred $3,900,486
Shares
382.980 Class A Common $382,980
Shares
10.000 Class D Common Shares $10,000
--------------------------------------------------------------------------------
TCW Capital, as Investment $1,440,421 Principal Amount $1,440,421
Manager pursuant to an of Notes
Investment Manage-ment Agreement 11.5234 Junior Preferred $288,084
dated as of April 18, 1990 Shares
29.026 Class A Common Shares $29,026
--------------------------------------------------------------------------------
TCW Capital, as Investment $278,702 Principal Amount $278,702
Manager pursuant to an of Notes
Investment Manage-ment Agreement 2.2296 Junior Preferred $55,740
dated as of June 19, 1989 Shares
5.616 Class A Common Shares $5,616
--------------------------------------------------------------------------------
Mezzanine Capital $1,278,449 Principal Amount $1,278,449
of Notes
10.2276 Junior Preferred $255,690
Shares
25.761 Class A Common Shares $25,761
--------------------------------------------------------------------------------
Xxxxxxx National Life Insurance $7,500,000 Principal Amount $7,500,000
Company of Notes
60 Junior Preferred Shares $1,500,000
151.128 Class B Common $151,128
Shares
--------------------------------------------------------------------------------
Mezzanine Capital and Income $5,000,000 Principal Amount $5,000,000
Trust 2001 of Notes
40 Junior Preferred Shares $1,000,000
100.752 Class A Common $100,752
Shares
--------------------------------------------------------------------------------
-1-
ADDRESSES FOR NOTICES
TCW Special Placements Fund III
c/o Trust Company of the West
Representative Xxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Xx.
TCW Capital, as Investment Manager
pursuant to an Investment Management
Agreement dated as of April 18, 1990
c/o Trust Company of the West
Representative Xxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Xx.
TCW Capital, as Investment Manager
pursuant to an Investment Management
Agreement dated as of
June 19, 1989
c/o Trust Company of the West
Representative Xxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Xx.
Mezzanine Capital
c/o Trust Company of the West
Representative Xxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Xx.
With copy to: O'Melveny & Xxxxx
000 00xx Xxxxxx, X.X.
Xxxxx 000-Xxxx
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx National Life Insurance
c/o PPM America Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
-2-
Mezzanine Capital &
Income Trust 2001 PLC
c/o Jordan/Zalaznick Advisors, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx
PAYMENT PROVISIONS
All payment pursuant to this Securities Purchase Agreement shall be made to:
Sanwa Bank Trust Operations
ABA # 000-000-000
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx XxXxxxxx
The following routing information should be used when sending transfers:
TCW Special Placements Fund III
Account No. 400-1800
TCW Capital (Under April 18, 1990 Investment Management
Agreement)
Account No. 400-3800
TCW Capital (Under June 19, 1990 Investment Management Agreement)
Account No. 400-0300
Mezzanine Capital
Account No. 400-1100
All wire transfers should provide sufficient information with such transfer to
identify the source and application of such funds, and with instructions to give
immediate telephone advice of payment to:
Trust Company of the West's Trust Department
(000) 000-0000
All notices of such payment to such Purchasers and all written confirmations of
such wire transfers shall be made to:
Trust Company of the West
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
-3-
Mezzanine Capital Income Trust
x/x Xxxxxxxx Xxxxxxxx Xxxx xx Xxx Xxxx
XXX No. 000-0000-00
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Account No. 458105201
Confirmation to: Xx. Xxxxx X. Xxxxxx
c/o Jordan/Zalaznick Advisors, Inc.
Telephone No.: (000) 000-0000
Xxxxxxx National Life Insurance Company
MANNER OF PAYMENT
All payments on account of the Notes shall be made by bank wire or transfer of
immediately available funds to:
Northern CHGO
ABA #0000-0000-0
Credit Account #00000000
26-91241 Xxxxxxx National Life
Insurance Company
Ref: Xxxxxxxxx, Date of Payment,
principal and interest breakdown.
ADDRESS FOR COMMUNICATIONS FOR NOTICES OF PAYMENTS AND
CONFIRMATION OF WIRE TRANSFERS
PPM America Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
-4-
EXHIBIT D
[FORM OF]
SUBSIDIARY GUARANTY
THIS GUARANTY (the "Guaranty") is entered into as of the ____ day of
October 1991, by each of the Undersigned Subsidiaries of Xxxxxxxxx Xxxxx
Corporation (each a "Guarantor," and collectively, the "Guarantors") in favor of
the Purchasers under the Securities Purchase Agreement referred to below to
secure obligations of FMCAN Acquisition Corp., an Illinois corporation
("Borrower").
Pursuant to the Securities Purchase Agreement dated as of the date hereof
(the "Securities Purchase Agreement") by and among Xxxxxx May Holdings, Inc.
("Holdings"), Borrower and the purchasers listed on Schedule 1 thereto, the
Borrower desires to issue and sell to the Purchasers $35,000,000 principal
amount of its 14% Subordinated Notes due 2000 (collectively, the "Subordinated
Notes"), all on the terms and conditions set forth therein.
The proceeds from the sale of the Subordinated Notes will be used to
finance the acquisition (the "Acquisition") contemplated by the Stock Purchase
Agreement dated as of August 22, 1991 (the "Stock Purchase Agreement") and for
other general corporate purposes of Holdings, the Borrower and the Guarantors,
as Subsidiaries of the Borrower. It is a condition precedent to the purchase and
sale of the Subordinated Notes that each Guarantor shall have executed this
guaranty. Capitalized terms not otherwise defined herein shall have the meaning
given them in the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the benefits which will inure to each
of the Guarantors as a result of the transactions contemplated by the Securities
Purchase Agreement, and for other good and valuable consideration, the receipt
of which hereby is acknowledged, each Guarantor hereby agrees as follows:
1. PAYMENT AND PERFORMANCE OF THE OBLIGATIONS. In order to secure
payment of the Subordinated Notes and performance of the Securities Purchase
Agreement by Borrower, each Guarantor hereby irrevocably and unconditionally
guarantees to Purchasers the due and punctual payment and performance of all the
obligations of Borrower to Purchasers arising out of or provided for in the
Subordinated Notes and the Securities Purchase Agreement or under any renewals,
extensions or modifications thereof, whether primary, secondary, direct,
contingent, sole, joint, several or joint and several, including without
limitation the payment of principal and any interest accruing thereon, now
existing or hereafter at any time or times incurred (hereinafter referred to
individually as an "Obligation," and collectively, as "Obligations"). If any
Obligation is not paid or performed by Borrower punctually when due, subject to
any applicable grace period, including without limitation any Obligation due by
acceleration of the maturity
thereof, each Guarantor will, upon demand by any Purchaser, immediately pay or
perform such Obligation or cause the same to be paid or performed strictly in
accordance with the terms thereof (including amounts that would become due but
for any stay, injunction or other prohibition preventing such payment or
performance in respect of the Ob1igations guaranteed hereby). Each Guarantor
will pay to Purchasers, upon demand, all costs and expenses, including without
limitation, reasonable counsel fees which may be incurred by any Purchaser in
the collection or enforcement of the Obligations or of any Guarantor's
obligations under this Guaranty. The liability of each Guarantor under this
Guaranty shall not exceed the Maximum Guaranty Amount (as defined in Exhibit A
hereto) determined as of the Ending Date (as defined in Exhibit A hereto).
2. REPRESENTATIONS AND WARRANTIES.
(a) Each Guarantor is a corporation duly organized and validly
existing under, and by virtue of, the laws of the state of its incorporation and
is in good standing under such laws. Each Guarantor has the corporate power and
lawful authority to own and operate its properties and assets and to carry on
its business as currently conducted and, with respect to its current operations,
as proposed to be conducted.
(b) Each Guarantor has all requisite legal and corporate power to
enter into this Guaranty, and to carry out and perform all of its obligations
under the terms of this Guaranty. This Guaranty is a valid and binding
obligation of each Guarantor, enforceable against such Guarantor in accordance
with its respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization, or similar laws affecting
the enforcement of creditors' rights generally and (ii) as the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3. GENERAL TERMS AND CONDITIONS.
(a) All payments by any Guarantor hereunder shall be made in Dollars
of the United States of America.
(b) Each Guarantor hereby waives, to the extent not prohibited by
applicable law which cannot itself be waived, (i) all presentments, demands for
performance, notices of nonperformance (except to the extent required by the
provisions hereof), (ii) any requirement of diligence or promptness on the part
of any Purchaser in the enforcement of its rights under the provisions of this
Guaranty, (iii) any and all notices (other than notices required to be given by
this Guaranty) of every kind and description which may
-2-
be required to be given by any statute or rule of law, and (iv) any defense
based on rights of setoff or statutes of limitations.
(c) The obligation of each Guarantor under this Guaranty is absolute
and unconditional and any Purchaser may at any time and from time to time
without the consent of or notice to Guarantors and without impairing or
releasing the obligations of Guarantors hereunder (i) exercise or refrain from
exercising any right or remedy against Borrower or others, including without
limitation Guarantors, and (ii) modify, amend, extend, supplement or waive or
consent to the breach of any provision of the Subordinated Notes or any
provision of the Securities Purchase Agreement applicable solely to Borrower, to
which modifications, amendments, extensions, supplements, waivers and consents
each Guarantor hereby assents. Without limiting the foregoing, it is
specifically understood that any modification, limitation or discharge of
Borrower's liability under the Subordinated Notes or the Securities Purchase
Agreement arising out of or by virtue of any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law hereinafter initiated by or against Borrower shall not affect, modify,
limit or discharge the liability of each Guarantor in any manner and this
Guaranty shall remain in full force and effect and shall be enforceable against
each Guarantor to the same extent and with the same effect as if such
proceedings had not been instituted.
(d) The guaranty and surety contained in paragraph 1 hereof is
absolute and unconditional, primary, direct and immediate and shall be valid and
binding upon each Guarantor regardless of (i) any invalidity, irregularity,
defect or unenforceability of or in the Subordinated Notes, the Securities
Purchase Agreement or any other obligation or agreement of Borrower or
Guarantors, (ii) any action or inaction by Purchasers or any other occurrence
referred to in subsection 3(c) above, or (iii) any other circumstance which
might otherwise constitute a defense available to, or a discharge or release of,
Borrower or Guarantors by operation of law.
(e) No failure or delay on the part of any Purchaser in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. This Guaranty will not be discharged as to any
Obligation except by payment in full of the principal thereof, premium if any,
and interest thereon. The rights and remedies of Purchasers hereunder are
cumulative and concurrent and not exclusive of any other rights or remedies
Purchasers may have.
(f) No set-off, counterclaim, reduction or diminution of an
obligation, or any defense of any kind or nature that any Guarantor has or may
have against Borrower or any Purchaser shall affect, modify or impair such
Guarantor's obligations hereunder.
-3-
Any claim that any Guarantor now or hereafter has against Borrower by way of
subrogation under this Guaranty or otherwise shall be fully subordinate in lien
and payment to any claim that any Purchaser now or hereafter has against
Borrower.
(g) This Guaranty is made and shall be governed by and construed
under the laws of the State of New York, without regard to the principles of
conflicts of laws.
(h) This Guaranty is a continuing guaranty and shall be binding upon
each Guarantor and their respective successors and assigns, and shall inure to
the benefit of the successors and assigns of the Purchasers and, in the event of
any permitted transfer or assignment of rights by any Purchaser, the rights and
privileges herein conferred upon such Purchaser shall automatically extend to
and be vested in such transferee or assignee, all subject to the terms and
conditions hereof. Upon the liquidation of any Guarantor, the obligations of
such Guarantor hereunder shall be assumed by its successor or Successors except
to the extent that any such assumption shall be prohibited by applicable law.
4. SUBORDINATION. The obligations of Borrower to the Purchasers are
subordinated to the obligations of Borrower under the Senior Financing Documents
to the extent and in the manner set forth in the Subordination Agreement.
5. SUBROGATION. Subject to payment in full of the Senior Obligations, the
Purchasers shall be subrogated to the rights of the holders of the Senior
Obligations to receive payments or distributions of assets of each Guarantor to
the extent that distributions otherwise payable to the Purchasers have been
applied to the payment of Senior Obligations.
6. TERMINATION. This Guaranty shall terminate and be of no further force
or effect upon the payment in full of all of the Obligations, provided that this
Guaranty shall continue to be effective or be reinstated (as the case may be) if
at any time payment of any of the Obligations is refunded or must otherwise be
returned by any Purchaser upon the bankruptcy, arrangement, reorganization or
similar proceeding for relief of debtors under state or federal law, all as
though such payment had not been made.
7. MISCELLANEOUS.
(a) This Guaranty shall be binding upon each Guarantor and upon the
heirs, executors, administrators, successors and assigns of each Guarantor, and
shall inure to the benefit of Purchasers and their successors and assigns.
(b) Any notice, demand or request under this Guaranty shall be in
writing, and shall be delivered by personal service or shall be sent by postage
prepaid, first class mail, addressed, if
-4-
to Purchasers, at their respective addresses set forth in Schedule 1 to the
Securities Purchase Agreement, and if to any Guarantor at the address specified
in Section 11.9 of the Securities Purchase Agreement.
or at such other address as the addressee may designate in writing. Each notice,
demand or request hereunder shall be deemed given on the date it is delivered.
(c) No amendment, modification or release from or waiver of any
provision hereof shall be effective unless in writing and signed by Purchasers
and shall be effective only in the specific instance and for the specific
purpose for which given.
(d) This Guaranty may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(e) The paragraph headings used herein are for convenience only and
do not affect or modify the terms and conditions hereof.
(f) If any provision hereof is found by a court of competent
jurisdiction to be prohibited or unenforceable it shall be ineffective only to
the extent of such prohibition or unenforceability, and such prohibition or
unenforceability shall not invalidate the balance of such provision to the
extent it is not prohibited or unenforceable, nor invalidate the other
provisions hereof, all of which shall be liberally construed in favor of
Purchasers in order to effect the provisions hereof.
IN WITNESS WHEREOF, each undersigned Guarantor has caused this Guaranty to
be duly executed as of the day and year first above written.
[SUBSIDIARIES OF XXXXXXXXX XXXXX CORPORATION]
-5-
EXHIBIT A
TO
SUBSIDIARY GUARANTY
Set forth below are the definitions used in the Guaranty to determine
the maximum liability of each Guarantor thereunder. These definitions and their
use in the Guaranty should be construed in a manner that gives effect to the
following intent: the parties intend that each Guarantor shall be liable in an
amount equal to 95% of the value of its assets after subtracting its liabilities
(as determined using the definitions below), with the goal of maximizing the
amount payable by such Guarantor without thereby rendering it insolvent, leaving
it with an unreasonably small amount of capital with which to conduct its
business, or leaving it unable to pay its debts as they mature.
"Ending Date" means the earlier of the date of the commencement of a
case under Title 11 of the United States Code involving Borrower or the date
enforcement of this Guaranty is sought.
"Fair Saleable Value" of any assets means the amount which may be
realized, as of a Calculation Date, within a reasonable time either through
collection of such assets or sale of such assets at the regular market value,
understanding "regular market value" to mean the amount which could be obtained
for the assets in question within such period by a capable and diligent
businessperson from an interested buyer who is willing to purchase under
ordinary selling conditions.
"Adjusted Indebtedness" means the present value, as of a Calculation
Date, of known probable liabilities, whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent, but excluding (i) any liabilities
under the Guaranty and (ii) all intercompany indebtedness owed by such Guarantor
to Borrower or any Corporation as to which the Borrower is a wholly-owned
subsidiary, it being understood that a portion of such indebtedness shall be
discharged in full in an amount equal to the amount paid by Guarantor hereunder.
Contingent or unliquidated liabilities shall be valued as of a Calculation Date
at the amount which, in light of all the facts and circumstances existing at
such time, represents the amount which could reasonably be expected to become an
actual matured liability.
"Adjusted Net Worth" means, as of a Calculation Date, the excess of
(i) the Fair Saleable Value of the assets of such Guarantor on such Calculation
Date, over (ii) the amount of Adjusted Indebtedness of such Guarantor on such
Calculation Date.
"Calculation Date" means the date of the Closing Date and each day
thereafter on or prior to the Ending Date.
-1-
"Maximum Guaranty Amount" shall be calculated as of each Calculation
Date, and means 95% of Adjusted Net Worth as of such Calculation Date.
-2-
EXHIBIT H
The Jordan Company
XXXXXX MAY HOLDINGS, INC. - Subordinate Debt/Preferred Strip Returns
(Dollars in Thousands)
1. ASSUMING REDEMPTION OF ALL COMMON STOCK, PREFERRED STOCK AND SENIOR SUB
DEBT IN SAME YEAR (1-10).
Year
0 1 1 2 2 3 3 4 4 5 5
Oct-91 Apr-92 Oct-92 Apr-93 Oct-93 Apr-94 Oct-94 Apr-95 Oct-95 Apr-96 Oct-96
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Year 10 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
--------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 9 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 8 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 7 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 6 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 5 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 47,735(b)
------------- 9,890
-------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 57,625(a)
Year 4 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 48,973(b)
------------- 7,150
-------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 54,123(a)
Year 3 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 46,268(b)
------------- 4,855
-------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 51,123(a)
Year 2 Exit: (42,000) 2,450 2,450 2,450 45,015(b)
------------- 2,835
-------
10.000% (42,000) 2,450 2,450 2,450 48,550(a)
Year 1 Exit: (42,000) 2,450 45,010(b)
------------- 1,332
-------
10.000% (42,000) 2,450 46,342(a)
6 6 7 7 8 8 9 9 10 10
Apr-97 Oct-97 Apr-98 Oct-98 Apr-99 Oct-99 Apr-00 Oct-00 Apr-01 Oct-01
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Year 10 Exit: 2,450 2,450 2,450 2,450 2,450 19,850 1,225 18,725 0 15,112
-------------- 32,330
-------
10.000% 2,450 2,450 2,450 2,450 2,450 19,850 1,225 18,725 0 47,482
Year 9 Exit: 2,450 2,450 2,450 2,450 2,450 19,850 1,225 32,718(b)
------------- 20,700
-------
10.000% 2,450 2,450 2,450 2,450 2,450 19,850 1,225 50,418(a)
Year 8 Exit: 2,450 2,450 2,450 2,450 2,450 60,407(b)
------------- 21,625
-------
10.000% 2,450 2,450 2,450 2,450 2,450 72,032(a)
Year 7 Exit: 2,450 2,450 2,450 49,447(b)
------------- 17,025
-------
10.000% 2,450 2,450 2,450 66,472(a)
Year 6 Exit: 2,450 48,556(b)
------------- 13,150
-------
10.000% 2,450 61,708(a)
Year 5 Exit:
-------------
10.000%
Year 4 Exit:
-------------
10.000%
Year 3 Exit:
-------------
10.000%
Year 2 Exit:
-------------
10.000%
Year 1 Exit:
-------------
-------------------------
(a) In addition, Investors will receive $1.00 per share of common stock owned
upon exit
(b) Consists of Sub Debt Interest and Principal, as well as Preferred Stock and
Accrued PIK Dividends where Applicable
-1-
The Jordan Company
XXXXXX MAY HOLDINGS, INC. - Subordinate Debt/Preferred Strip Returns
(Dollars in Thousands)
2. ASSUMING "PUT" AS STRIP COMMON EQUIPTY IN YEAR 7 WITH REDEMPTION OF DEBT
AND PREFERRED A LATER DATE:
Year 0 1 1 2 2 3 3 4 4 5 5
Oct-91 Apr-92 Oct-92 Apr-93 Oct-93 Apr-94 Oct-94 Apr-95 Oct-95 Apr-96 Oct-96
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Year 10 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
--------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 9 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 8 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 7 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 6 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 5 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 47,735(b)
------------- 9,890
-------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 57,625(a)
Year 4 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 48,973(b)
------------- 7,150
-------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 54,123(a)
Year 3 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 46,268(b)
------------- 4,855
-------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 51,123(a)
Year 2 Exit: (42,000) 2,450 2,450 2,450 45,015(b)
------------- 2,835
-------
10.000% (42,000) 2,450 2,450 2,450 48,550(a)
Year 1 Exit: (42,000) 2,450 45,010(b)
------------- 1,332
-------
10.000 (42,000) 2,450 46,342(a)
6 6 7 7 8 8 9 9 10 10
Apr-97 Oct-97 Apr-98 Oct-98 Apr-99 Oct-99 Apr-00 Oct-00 Apr-01 Oct-01
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Year 10 Exit: 2,450 2,450 2,450 2,450 2,450 19,950 1,225 18,725 0 15,112
-------------- 1,770 1,490 1,200
------- ------- -------
10.000% 2,450 2,450 2,450 2,450 2,450 21,720 1,225 20,215 0 16,312
Year 9 Exit: 2,450 2,450 2,450 2,450 2,450 19,950 1,225 32,718(b)
------------- 1,770 1,490
------- -------
10.000% 2,450 2,450 2,450 2,450 2,450 21,720 1,225 34,208(a)
Year 8 Exit: 2,450 2,450 2,450 2,450 2,450 50,407(b)
------------- 1,770
-------
10.000% 2,450 2,450 2,450 2,450 2,450 52,177(a)
Year 7 Exit: 2,450 2,450 2,450 49,447(b)
------------- 17,025
-------
10.000% 2,450 2,450 2,450 66,472(a)
Year 6 Exit: 2,450 48,556(b)
------------- 13,150
-------
10.000% 2,450 61,708(a)
Year 5 Exit:
-------------
10.000%
Year 4 Exit:
-------------
10.000%
Year 3 Exit:
------------- 4,855
10.000%
Year 2 Exit:
-------------
10.000%
Year 1 Exit:
-------------
10.000
_________________________
(a) In addition, Investors will receive $1.00 per share of common stock owned
upon exit
(b) Consists of Sub Debt Interest and Principal, as well as Preferred Stock and
Accrued PIK Dividends where Applicable
-2-
The Jordan Company
XXXXXX MAY HOLDINGS, INC. - Subordinate Debt/Preferred Strip Returns
(Dollars in Thousands)
3. ASSUMING 1/3 OF THE "PUT" STRIP COMMON EQUITY IN YEAR 7 WITH REDEMPTION OF
DEBT PREFERRED AND REMAINING 2/3 OF STRIP COMMON EQUITY IN YEAR 9:
Year
0 1 1 2 2 3 3 4 4 5 5
Oct-91 Apr-92 Oct-92 Apr-93 Oct-93 Apr-94 Oct-94 Apr-95 Oct-95 Apr-96 Oct-96
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Year 9 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 8 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 7 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 6 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
-------------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450
Year 5 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 47,735(b)
------------- 9,890
-------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 2,450 57,625(a)
Year 4 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 48,973(b)
------------- 7,150
-------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 2,450 2,450 54,123(a)
Year 3 Exit: (42,000) 2,450 2,450 2,450 2,450 2,450 46,268(b)
------------- 4,855
-------
10.000% (42,000) 2,450 2,450 2,450 2,450 2,450 51,123(a)
Year 2 Exit: (42,000) 2,450 2,450 2,450 45,015(b)
------------- 2,835
-------
10.000% (42,000) 2,450 2,450 2,450 48,550(a)
Year 1 Exit: (42,000) 2,450 45,010(b)
------------- 1,332
-------
10.000% (42,000) 2,450 46,342(a)
6 6 7 7 8 8 9 9 10 10
Apr-97 Oct-97 Apr-98 Oct-98 Apr-99 Oct-99 Apr-00 Oct-00 Apr-01 Oct-01
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Year 9 Exit: 2,450 2,450 2,450 2,450 2,450 19,950 1,225 32,716(b)
------------- 5,675 580 497
------- ------- 17,800
-------
10.000% 2,450 2,450 2,450 8,125 2,450 20,540 1,225 81,015(a)
Year 8 Exit: 2,450 2,450 2,450 2,450 2,450 80,409(b)
------------- 5,675 15,007
------- -------
10.000% 2,450 2,450 2,450 8,125 2,450 85,413(a)
Year 7 Exit: 2,450 2,450 2,450 49,447(b)
------------- 17,025
-------
10.000% 2,450 2,450 2,450 66,472(a)
Year 6 Exit: 2,450 48,556(b)
------------- 13,150
-------
10.000% 2,450 61,708(a)
Year 5 Exit:
-------------
10.000%
Year 4 Exit:
-------------
10.000%
Year 3 Exit:
-------------
10.000%
Year 2 Exit:
-------------
10.000%
Year 1 Exit:
-------------
10.000%
-------------------------
(a) In addition, Investors will receive $1.00 per share of common stock owned
upon exit
(b) Consists of Sub Debt Interest and Principal, as well as Preferred Stock and
Accrued PIK Dividends where Applicable
-3-
XXXXXX MAY HOLDINGS, INC.
SUBORDINATE DEBT / PREFERRED STRIP
EXAMPLE OF 16.0% PREFERRED RETURN TO ORIGINAL PURCHASERS
Scenario: Assume 1/3 of Original Purchasers "put" Strip Common Equity in Year
7, subject to Section 6.8, with redemption of Subordinate Debt, Preferred
and remaining 2/3 of Strip Common Equity through a sale to the Company in
Year 9.
A. Those Purchasers who "put" their Common Equity in Year 7 will receive the
following minimum distributions in Years 7, 8 and 9 as consideration for
the Preferred Return:
($'s in Millions) Year 7 Year 8 Year 9
------ ------ ------
Minimum Common Equity
Payments to 1/3 of
Purchasers $5.676 (a) $0.590 $0.497
-----------
(a) In addition, these Original Purchasers will receive $1.00/share for
each share of Common Equity "put" back to the Company.
B. Those remaining 2/3 of Original Purchasers will receive the following
minimum distribution in Year 9 as consideration for the Preferred Return:
($'s in Millions) Year 9
------
Minimum Common Equity Payment
to Remaining 2/3 of Purchasers $17.800 (b)
-----------
(b) In addition, these Original Purchasers will receive $1.00/share for
each share of Common Equity sold.
C. Thus, the total minimum payments to the Original Purchasers in Years 7, 8
and 9 in this example are as follows:
-1-
($'s in Millions) Year 7 Year 8 Year 9
------ ------ ------
Subordinate Debt Interest $4.900 $ 4.900 $ 2.450
Subordinate Debt Principal $0.000 $17.500 $17.500
Preferred Stock Principal
and Accrued Dividends $0.000 $0.000 $3.993
Minimum Common Equity
Payments to 1/3 of
Purchasers who "Put" $5.675 (a) $0.590 $0.497
Minimum Common Equity
Payment to Remaining 2/3
of Purchasers $0.000 $0.000 $17.800 (b)
------ ------ -------
Total Minimum
Distributions $10.575 $22.990 $52.240
EXHIBIT I
THE JORDAN COMPANY
000 XXXX XXXXXX XXXXX
XXX XXXX, XXX XXXX 00000
October 30, 1991
VIA TELECOPY
(011-4439-241-2133)
-------------------
Mezzanine Capita1 &
Income Trust 2001 PLC
c/o Xxxxxxxx Xxxxxxxxx Limited
00 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxxxx XX0 0XX
Attention: Mr. Xxx Xxxxxxxxx
Re: Securities Purchase Agreement, dated as of October 30, 1991 (the
"PURCHASE AGREEMENT"), between Xxxxxx May Holdings, Inc.
("HOLDINGS") and FMCAN Acquisition Corp., as issuers, and TCW
Special Placements Fund III, TCW Capital as an investment manager
pursuant to each of two Investment Management Agreements,
Mezzanine Capital, Xxxxxxx National Life Insurance Company and
Mezzanine Capital & Income Trust 2001 PLC ("MCIT"), as
purchasers.
Gentlemen:
Each of the undersigned, being all of the Holders of Class C Common Shares
of Holdings, hereby agrees with MCIT, in connection with (and as a condition to)
its investment made today under the Purchase Agreement, not to exercise any of
the voting power available to holders of Class C Common Shares as a class to
elect a Director to the Board of Directors of Holdings whose vote will
constitute 51% of the voting power of such Board as provided in Section II.D(3)
of Article Fourth of the Certificate of Amendment of the Certificate of
Incorporation until such time as either (a) MCIT shall so consent or (b) Xxxxx
X. Xxxxxxxxx and Xxxx X. Xxxxxx XX shall, in their sole and absolute discretion
and in their capacity as investment advisers to MCIT and as individual
investors, have determined that the investments in Holdings of MCIT and the
holders of Class C Common Shares are considered likely to be in jeopardy.
Terms for which meanings are provided in the Purchase Agreement are used
herein with such meanings. This letter shall be
construed in accordance with Sections 9(a), 9(c), 9(f), 9(g), 9(l) and 9(p) of
the Shareholders Agreement, as so defined, understanding that all references in
such Sections to "this Agreement" shall refer instead to this letter agreement.
Very truly yours,
THE XXXX X. XXXXXX, XX
By:
------------------------------------------
Title:
----------------------------------
LEUCADIA INVESTORS, INC.
By:
------------------------------------------
Title:
----------------------------------
THE JW/JENN TRUST
By:
------------------------------------------
Title:
----------------------------------
------------------------------------------
Xxxxx X. Xxxxxxxxx
------------------------------------------
Xxxxxxxx X. Xxxxxxx
------------------------------------------
Xxxx X. Xxxxxx
------------------------------------------
Xxxx X. Max
------------------------------------------
Xxxx X. Xxxx
------------------------------------------
Xxxxxxx Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
------------------------------------------
Xxxx Xxxxxxxx
------------------------------------------
Xxxxxx X. Xxxxx
-2-
FIRST AMENDMENT
This First Amendment (this "Amendment") is entered into as of
September 18, 1992 by and among Xxxxxx May Holdings, Inc., a Delaware
corporation ("Holdings"), Xxxxxxxxx Xxxxx Corporation, an Illinois corporation,
as successor by merger to FMCAN Acquisition Corp. (the "Company") and the
persons named on the signature pages hereof (the "Purchasers") and amends the
Securities Purchase Agreement entered into as of October 30, 1991 among
Holdings, the Company and the Purchasers (the "Securities Purchase Agreement").
All capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Securities Purchase Agreement.
RECITALS
WHEREAS, Xxxxx Xxxxxx Candy Shops, Inc., a New York corporation (the
"Seller") and the Company have entered into that certain Agreement for
Acquisition of Certain Assets dated July 31, 1992, in the form attached hereto
as Exhibit A (as amended by the Amendatory Agreement dated as of September 18,
1992, the "Acquisition Agreement"), pursuant to which the Company has agreed to
purchase certain assets (the "Acquired Assets") from the Seller;
WHEREAS, the Company desires to finance a portion of the purchase
price of the Acquired Assets pursuant to an Amended and Restated Credit
Agreement dated as of September 18, 1992 among the Company, Holdings, the
lenders named therein and The First National Bank of Chicago, as Agent, in the
form attached hereto as Exhibit B (the "Amended Working Capital Facility");
WHEREAS, in connection with the acquisition of the Acquired Assets and
the execution of the Amended Working Capital Facility, the Company desires
certain amendments to the provisions of the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the premises, and the agreements
contained herein, the undersigned hereby agree as follows:
1. Section 1 of the Securities Purchase Agreement is hereby amended
by amending and restating the following definitions:
"EBITDA" means, for any period, Consolidated Net Income for such
period PLUS all amounts deducted in determining such Consolidated Net Income on
account of Consolidated Interest Expenses, taxes based on or measured by income,
depreciation expense and amortization expense (including, without limitation,
amortization expense related to the write-up in the Book Value of any assets due
to goodwill or unallocated purchase price and other amortization or depreciation
arising out of the transactions contemplated by this Agreement, the Ancillary
Agreements and the First Amendment, to the extent such adjustments are made
pursuant to APB Nos. 16 and 17 and are deducted in determining Consolidated Net
Income for such period), the transaction costs expensed
but not capitalized during the period from the Closing Date to and including
August 31, 1992 transaction costs relating to the transactions contemplated by
the First Amendment expensed but not capitalied prior to August 31, 1993, the
consulting fee payable to Xxxxxx Xxxxx and the fees of the three directors
designated by the Jordan Group (to the extent that such consulting fee and
directors' fees do not exceed, in the aggregate, $150,000 in any fiscal year),
fees and expenses paid or payable under the Management Consulting Agreement and
the Investment Bank Fee Agreement and the non-cash portion of expenses under SAR
Agreements and any Permitted Stock Option Plan, all as determined for Holdings
and its Subsidiaries on a consolidated basis in accordance with GAAP.
"Investment Banking Fee Agreement" means the Investment Banking Fee
Agreement entered into on October 30, 1991 by and between The Xxxxxx Company and
Holdings, as such agreement was amended on September 18, 1992.
"Fixed Charges" shall mean, for any period, without duplication,
Consolidated Interest Expense for such period, PLUS (i) scheduled payments of
principal of all Indebtedness of Holdings and its Subsidiaries during such
period (including payments actually made in cash during such period required in
connection with scheduled commitment reductions under the Working Capital
Facility), PLUS, (ii) capital expenditures made during such period (reduced by
(a) the aggregate amount of credits received by the Company and its Subsidiaries
in respect of motor vehicle trade-ins during such period and (b) all amounts not
in excess of $510,000, cumulatively and in the aggregate for all periods
expended in compliance with Sections 10.3(F) and (G) of the Senior Note Purchase
Agreement), PLUS (iii) payments actually paid or payable in cash with respect to
such period with respect to preferred stock (including, without limitation and
without duplication, dividends paid on the common stock of the Company for the
purpose of funding the payment of dividends by Holdings on the Seller Preferred
Stock), all as determined for Holdings and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"Management Consulting Agreement" means the Management Consulting
Agreement entered into on October 30, 1991 by and between TJC Management Corp.
and Holdings, as such agreement was amended on September 18, 1992.
2. Section 1 of the Securities Purchase Agreement is hereby further
amended by adding the following definition:
"First Amendment" means the First Amendment dated as of September 18,
1992 to this Agreement.
3. Clause (v) of Section 7.2 of the Securities Purchase Agreement
is hereby amended to read in its entirety as follows:
"(v) for so long as no Event of Default shall have occurred and be
continuing, any payments made during the period ending on the sixth
anniversary of the Closing pursuant to the terms of the Management
Consulting Agreement as amended by the Amendment thereto dated
September 18, 1992 but without giving effect to any other
amendments thereto;"
2
4. Clause (vi) of Section 7.2 of the Securities Purchase Agreement
is hereby amended to read in its entirety as follows:
"(vi) for so long as no Event of Default shall have occurred and
be continuing, any payments made during the period ending on the
sixth anniversary of the Closing pursuant to the terms of the
Management Consulting Agreement as amended by the Amendment
thereto dated September 18, 1992 but without giving effect to any
other amendments thereto;"
5. Clause (b) of Section 7.4 of the Securities Purchase Agreement is
hereby amended by replacing the number "$47,500,000" in the fourth line thereof
with "57,500,000 and by inserting "and reduced by any permanent reduction in the
Facility A Commitment as defined in the Working Capital Facility" at the end of
such clause.
6. Section 7.10(a) of the Securities Purchase Agreement is hereby
amended by and restated and reads in its entirety as follows:
"Holdings covenants that it shall not, in any fiscal year, permit
the aggregate amount of Extraordinary Losses to exceed (a)
$1,000,000 in the aggregate in any fiscal year or (b) $4,400,000
cumulatively and in the aggregate from and after the Closing
Date. For purposes of this Section 7.10(a), "Extraordinary
Losses" shall mean, with respect to any period, for Holdings and
its Subsidiaries on a consolidated basis, the aggregate amount of
losses which are properly classified as extraordinary or non-
recurring in accordance with GAAP (including, without limitation,
losses from the sale or other disposition of Property not in the
ordinary course of business but excluding any depreciation or
amortization resulting from revaluations of the assets acquired
in the Acquisition or pursuant to the Agreement for the
Acquisition of Certain Assets dated as of July 31, 1992 between
the Company and Xxxxx Xxxxxx Candy Shops, Inc.), net of any
income or gain realized during such period which is properly
classified as extraordinary or non-recurring in accordance with
GAAP (including, without limitation, gain or income from the sale
or other disposition of property not in the ordinary course of
business).
7. Section 7.10(b) of the Securities Purchase Agreement is hereby
amended by replacing the table therein with the following table:
May 31, 1992 1.44:1.00
August 31, 1992 1.00:1.00
November 30, 1992 1.00:1.00
February 28, 1993 1.00:1.00
3
May 31, 1993 1.00:1.00
August 31, 1993 1.00:1.00
November 30, 1993 1.00:1.00
February 28, 1994 1.00:1.00
May 31, 1994 1.00:1.00
August 31, 1994 1.00:1.00
November 30, 1994 1.00:1.00
February 28, 1995 1.00:1.00
May 31, 1995 1.00:1.00
August 31, 1995 1.11:1.00
November 30, 1995 1.00:1.00
February 28, 1996 1.00:1.00
May 31, 1996 1.00:1.00
August 31, 1996 and thereafter 1.06:1.00
8. (a) The Purchasers hereby acknowledge and agree the purchase of
the Acquired Assets pursuant to the Acquisition Agreement shall not be deemed to
be a capital expenditure for the purposes of Section 7.7 of the Securities
Purchase Agreement.
(b) Section 7.7 of the Securities Purchase Agreement is hereby
amended by replacing the first sentence thereof with the following:
"For so long as any Notes or at least 92 Junior
Preferred Shares shall remain outstanding,
Holdings and the Company will not, and will not
permit any of their Subsidiaries to, directly or
indirectly, make any capital expenditures during
any fiscal year in an aggregate amount for
Holdings and its Subsidiaries in excess of (a)
with respect to each of the fiscal years ending
August 31, 1993 and August 31, 1994, $4,400,000
plus (i) the amount by which
4
$4,400,000 exceeds the actual capital expenditures in the
preceding fiscal year and (ii) the aggregate amount of credits
received by the Company and its Subsidiaries in such fiscal
year in respect of motor vehicle trade-ins; (b) with respect
to the fiscal year ending August 31, 1995, $3,300,000 plus (i)
the amount by which $4,400,000 exceeds the actual capital
expenditures in the preceding fiscal year and (ii) the
aggregate amount of credits received by the Company and its
Subsidiaries in such fiscal year in respect of motor vehicle
trade-ins; and (c) with respect to the fiscal year ending
August 31, 1996 and any fiscal year thereafter, $3,300,000
plus (i) the amount by which $3,300,000 exceeds the actual
capital expenditures in the preceding fiscal year and (ii) the
aggregate amount of credits received by the Company and its
Subsidiaries in such fiscal year in respect of motor vehicle
trade-ins.
9. Effective as of the Effective Date (as hereinafter defined), in
consideration of the representations, and warranties, covenants and agreements
of Holdings and the Company set forth in this Amendment, the Purchasers hereby
consent to the execution, delivery and performance of the Acquisition Agreement
and the Amended Working Capital Facility and waive any Event of Default under
the provisions of the Securities Purchase Agreement that would otherwise be
deemed to result EXCLUSIVELY from such execution, delivery and performance.
10. To induce the Purchasers to enter into this Amendment and to
amend the Securities Purchase Agreement in the manner provided herein, Holdings
and the Company jointly and severally represent and warrant to each Purchaser
that the following statements are true, correct and complete:
(a) Each of Holdings and the Company has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Securities
Purchase Agreement as amended by this Amendment (the "Amended Agreement").
(b) The execution and delivery of this Amendment has been duly
authorized by all necessary corporate action by Holdings and the Company.
(c) The execution and delivery by each of Holdings and the
Company and the performance by Holdings and the Company of the Amended Agreement
does not and will not (i) violate any provision of any law, rule or regulation
applicable to Holdings, the Company or any of their respective Subsidiaries, the
Certificate of Incorporation or Bylaws of Holdings, the Company or any of their
respective Subsidiaries or any order, judgment or decree of any court or other
agency of government binding on Holdings, the Company or any of their respective
Subsidiaries, (ii) conflict with, result in a breach of, or constitute a default
under, any contractual obligation of Holdings, the Company or any of their
respective Subsidiaries, (iii) result in or require the creation or imposition
of any Lien upon any of their properties or assets (other than Liens created
pursuant to the Senior Financing Documents), or (iv) require any approval of
stockholders or any approval or consent or any Person under any contractual
obligation of Holdings, the Company or any of their respective Subsidiaries
except consents under the Senior Financing Documents which consents have been
obtained on or before the Effective Date (as hereinafter defined).
5
(d) This Amendment and the Amended Agreement are the legally
valid and binding obligations of each of Holdings and the Company enforceable
against such entity in accordance with their respective terms.
(e) Except as set forth on Schedule 1 hereto, the
representations and warranties contained in the Securities Purchase Agreement
are and will be true, correct and complete in all material respects on and as of
the Effective Date to the same extent as though made on and as of that date.
(f) No event has occurred and is continuing or will result from
the transactions contemplated by this Amendment which would constitute an Event
of Default.
(g) All representations and warranties of the Company and the
Seller in the Acquisition Agreement are true, correct and complete in all
material respects on and as of the effective date.
11. This Amendment will become effective on a date (the "Effective
Date") when the following conditions have been satisfied or waived:
(a) The representations of Holdings and the Company contained in
this Amendment shall be true, correct and complete when made, and shall be true,
correct and complete on the Effective Date with the same force and effect as if
they had been made at and as of such time.
(b) Other than consents required under leases that are part of
the Acquired Assets, Holdings, the Company and their respective Subsidiaries
shall have obtained prior to or on the Effective Date any and all consents,
permits and waivers, and completed all filings necessary or appropriate for
consummation of the transactions contemplated by this Amendment, and all such
transactions shall be legally permitted by all laws and regulations to which the
Purchasers, Holdings and the Company and any of their respective subsidiaries
are subject.
(c) the Amended Working Capital Facility shall have been entered
into by the parties thereto.
(d) All corporate and other proceedings of Holdings and the
Company in connection with the transactions contemplated by this Amendment, and
all documents and instruments incident to such transactions, shall be reasonably
satisfactory in form and substance to the Purchasers and their counsel.
12. Except as specifically amended by this Amendment, the Securities
Purchase Agreement shall remain in full force and effect and is hereby ratified
and confirmed. The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of the Purchasers under
the Securities Purchase Agreement or the Holdings Guaranty.
6
13. This Amendment may be executed in any number of counterparts and
by the different parties hereto in separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument.
14. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of the
State of New York.
7
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first above written.
XXXXXX MAY HOLDINGS, INC.
By: /s/ Xxxx X. Max
------------------------------------------
Its: Vice President
------------------------------------------
XXXXXXXXX XXXXX CORPORATION
By: /s/ Xxxx X. Max
------------------------------------------
Its: Vice President
------------------------------------------
TCW SPECIAL PLACEMENTS FUND III
By: TCW Capital
Its: Managing General Partner
By: TCW Asset Management Company
Its: Managing General Partner
By: /S/ Xxxxxx Xxxxxxxx
---------------------------------------
Its: Vice President
---------------------------------
TCW CAPITAL, as Investment Manager
pursuant to an Investment
Management Agreement dated as of
June 30, 1989
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------
Its: Vice President
-------------------------------------
8
TCW CAPITAL, as Investment Manager
pursuant to an Investment
Management Agreement dated as of
April 18, 1990
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------------
Its: Vice President
-------------------------------------
MEZZANINE CAPITAL
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------------
Its: Vice President
------------------------------------
XXXXXXX NATIONAL LIFE INSURANCE
COMPANY
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Its: SENIOR VICE PRESIDENT & CHIEF FINANCIAL
OFFICER
------------------------------------------
MEZZANINE CAPITAL AND INCOME TRUST
2001 PLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------
Its: DIRECTOR
--------------------------------------
WCT PTE. LTD
By: /s/ NG XXX XXX
---------------------------------------
Its: DIRECTOR
-------------------------------------
9
SECOND AMENDMENT
This Second Amendment (this "Amendment") is entered into as of August
12, 1994 by and among Xxxxxx May Holdings, Inc., a Delaware corporation
("Holdings"), Xxxxxxxxx Xxxxx Corporation, an Illinois corporation, as successor
by merger to FMCAN Acquisition Corp. (the "Company"), and the persons named on
the signature pages hereof (the "Purchasers"), and amends the Securities
Purchase Agreement entered into as of October 30, 1991 among Holdings, the
Company and the Purchasers (as amended by the First Amendment thereto dated as
of September 18, 1992, and as otherwise amended, modified and supplemented prior
to the date hereof, the "Securities Purchase Agreement"). All capitalized terms
used herein and not otherwise defined shall have the respective meanings
provided such terms in the Securities Purchase Agreement.
RECITALS
WHEREAS, the Company and Holdings are parties to an Amended and Restated Credit
Agreement dated as of September 18, 1992 with the lenders named therein (the
"Lenders") and The First National Bank of Chicago, as agent thereunder (as
amended, modified and supplemented prior to the date hereof, the "Existing
Credit Agreement");
WHEREAS, the Company and Holdings also are parties to a Note
Purchase Agreement dated as of October 30, 1991 with Xxxxxxx National Life
Insurance Company (as amended, modified and supplemented prior to the date
hereof, the "Senior Note Purchase Agreement");
WHEREAS, the Company and the Lenders desire to enter into a new
Credit Agreement (the "New Credit Agreement") in order to refinance its
indebtedness under the Existing Credit Agreement and the Senior Note Purchase
Agreement and to provide working capital to the Company, among other purposes;
and
WHEREAS, in connection with the execution of the New Credit
Agreement, the Company, Holdings and the Purchasers desire to make certain
amendments to the Securities Purchase Agreement, as more fully set forth below.
NOW, THEREFORE, in consideration of the premises and the
agreements contained herein the undersigned hereby agree as follows:
(a) Section 1 of the Securities Purchase Agreement is hereby
amended by adding the following definitions:
"Asset Sale" means, with respect to any Person, (i) the sale,
lease, conveyance, disposition or other transfer by such Person
of any of its assets (including by way of a sale-leaseback
transaction and including the sale or other transfer of any of
the capital stock of any
Subsidiary of such Person), other than (A) sales of inventory in
the ordinary course of business, or (B) the disposition of
obsolete or worn-out equipment, other personal property or store
fixtures in the ordinary course of business, or (ii) the
issuance, sale, conveyance, disposition or other transfer by such
Person of any equity interests of or in such Person.
"Credit Agreement" means the Credit Agreement to be entered into
on the date of the Second Amendment by and among the Company,
Holdings, the lenders referred to therein and The First National
Bank of Chicago, as agent thereunder, as it may be amended from
time to time.
"Management Fees" means any amounts owing by the Company or
Holdings to (i) any of their respective directors, (ii) Xxxxxx X.
Xxxxx, (iii) TJC Management Corp. or (iv) any Affiliate of either
of the Company or Holdings, in the case of any of clauses (i),
(ii), (iii) or (iv) above in exchange for services related to
management, consulting, investment banking or other similar
services (including, without limitation, compensation for serving
as a director of Holdings or the Company), but, in any case, only
to the extent permitted under Section 7.2 hereof.
"Net Cash Proceeds" means, with respect to any Asset Sale of any
Person, (a) cash received by such Person or any Subsidiary of
such Person from such Asset Sale (including cash received as
consideration for the assumption or incurrence of liabilities
incurred in connection with or in anticipation of such Asset
Sale), net of (i) provision for all income or other taxes
measured by or resulting from such Asset Sale, (ii) all brokerage
commissions and other reasonable fees and expenses directly
related to such Asset Sale, and (iii) all amounts used to repay
Indebtedness secured by a Lien on any asset disposed of in such
Asset Sale or which is or may be required (by the express terms
of the instrument governing such Indebtedness) to be repaid in
connection with such Asset Sale (including payments made to
obtain or avoid the need for the consent of any holder of such
Indebtedness), and (b) cash payments in respect of any
Indebtedness, capital stock or other consideration received by
such Person or any Subsidiary of such Person from such Asset Sale
upon receipt of such cash payments by such Person or such
Subsidiary.
"Second Amendment" means the Second Amendment to this Agreement,
dated as of August 12, 1994.
-2-
"TJC Management Corp." means TJC Management Corp., a Delaware
corporation, and its successors and assigns, including a debtor-
in-possession on behalf of TJC Management Corp.
2. Section 1 of the Securities Purchase Agreement is hereby
further amended by amending and restating the definition of "Consolidated
Interest Expense" set forth therein in its entirety as follows:
"Consolidated Interest Expense" means, for any period, total
interest expense (including, without limitation, that portion of
any Capitalized Lease Obligations attributable to interest
expense in conformity with GAAP) paid or accrued with respect to
all outstanding Indebtedness for borrowed money of Holdings and
its Subsidiaries, plus net payments made (or minus net payments
received) under any interest rate hedging, cap or similar
agreement or arrangement, and EXCLUDING all commissions,
discounts and other fees and charges owed with respect to letters
of credit and bankers acceptance financing and prepayment
charges, agency fees, administrative fees, commitment fees and
capitalized transaction costs allocated to interest expense, all
as determined for Holdings and its Subsidiaries on a consolidated
basis for such period in accordance with GAAP.
3. Section 1 of the Securities Purchase Agreement is hereby
further amended by amending and restating CLAUSE (V) of the definition of
"Consolidated Net Income (Loss)" set forth therein in its entirety as follows:
"(v) any other extraordinary gains (but not losses) of Holdings
or its Subsidiaries,"
4. Section 1 of the Securities Purchase Agreement is hereby
further amended by adding the following to the end of the definition of
"Consolidated Net Income (Loss)" set forth therein:
"and (vii) the approximately $2,500,000 of extraordinary losses
of the Company resulting from the early retirement of debt
resulting from the transactions contemplated by the Credit
Agreement"
5. Section 1 of the Securities Purchase Agreement is hereby
further amended by amending and restating the definition of "EBITDA" set forth
therein in its entirety as follows:
"EBITDA" means, for any period, Consolidated Net Income for such
period (a) PLUS all amounts deducted in determining such
Consolidated Net Income on account of
-3-
(i) Consolidated Interest Expense, (ii) taxes based on or
measured by income, (iii) depreciation expense, (iv) amortization
expense (including, without limitation, amortization expense
related to the write-up in the Book Value of any assets due to
goodwill or unallocated purchase price and other amortization or
depreciation arising out of the transactions related to Holdings'
acquisition of the Company, to the extent such adjustments are
made pursuant to APB Nos. 16 and 17 and are deducted in
determining Consolidated Net Income for such period), (v) all
Management Fees accrued during such period, and (vi) the non-cash
portion of expenses under the SAR Agreements and any Stock Option
Plan (b) MINUS all Management Fees paid or (to the extent all
covenants restricting the payment of Management Fees will be
satisfied) to be paid with respect to such period, all as
determined for Holdings and its Subsidiaries on a consolidated
basis in accordance with GAAP.
6. Section 1 of the Securities Purchase Agreement is hereby
further amended by amending and restating the definition of "Fixed Charges" set
forth therein in its entirety as follows:
"Fixed Charges" shall mean, for any period, without duplication,
Consolidated Interest Expense for such period, PLUS (i) scheduled
payments of principal of all Indebtedness for borrowed money of
Holdings and its Subsidiaries during such period, PLUS (ii)
capital expenditures made during such period (reduced by the
aggregate amount of Net Cash Proceeds received by the Company and
its Subsidiaries during such period in respect of sales of
capital assets), PLUS (iii) payments actually paid in cash with
respect to such period with respect to the SAR Agreements, or
notes issued pursuant thereto, and preferred stock, all as
determined for Holdings and its Subsidiaries on a consolidated
basis in accordance with GAAP.
7. Section 1 of the Securities Purchase Agreement is hereby
further amended by amending and restating the definition of "SAR Agreements" set
forth therein in its entirety as follows:
"SAR Agreements" means (A) the agreements set forth on Schedule
1.1-C of the Credit Agreement as of the date of the Second
Amendment, as may be amended by Holdings after the date of the
Second Amendment, but only to the extent necessary to cause the
terms and conditions (but not the number of stock appreciation
rights granted thereunder) of such SAR Agreements to be
consistent with the terms and conditions of the SAR Agreement
dated as of January 1, 1993 between Holdings and Xxxxxx X. Xxxxxx
(the "Secker SAR Agreement") and (B) any other stock
-4-
appreciation rights agreements entered into by Holdings after the
date of the Second Amendment in substantially the form of the
Secker SAR Agreement, but only to the extent that such agreements
do not provide stock appreciation rights, when aggregated with
the stock appreciation rights granted under all then-existing SAR
Agreements, in excess of 52.75.
8. Section 1 of the Securities Purchase Agreement is hereby
further amended by amending and restating the definition of "Senior Financing
Documents" set forth therein in its entirety as follows:
"Senior Financing Documents" means the Working Capital Facility.
9. Section 1 of the Securities Purchase Agreement is hereby
further amended by amending and restating the definition of "Working Capital
Facility" set forth therein in its entirety as follows:
"Working Capital Facility" means the Credit Agreement and all
other Loan Documents (as defined in the Credit Agreement).
10. Section 7.2 of the Securities Purchase Agreement is hereby
amended by adding the following sentence to the end thereof:
Notwithstanding anything to the contrary in this Agreement, each
of Holdings and the Company agrees that it will not, and will not
permit any of its Subsidiaries to, directly or indirectly, pay
any Management Fees pursuant to clause (v) of this Section 7.2
which are accrued as of the effective date of the Second
Amendment or accrue thereafter UNLESS:
(a) all of the conditions set forth in clause (v) of this
Section 7.2 are satisfied, and
(b) such payment is made
(i) after the February 28, 1995 and Purchasers holding
a majority of the outstanding indebtedness under the
Notes shall have consented in writing to the payment of
such fees (which consent such Purchasers may give or
withhold in their sole discretion), or
(ii) after May 31, 1995 if the ratio of Holdings'
EBITDA to its Fixed Charges, measured as of the last
day of any fiscal quarter of Holdings ending on or
after May 31, 1995 for
-5-
the period of four full fiscal quarters of Holdings
ending on such date, is equal to or greater than
1.00:1.00.
11. Clause (b) of Section 7.4 of the Securities Purchase
Agreement is hereby amended and restated in its entirety as follows:
(b) Indebtedness in respect of the Working Capital Facility
or any refinancing thereof, in an aggregate principal amount not
to exceed $63,000,000 reduced by all actual payments made in
respect of any term (but not revolver) indebtedness under the
Working Capital Facility or under any agreement respecting
indebtedness incurred to refinance all or a portion of the
Indebtedness under this Section 7.4(b) (other than any payments
made from the proceeds of any refinancing) and reduced by any
permanent reduction in the Aggregate Revolving Loan Commitment
(as defined in the Credit Agreement) or any permanent reduction
in the aggregate revolving loan commitment available under any
refinancing thereof (excluding, in each case, permanent
reductions made in connection with a refinancing or refunding
thereof) (for purposes of this clause (b), the term "principal
amount" shall be deemed to include the amounts available for
drawing under any letters of credit issued and outstanding under
the Working Capital Facility or any refinancing thereof);
12. Clause (f) of the Section 7.4 of the Securities Purchase
Agreement is hereby amended by replacing "$1,000,000", which appears at the end
of such clause, with "$1,500,000".
13. Section 7.7 of the Securities Purchase Agreement is hereby
deleted in its entirety.
14. Section 7.10(a) of the Securities Purchase Agreement is
hereby deleted in its entirety.
15. Section 7.10(b) of the Securities Purchase Agreement is
hereby amended by replacing the table therein with the following table:
August 31, 1994 0.50:1.00
November 30, 1994 0.50:1.00
February 28, 1995 0.65:1.00
May 31, 1995 0.90:1.00
August 31, 1995 1.00:1.00
November 30, 1995 1.00:1.00
February 28, 1996 1.00:1.00
May 31, 1996 1.00:1.00
August 31, 1996
and thereafter 1.00:1.00
-6-
16. Effective as of the Effective Date (as hereinafter defined),
the Purchasers hereby waive Holdings' noncompliance with Section 7.10(b) of the
Securities Purchase Agreement and any Event of Default created thereby with
respect to the period of four consecutive full fiscal quarters ended on May 31,
1994 to the extent that such noncompliance or Event of Default was caused by
Holdings' failure to maintain during such period a ratio of EBITDA to Fixed
Charges of not less than 1.00:1.00, provided, however, that the ratio of EBITDA
to Fixed Charges maintained by Holdings during such period was not less than
0.50:1.00. Notwithstanding such waiver, Holdings and the Company agree that
payment by either of them or any of their respective Subsidiaries of any
management fees described in Section 7.2(v) of the Amended Agreement shall be
expressly subject to compliance with and satisfaction of the conditions set
forth in Section 7.2, as amended by this Amendment.
17. Effective as of the Effective Date, in consideration of the
representations, warranties, covenants and agreements of Holdings and the
Company set forth in this Amendment, the Purchasers hereby consent to the
execution, delivery and performance of, and the consummation of the transactions
contemplated by, the New Credit Agreement (including the incurrence of
indebtedness, the granting of security interests, the creation of Liens and the
repayment of certain existing indebtedness, all as contemplated by the New
Credit Agreement) and waive any Event of Default under the provisions of the
Securities Purchase Agreement that would be deemed to result exclusively from
such execution, delivery, performance and consummation. The parties hereto
acknowledge and agree that the Indebtedness of the Company under the Senior Note
Purchase Agreement is being paid in full concurrently with the execution and
delivery hereof and that accordingly, the terms "Pledge Agreement", "Senior Note
Purchase Agreement", and "Xxxxxxx" shall no longer have any force or effect with
respect to the Securities Purchase Agreement. The Securities Purchase Agreement
shall be deemed to be amended wherever and as necessary to reflect the
foregoing. Nothing in this paragraph 17 shall be deemed to waive or modify any
provision of the Amended Agreement to permit any transaction to occur after the
Effective Date merely because such transaction is permitted or required by the
terms of the New Credit Agreement or any document or agreement executed in
connection therewith.
18. To induce the Purchasers to enter into this Amendment,
Holdings and the Company jointly and severally represent and warrant to each
Purchaser that the following statements are true, correct and complete as of the
date hereof:
(a) Each of Holdings and the Company has all requisite corporate
power and authority to enter into this Amendment and to perform its
obligations under the Securities Purchase Agreement as amended by this
Amendment (the "Amended Agreement").
-7-
(b) The execution and delivery of this Amendment has been duly
authorized by all necessary corporate action by Holdings and the Company.
(c) The execution and delivery by each of Holdings and the
Company of this Amendment and the performance by Holdings and the Company
of their respective obligations under the Amended Agreement do not and will
not (i) violate any provision of any law, rule or regulation applicable to
Holdings, the Company or any of their respective Subsidiaries, the
organizational documents of Holdings, the Company or any of their
respective Subsidiaries or any order, judgment or decree of any court or
any agency or government binding on Holdings, the Company or any of their
respective Subsidiaries, (ii) conflict with, result in a breach of, or
constitute a default under, any contractual obligation of Holdings, the
Company or any of their respective Subsidiaries, (iii) result in or require
the creation or imposition of any Lien upon any of their properties or
assets (other than Liens created pursuant to the Senior Financing
Documents), or (iv) require any approval of stockholders or any approval or
consent of any Person under any contractual obligation of Holdings, the
Company or any of their respective Subsidiaries except approvals and
consents which have been obtained on or before the Effective Date.
(d) This Amendment and the Amended Agreement are the legally
valid and binding obligations of each of Holdings and the Company
enforceable against such entity in accordance with their respective terms.
(e) No event has occurred and is continuing or will result from
the transactions contemplated by this Amendment which would constitute an
Event of Default.
19. This Amendment will become effective upon the effectiveness
of the New Credit Agreement (the "Effective Date").
20. Except as specifically amended by this Amendment, the
Securities Purchase Agreement shall remain in full force and effect and is
hereby ratified and confirmed. The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a wavier of any right, power or remedy of the
Purchasers under the Securities Purchase Agreement.
21. This Amendment may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument.
-8-
22. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
-9-
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the date first above written.
XXXXXX MAY HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Its: Vice President
----------------------------------
XXXXXXXXX XXXXX CORPORATION
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Its: Vice President and Chief
Financial Officer
----------------------------------
TCW SPECIAL PLACEMENTS FUND III
By: TCW Capital
Its: Managing General Partner
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Its: Managing Director
-----------------------------
TCW CAPITAL, as Investment Manager pursuant
to an Investment Management Agreement dated
as of June 30, 1989
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Its: Managing Director
-----------------------------
-10-
TCW CAPITAL, as Investment Manager pursuant
to an Investment Management Agreement dated
as of April 18, 1990
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Its: Managing Director
-----------------------------
MEZZANINE CAPITAL
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Its: Managing Director
-----------------------------
XXXXXXX NATIONAL LIFE INSURANCE COMPANY
By: /s/
----------------------------------------
Its: Chief Operating Officer
---------------------------------------
MEZZANINE CAPITAL AND INCOME TRUST 2001 PLC
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Its: Director
---------------------------------------
WCT PTE, LTD
By: /s/ NG XXX XXX
----------------------------------------
Its: Director
---------------------------------------
-11-
THIRD AMENDMENT
This Third Amendment (this "Amendment") is entered into as of July 2,
1997 by and among Xxxxxx May Holdings, Inc., a Delaware corporation
("Holdings"), Xxxxxxxxx Xxxxx Corporation, an Illinois corporation, as successor
by merger to FMCAN Acquisition Corp. (the "Company"), and the persons named on
the signature pages hereof (the "Purchasers"), and amends the Securities
Purchase Agreement entered into as of October 30, 1991 among Holdings, the
Company and the Purchasers (as amended by the First Amendment thereto dated as
of September 18, 1992, and the Second Amendment thereto dated as of August 12,
1994, and as otherwise amended, modified and supplemented prior to the date
hereof, the "Securities Purchase Agreement"). All capitalized terms used herein
and not otherwise defined shall have the respective meanings provided such terms
in the Securities Purchase Agreement.
RECITALS
A. The Company is issuing $100,000,000 in principal amount of
10-1/4% Senior Secured Notes due 2004 ("Senior Notes"), initially in
transactions that comply with Rule 144A and other available exemptions under the
Securities Act (the "Offering").
B. Part of the net proceeds of the Offering will be used to (i)
repay in full all outstanding indebtedness under the Credit Agreement, and (ii)
repurchase the Notes, including accrued and unpaid interest thereon and the
prepayment premium applicable thereto.
C. Pursuant to an Indenture (the "Indenture") entered into by the
Company with The Bank of New York, as trustee (the "Trustee"), on the date the
Offering is consummated (the "Note Closing"), the Senior Notes will be secured
by (collectively, "Indenture Collateral") (i) security interests in certain of
the Company's equipment, fixtures and general intangibles, including trademarks,
and mortgages on certain of the Company's owned real property, and proceeds of
the foregoing, and (ii) a security interest in and a pledge of all of the
capital stock of the Company's future subsidiaries, if any.
D. Simultaneously with the Note Closing, the Company is entering
into a new revolving credit facility with the lenders referred to therein and
The First National Bank of Chicago, as agent thereunder (the "Credit Facility"),
pursuant to which, subject to certain limitations, the Company may borrow from
time to time up to an aggregate amount of $20,000,000.
E. The Company's obligations under the Credit Facility will be
secured by ("Bank Collateral") (i) a security interest in the Company's
accounts, raw materials and finished goods inventory and (ii) at the Company's
election, mortgages on the Company's owned stores.
F. Simultaneously with the Note Closing, (i) the Company is entering
into a Tax Sharing and Management Consulting Agreement with Holdings, in the
form attached hereto as Annex 1 ("Tax Sharing Agreement"); (ii) Holdings is
entering into a Management Consulting Agreement with TJC Management Corp., in
the form attached hereto as Annex 2 ("TJC Agreement"); and (iii) Holdings and
TJC Management Corp. are terminating the Management Consulting Agreement and
replacing it with the TJC Agreement.
G. Subsequent to the Note Closing, the Company intends to file a
registration statement with the Commission with respect to an offer to exchange
the Senior Notes (the "Exchange Offer") for senior secured debt securities of
the Company with terms substantially identical to the Senior Notes (the
exchanged notes are herein referred to as "Senior Notes").
H. In connection with the foregoing transactions, the Company,
Holdings and the Purchasers desire to make certain amendments to the Securities
Purchase Agreement, as more fully set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, the undersigned hereby agree as follows:
1. Section 1 of the Securities Purchase Agreement is hereby amended
by adding the following definitions:
"Bank Collateral" has the meaning ascribed to such term in Recital E
of the Third Amendment.
"Credit Facility" has the meaning ascribed to such term in Recital D
of the Third Amendment, as it may be amended from time to time.
"Exchange Offer" has the meaning ascribed to such term in Recital G of
the Third Amendment.
"Indenture" has the meaning ascribed to such term in Recital C of the
Third Amendment, as it may be amended from time to time.
"Indenture Collateral" has the meaning ascribed to such term in
Recital C of the Third Amendment.
"Note Closing" has the meaning ascribed to such term in Recital C of
the Third Amendment.
"Offering" has the meaning ascribed to such term in Recital A of the
Third Amendment.
2
"Redemption Date" shall mean the date determined as follows: (i) (1)
if Holdings has elected the Sale option in accordance with Section
6.8(d), then the earlier of (x) the date the Sale is consummated and
(y) the date which is one year after the date of the notice of such
election, or (2) if Holdings has elected the Sale option and prior to
the expiration of the period set forth in clause (y) above, abandons
such Sale, then the date which is 90 days following the determination
of Fair Market Value by appraisal; or (ii) if Holdings elects to have
Fair Market Value determined in accordance with an appraisal, then the
date no later than 90 days following such determination; or (iii) if
the Fair Market Value of Holdings is determined by reference to an
Exit Event described in Sections 6.8(c)(1) or (2), the date such Exit
Event is consummated.
"Senior Notes" has the meaning ascribed to such terms in Recitals A
and G of the Third Amendment.
"Tax Sharing Agreement" has the meaning ascribed to such term in
Recital F of the Third Amendment, as in effect on the date of its
execution.
"Third Amendment" means the Third Amendment to this Agreement, dated
as of July 2, 1997.
"TJC Agreement" has the meaning ascribed to such term in Recital F of
the Third Amendment, as in effect on the date of its execution.
"Trustee" has the meaning ascribed to such term in Recital C of the
Third Amendment.
2. Section 1 of the Securities Purchase Agreement is hereby further
amended by amending and restating the definition of "Management Fees" set forth
therein in its entirety as follows:
"Management Fees" means any amounts owing by the Company or Holdings
to (i) any of their respective directors, (ii) Xxxxxx X. Xxxxx, (iii)
TJC Management Corp. (or its designee(s)), (iv) affiliates of the TCW
Entities for expense reimbursement, or (v) any Affiliate of either of
the Company or Holdings, in the case of any of clauses (i) - (v) above
in exchange for services related to management, consulting, investment
banking or other similar services (including, without limitation,
compensation for serving as a director of Holdings or the Company) or
reimbursement of expenses, but, in any such case, only to the extent
permitted under Section 7.2 hereof."
3. Section 1 of the Securities Purchase Agreement is hereby further
amended by amending and restating clause (v) of the definition of "Triggering
Event" set forth therein in its entirety as follows:
3
"(v) in the event of a request for redemption in accordance with
Section 6.8 hereof, the failure of Holdings to redeem the Common
Shares requested for redemption on or prior to the Redemption Date."
4. Section 1 of the Securities Purchase Agreement is hereby further
amended by amending and restating the definition of "Senior Financing Documents"
set forth therein in its entirety as follows:
"Senior Financing Documents" means the Indenture, Security Documents
(as defined in the Indenture), Credit Facility and Loan Documents (as
defined in the Credit Facility)."
5. Section 1 of the Securities Purchase Agreement is hereby further
amended by amending and restating the definition of "Working Capital Facility"
set forth therein in its entirety as follows:
"Working Capital Facility" means the Credit Facility and all other
Loan Documents (as defined in the Credit Facility).
6. Section 2.6(b) of the Securities Purchase Agreement is hereby
amended to provided that the premium in the event of prepayment of Notes for the
period October 31, 1996 to October 30, 1997 is 5.00%.
7. Section 6.8(a) of the Securities Purchase Agreement is hereby
amended by amending clause (x) thereof to read "January 1, 2000" rather than
"December 10, 1998."
8. Section 6.8(d)(2) of the Securities Purchase Agreement is hereby
amended by adding the following to the end thereof:
"In determining the Fair Market Value of Holdings, the investment
banking firms shall consider the discount or premium at which the
Senior Notes trade, but shall not consider in their appraisal any
costs arising from a prepayment of the Senior Notes."
9. Section 7.2 of the Securities Purchase Agreement is hereby
amended and restated in its entirety as follows:
"7.2 CERTAIN TRANSACTIONS.
For so long as Threshold Securities shall remain outstanding,
Holdings and the Company will not, and will not permit any of their
Subsidiaries to, directly or indirectly, enter into any transaction
with, any of its officers, directors or shareholders, or any member of
their immediate families, or any firm, corporation, trust, or other
entity in which such persons have an ownership interest or any
Affiliate of the
4
foregoing; provided, however, that Holdings shall not be in violation
of this Section 7.2 by virtue of (i) the transactions consummated
pursuant to this Agreement and the Ancillary Agreements; (ii)
compensation accrued in the ordinary course of business; (iii)
advances to employees of Holdings or its Subsidiaries for moving,
relocation and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business; (iv) other advances
to employees which in the aggregate shall not at any time exceed
$300,000 for all employees; (v) payments made pursuant to the terms of
the Tax Sharing Agreement; (vi) subject to accrual and deferral if
required by the Senior Financing Documents or by the TCW Entities,
payments made pursuant to the terms of the TJC Agreement as in effect
on the date of the Note Closing without giving effect to any
amendments thereto; (vii) consulting fees to Xxxxxx Xxxxx not in
excess of $52,000 per year (subject to reasonable increases) and
reasonable directors' fees in the ordinary course; (viii)
reimbursement of expenses of up to $48,000 to affiliates of the TCW
Entities; (ix) transactions described in Schedule 3.15 hereto or (x)
transactions contemplated to occur simultaneously with the Note
Closing and described in the Senior Notes Offering Circular dated June
27, 1997; provided, however, that if the TCW Entities have required
the accrual and deferral of payments under the TJC Agreement in
accordance with clause (vi) above, the reimbursement of expenses
described in clause (viii) above shall automatically and without
further action be accrued and deferred for so long as the payments
under the TJC Agreement are required to be accrued and deferred by the
TCW Entities."
10. Section 7.3 of the Securities Purchase Agreement is hereby
amended to amend and restate clause (i) thereof to read in its entirety as
follows:
"(i) sell, pledge, assign, transfer or otherwise dispose of, or cause
or permit the sale, pledge, assignment, transfer or other disposition
of, any of the capital stock of any of its Subsidiaries other than a
pledge of the capital stock of any of its Subsidiaries pursuant to the
Indenture as required thereby,".
11. Section 7.4 of the Securities Purchase Agreement is hereby
amended and restated in its entirety as follows:
"7.4 INDEBTEDNESS. For so long as any Notes or at least 92 Junior
Preferred Shares shall remain outstanding, Holdings and the Company
will not, and will not permit any of their Subsidiaries to, directly
or indirectly, create, incur, assume, guarantee or otherwise become or
remain directly or indirectly liable with respect to any Indebtedness
except:
(a) Indebtedness in respect of the Senior Notes;
(b) Indebtedness in respect of the Working Capital Facility or any
refinancing thereof, in an aggregate principal amount not to exceed
$25,000,000 reduced by any
5
permanent reduction in the aggregate revolving loan commitment
(excluding, in each case, permanent reductions made in connection with
a refinancing or refunding thereof) (for purposes of this clause (b),
the term "principal amount" shall be deemed to include the amounts
available for drawing under any letters of credit issued and
outstanding under the Working Capital Facility or any refinancing
thereof);
(c) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course
of business, provided that such Indebtedness is extinguished within
five business days of its incurrence;
(d) Indebtedness of a Subsidiary of the Company owing to the Company
or to another Subsidiary of the Company;
(e) Indebtedness existing on the Closing Date and listed on Schedule
7.4;
(f) Other Indebtedness, including, without limitation, Indebtedness
incurred in respect of Capital Leases, purchase money security
interests and capital expenditures permitted by Section 7.7; provided
that the aggregate principal amount of such indebtedness incurred
during any fiscal year shall not exceed $1,500,000; and
(g) Obligations under the Tax Sharing Agreement, the TJC Agreement and
the SAR Agreements.
12. Section 7.5 of the Securities Purchase Agreement is hereby
amended and restated in its entirety as follows:
"7.5 LIENS. For so long as any of the Notes or at least 92 Junior
Preferred Shares shall remain outstanding, Holdings and the Company
will not, and will not permit any of their Subsidiaries to, directly
or indirectly, create, grant, suffer to exist or permit the creation
of any Lien on any of its properties or assets except:
(a) Permitted Liens;
(b) Liens specifically described and identified on Schedule 3.6
hereto;
(c) Liens in respect of Indebtedness permitted by Section
7.4(f);
(d) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with
the importation of goods;
(e) Liens securing Indebtedness permitted under Sections 7.4(b)
(and any refinancing thereof); and
6
(f) Liens securing the Senior Notes granted pursuant to the
Indenture and Security Documents (as defined in the Indenture) and any
refinancing thereof."
13. Effective as of the Effective Date (as hereinafter defined), in
consideration of the representations, warranties, covenants and agreements of
Holdings and the Company set forth in this Amendment, the Purchasers hereby
consent to each of the following: (i) the consummation of the Offering of the
Senior Notes and the execution, delivery and performance of, the Indenture and
the Collateral Documents (as defined in the Indenture) (including the incurrence
of indebtedness, the granting of security interests, the creation of Liens, the
repayment of the Notes and Indebtedness under the Credit Agreement and the
payment of fees and expenses related thereto) and the subsequently contemplated
Exchange Offer; (ii) the execution, delivery and performance of, and the
consummation of the transactions contemplated by, the Credit Facility and the
Loan Documents (as defined in the Credit Facility) (including the incurrence of
indebtedness, the granting of security interests, the creation of Liens and the
payment of fees and expenses related thereto); (iii) the payment out of the net
proceeds of the Offering of the outstanding investment banking fee aggregating
$500,000 pursuant to the Investment Banking Fee Agreement; (iv) the payment out
of the net proceeds of the Offering of any accrued fees actually due under the
Management Consulting Agreement to TJC Management Corp. (or its designee(s))
aggregating approximately $1,200,000 as of March 1, 1997; and (v) the execution,
delivery and performance of the Tax Sharing Agreement and the TJC Agreement, and
waive any Event of Default under the provisions of the Securities Purchase
Agreement that would be deemed to result exclusively from such execution,
delivery, performance and consummation of the transactions set forth in clauses
(i)-(v) above.
14. To induce the Purchasers to enter into this Amendment, Holdings
and the Company, jointly and severally, represent and warrant to each Purchaser
that the following statements are true, correct and complete as of the date
hereof:
(a) Each of Holdings and the Company has all requisite corporate
power and authority to enter into this Amendment and to perform its
obligations under the Securities Purchase Agreement as amended by this
Amendment (the "Amended Agreement").
(b) The execution and delivery of this Amendment has been duly
authorized by all necessary corporate action by Holdings and the
Company.
(c) The execution and delivery by each of Holdings and the
Company of this Amendment and the performance by Holdings and the
Company of their respective obligations under the Amended Agreement do
not and will not (i) violate any provision of any law, rule or
regulation applicable to Holdings, the Company or any of their
respective Subsidiaries, the organizational documents of Holdings, the
Company or any of their respective Subsidiaries or any order, judgment
or decree of any court or any agency or government binding on
Holdings, the Company or any of their respective Subsidiaries, (ii)
conflict with, result in a breach of, or constitute a
7
default under, any contractual obligation of Holdings, the Company or
any of their respective Subsidiaries, (iii) result in or require the
creation or imposition of any Lien upon any of their properties or
assets (other than Liens created pursuant to the Senior Financing
Documents), or (iv) require any approval of stockholders or any
approval or consent of any Person under any contractual obligation of
Holdings, the Company or any of their respective Subsidiaries, except
approvals and consents which have been obtained on or before the
Effective Date.
(d) This Amendment and the Amended Agreement are the legally
valid and binding obligations of each of Holdings and the Company
enforceable against such entity in accordance with their respective
terms.
(e) No event has occurred and is continuing which would
constitute an Event of Default.
15. This Amendment will become effective upon the payment in full of
the Notes (including accrued and unpaid interest thereon and the prepayment
premium applicable thereto) (the "Effective Date").
16. Except as specifically amended by this Amendment, the Securities
Purchase Agreement shall remain in full force and effect and is hereby ratified
and confirmed. The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provisions
of, or operate as a waiver of any right, power or remedy of the Purchasers
under, the Securities Purchase Agreement.
17. This Amendment may be executed in any number of counterparts and
by the different parties hereto in separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument.
18. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
[signature pages follow]
8
IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as of the date first above written.
XXXXXX MAY HOLDINGS, INC.
By: /s/ Xxx X. Xxxxxxxx
--------------------------------------
Its: President and Chief Operating Officer
--------------------------------------
XXXXXXXXX XXXXX CORPORATION
By: /s/ Xxx X. Xxxxxxxx
--------------------------------------
Its: President and Chief Operating Officer
--------------------------------------
TCW SPECIAL PLACEMENTS FUND III
By: TCW Capital
Its: Managing General Partner
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
Its: Group Managing Director
--------------------------
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Its: Managing Director
--------------------------
TCW CAPITAL, as Investment Manager
pursuant to an Investment Management
Agreement dated as of June 19, 1989
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Its: Group Managing Director
--------------------------------
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Its: Managing Director
--------------------------------
9
TCW CAPITAL, as Investment Manager
pursuant to an Investment Management
Agreement dated as of April 18, 1990
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Its: Group Managing Director
--------------------------------
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Its: Managing Director
--------------------------------
MEZZANINE CAPITAL
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Its: Group Managing Director
--------------------------------
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Its: Managing Director
--------------------------------
MCIT (EXISTING POOL) LIMITED
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Its: Director
--------------------------------------
WCT INVESTMENT PTE. LTD
By: /s/ Kunnasagaran Xxxxxxxx
--------------------------------------
Its: Director
--------------------------------------
JORDAN INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxx XX
--------------------------------------
Its: Chief Executive Officer
--------------------------------------
10
ANNEX 1
to
THIRD AMENDMENT
TO
SECURITIES PURCHASE AGREEMENT
Form of Tax Sharing Agreement
11
TAX SHARING AND MANAGEMENT CONSULTING AGREEMENT
THIS TAX SHARING AND MANAGEMENT CONSULTING AGREEMENT is made and entered as
of July 2, 1997 (this "Agreement") by and between Xxxxxx May Holdings, Inc., a
Delaware corporation ("Holdings"), and Xxxxxxxxx Xxxxx Corporation, an Illinois
corporation (the "Company").
WITNESSETH
WHEREAS, Holdings owns all of the issued and outstanding capital stock of
the Company and may, therefore, include the income and expense of the Company
and each of its subsidiaries, if any, in Holdings' consolidated federal income
tax returns; and
WHEREAS, the parties hereto desire to consolidate such returns upon the
terms and conditions herein set forth; and
WHEREAS, the Company desires to have Holdings and its affiliates provide
management consulting and financial advisory services on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto hereby agree as follows:
1. TAX SHARING AGREEMENT.
(a) FILING AND PREPARATION OF FUTURE RETURNS. Company, on behalf of
itself and each existing and future subsidiary thereof (the Company and each
existing and future subsidiary thereof are sometimes collectively referred to as
the "Subsidiaries" or individually as a "Subsidiary"), consents to joining with
Holdings (Holdings and each of its consolidated subsidiaries being herein
referred to as the "Group") in the filing of the consolidated federal income tax
returns for any taxable year for which a consolidated return can be filed and
each taxable year thereafter, in accordance with
applicable income tax laws and regulations. Holdings agrees that it will
prepare and file in a timely manner all federal income tax returns required
to be filed on behalf of the Group.
(b) ESTIMATED TAX PAYMENTS; TAX BENEFIT REIMBURSEMENTS.
(i) Promptly following a request by Holdings, each Subsidiary
shall pay to Holdings an amount equal to such Subsidiary's separate return
tax liability as defined in Treasury Regulations Section 1.1552-1(a)(2)(ii)
(the "Separate Return Tax Liability") multiplied by a fraction the numerator
of which equals one and the denominator of which equals the total number of
estimated tax payments that would be made by such Subsidiary for such taxable
year if it were filing a separate tax return for such year. If the estimated
tax payment of the Group is based upon the prior taxable year's consolidated
tax liability, such Subsidiary's payment under this Section 1(b)(i) shall be
determined by using its Separate Return Tax Liability for such prior year,
and if such estimated tax payment is based upon the current year's tax
liability, such Subsidiary's payment under this Section 1(b)(i) shall be
determined by using its estimated Separate Return Tax Liability for such
current year.
(ii) In the event that the sum of any estimated payments made by
any Subsidiary in a taxable year under Section 1(b)(i) exceeds such Subsidiary's
final Separate Return Tax Liability for such taxable year, Holdings shall
promptly pay to such Subsidiary the amount of such excess. In the event that
the final Separate Return Tax Liability of such Subsidiary for a taxable year
exceeds the sum of any payments based on estimated amounts made by such
Subsidiary under Section 1(b)(i) for such taxable year, such Subsidiary shall
pay such excess to Holdings promptly following Holdings' request therefor.
2
(iii) The aggregate of any loss carryovers or credit
carryovers of the Group as of August 30, 1997, shall not be available in any
carryover year for purposes of calculating the Separate Return Tax Liability of
a member.
(iv) The losses of each of the Subsidiaries generated after
August 30, 1997 that do not reduce the taxable income of the Group shall be
carried forward for utilization by the Group and shall be available for
calculating the Separate Return Tax Liability of any Subsidiary. Holdings shall
determine the order in which losses incurred by each of the Subsidiaries shall
be utilized by the Group, in a manner not inconsistent with calculating Separate
Return Tax Liability.
(v) Any payments or reimbursements hereunder shall be computed
by Holdings.
(c) ADJUSTMENTS TO LIABILITY. Holdings and each Subsidiary agree
that in the event there should be any factual circumstance, or any application,
either retroactively or prospectively, of any federal income tax laws or
revision of the federal income tax laws, which results in a redetermination of
the Separate Return Tax Liability of any Subsidiary, the payment under Section
1(b) shall be adjusted to account for such redeterminations. It is intended
that the adjustment referred to in this Section shall relate to those items
which are given recognition in the Group's consolidated tax returns or are
approved or adjusted by the Internal Revenue Service in its audit of said
returns, and which therefore have been recognized or given effect by the
computation of the consolidated income tax of the Group and the income tax
computed on the separate return basis of each Subsidiary.
(d) OTHER TAXES. Each Subsidiary shall pay to Holdings any foreign,
federal, state or local taxes or governmental charges incurred by Holdings or
(to the extent required by law to be
3
paid by Holdings) by such Subsidiary relating to the business, operations or
finances of such Subsidiary (except for any taxes or charges otherwise
addressed in this Section 1). For purposes of this Agreement, the term
"taxes" shall include, but is not limited to, all net income, capital gains,
gross income, gross receipts, sales, use, transfer, franchise, profits,
license, capital, payroll, excise, value added or other taxes and any related
interest or governmental charge.
(e) ADDITIONAL SUBSIDIARIES. If at any time after the date upon
which this Agreement is executed, any party to this Agreement acquires or
creates one or more subsidiary corporations that are includible corporations of
the Group, either Holdings or a Subsidiary shall cause such subsidiary
corporation to be subject to this Agreement and all references to either Group
or a Subsidiary herein shall thereafter be interpreted to refer to Holdings, the
Subsidiaries and such subsidiary or subsidiaries, or to a Subsidiary and such
subsidiary or subsidiaries, respectfully. The parties hereto agree that this
Agreement shall govern only the allocation of income taxes among Holdings and
each Subsidiary for each taxable year, or portions thereof, in which each
respective Subsidiary is included in a consolidated income tax return filed by
Holdings and that no party to this Agreement shall have any rights or
obligations under this Agreement to any other party to this Agreement subsequent
to such party's disaffiliation from the Group, as defined in the Code.
2. MANAGEMENT CONSULTING AND INVESTMENT BANKING SERVICES.
(a) AFFILIATES OF HOLDINGS. Any services to be performed by Holdings
pursuant to this Section 2 may be performed by affiliates of Holdings and
appropriate personnel of such affiliates or by independent third party
contractors, in each case as may be designated from time to time by Holdings.
4
(b) MANAGEMENT CONSULTING SERVICES. The Company hereby retains
Holdings to render management consulting services from time to time for the
Company regarding the Company and its subsidiaries, their financial and business
affairs and their relationships with their lenders and shareholders, and the
operation and expansion of their businesses. Holdings' personnel shall attend
Board of Directors' meetings and shall be available to the Company's managers,
auditors and other personnel for consultation and advice, subject to Holdings'
reasonable convenience and scheduling. Services may be rendered from such
locations as may be selected by Holdings and agreed to by the Company.
(c) INVESTMENT BANKING SERVICES. In addition to the management
consulting services set forth in Section 2(b) above, Holdings also shall from
time to time provide financial advisory services to the Company, and in its
capacity as financial advisor to the Company, Holdings will maintain its
familiarity with the Company's operations, prospects, assets, capitalization and
financial position, the trading markets for its securities, and such other
related factors as Holdings deems relevant. Holdings will advise the Company as
to opportunities in the financial markets for the Company, assist the Company in
all of its financing transactions and advise the Company in any future
recapitalization transactions, acquisitions or dispositions of assets or any
similar transactions.
(d) OPTIONAL SERVICES. If after the date hereof the Company requests
Holdings to render any services which are outside of the scope of services
contemplated by Sections 2(b) and (c) above, the Company and Holdings may
negotiate the terms of such engagement, including the fees to be payable by the
Company to Holdings; PROVIDED, that such services must be reasonably necessary
and the amounts charged for such services must be comparable to the charge for
such services in a commercial, unrelated third party transaction.
5
3. TERM.
(a) The tax sharing agreement set forth in Section 1 hereof shall
continue in effect until terminated by written agreement between all the parties
hereto.
(b) The term of services to be provided in Section 2 hereof shall
commence on the date hereof and continue in effect until the fifth (5th)
anniversary of the date hereof ("Base Term"), and shall be automatically renewed
for successive one-year terms (each, a "Renewal Term") unless either party, not
earlier than 60 days or later than 30 days prior to the last day of the Base
Term or any Renewal Term, notifies the other party as to its termination of this
Agreement.
4. PAYMENTS, FEES AND EXPENSES.
(a) MANAGEMENT CONSULTING FEE AND OTHER PAYMENTS. In consideration
of the services to be provided by Holdings pursuant to Section 2(b) above, the
Company shall make the following payments to Holdings:
(i) $412,000 per annum, payable in four equal quarterly installments
in arrears, on the last day of each fiscal quarter, the first payment
of which shall be made (prorated for the number of days, commencing
with the date hereof, during which the Agreement was in effect) on the
last day of the fiscal quarter ending in August 1997; and
(ii) such amounts, payable to Holdings within five (5) days of its
demand therefor, sufficient for Holdings to pay (A) the fees and
expenses of Holdings' directors; and (B) its indemnification
obligations to Holdings' directors arising from the Indemnification
Agreements between Holdings and its directors, Holdings' By-laws and
its Certificate of Incorporation, in each case, as amended or
restated, and the General Corporation Law of the State of Delaware.
(b) INVESTMENT BANKING FEE. In consideration of the services to be
provided by Holdings pursuant to Section 2(c) above, the Company shall make the
following payments to Holdings:
6
(i) for any future recapitalizations, acquisitions or dispositions of
the Company's assets, sale of the Company stock, merger, consolidation
or similar transaction, a fee of two percent (2%) of the transaction
value payable upon consummation of such transaction; and
(ii) for any financing transaction, a fee of one percent (1%) of the
aggregate amount financed in such transaction.
(c) EXPENSES. In addition to the amounts payable pursuant to
Sections 4(a) and (b) above, the Company shall reimburse Holdings for actual and
direct out-of-pocket expenses incurred by Holdings and its personnel in
performing the services hereunder, including, but not limited to, any travel
expenses and legal and accounting fees incurred. The Company shall make such
reimbursement payments to Holdings within 30 days of the date it receives a
statement therefor together with such supporting data as the Company may
reasonably require.
(d) DEFERRAL. Notwithstanding the foregoing, the Company shall not
be required to pay, and Holdings shall have no right to receive and keep, the
fees set forth in Sections 4(a)(i) and 4(b) above, if and to the extent
expressly prohibited by the provisions of any credit, stock, financing or other
agreements or instruments (including, without limitation, (i) the Securities
Purchase Agreement dated as of October 30, 1991, (ii) the Indenture dated as of
July 2, 1997, pursuant to which the 10 1/4% Senior Secured Notes due 2004 were
issued, and (iii) the Amended and Restated Credit Agreement dated as of July 2,
1997, each as amended); PROVIDED, HOWEVER, that if, as a result of the operation
of such prohibitions on postponements, payments otherwise owed hereunder are not
made, such payments shall not be cancelled but rather shall accrue, and shall be
payable without interest, by the Company promptly when, and to the extent, that
the Company is no longer prohibited from making such payments.
5. LIMITATION OF LIABILITY; INDEMNIFICATION. The Company will indemnify
and hold
7
harmless the officers, agents and employees of Holdings and its affiliates
and each other person, if any, controlling Holdings or any of its affiliates,
and any and all independent contractors hired by Holdings specifically for
the services contemplated by this Agreement, from and against any losses,
claims, damages or liabilities (or actions in respect thereof) related to or
arising out of its engagement under this Agreement or its role in connection
therewith, and will reimburse Holdings and any other party entitled to be
indemnified hereunder for all expenses (including reasonable counsel fees) as
they are incurred by it or any such other indemnified party in connection
with investigating, preparing or defending any such action or claim, whether
or not in connection with pending or threatened litigation in which it is a
party. Neither Holdings nor any of Holdings' affiliates, nor any officer,
director, employee or agent of Holdings or its affiliates nor any person
controlling Holdings or any of its affiliates shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company
for or in connection with such engagement except for any such liability for
losses, claims, damages, liabilities or expenses incurred by the Company that
result from Holdings' or any indemnified party's criminal acts or intentional
wrongdoing. Nothing in this Section shall limit or otherwise affect the
rights or obligations, if any, of any of the parties hereto pursuant to
officer/director indemnification agreements, by-laws or certificates of
incorporation, in each case as amended or restated, or applicable law. The
provisions of this Section 5 shall survive the termination of this Agreement.
6. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties with respect to the tax sharing arrangement between
Holdings and the Company and Holdings' rendering of management consulting and
investment banking services to the Company. Neither this
8
Agreement nor any provision hereof may be modified, waived, terminated or
amended except expressly by an instrument in writing signed by Holdings and
the Company.
(b) SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by
either party without the consent of the other party but shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns upon such permitted assignment.
(c) ENFORCEABILITY. In the event that any provision of this
Agreement shall be held to be void or unenforceable, in whole or in part, the
remaining provisions of this Agreement and the remaining portion of any
provision not held void or unenforceable in part shall continue in full force
and effect.
(d) NOTICES. Except as otherwise specifically provided herein,
notice given hereunder shall be deemed sufficient if delivered personally or
sent by registered or certified mail or receipted document delivery service to
the address of the party for whom intended at the principal executive offices of
such party, or at such other address as such party may hereafter specify by
written notice to the other party.
(e) WAIVERS. No waiver by either party of any breach of any
provision of this Agreement shall be deemed a continuing waiver or a waiver of
any preceding or succeeding breach of such provision or of any other provision
herein contained.
(f) INDEPENDENT CONTRACTORS. Holdings and its personnel shall, for
purposes of this Agreement, be independent contractors with respect to the
Company.
(g) GOVERNING LAW. This Agreement shall be governed by the internal
laws (and not the law of conflicts) of the State of Illinois.
[signature page follows]
9
IN WITNESS WHEREOF, the parties hereto have duly executed this Tax Sharing
and Management Consulting Agreement as of the date first above written.
XXXXXX MAY HOLDINGS, INC.
By:
-----------------------------------
Title:
---------------------------------
XXXXXXXXX XXXXX CORPORATION
By:
-----------------------------------
Title:
--------------------------------
10
ANNEX 2
to
THIRD AMENDMENT
TO
SECURITIES PURCHASE AGREEMENT
Form of TJC Agreement
12
MANAGEMENT CONSULTING AGREEMENT
THIS MANAGEMENT CONSULTING AGREEMENT, dated as of July 2, 1997 (this
"Agreement"), is by and between XXXXXX MAY HOLDINGS, INC. (the "Company") and
TJC MANAGEMENT CORP. (the "Consultant").
WITNESSETH
WHEREAS, the Consultant's personnel are highly skilled in the field of
rendering advice to business concerns such as the Company; and
WHEREAS, the Company and the Consultant entered into that certain
Management Consulting Agreement dated as of October 30, 1991 (as amended, the
"Original Management Consulting Agreement"), pursuant to which the Consultant
agreed to render certain consulting services to the Company and its
subsidiaries, if any, and the Company agreed to pay the Consultant certain fees
and expenses for a term continuing until November 1, 1997, unless extended, or
sooner terminated, as provided in the Original Management Consulting Agreement;
and
WHEREAS, as of March 1, 1997, the Company had accrued an aggregate amount
of $1,183,000 in fees owing to the Consultant under the Original Management
Consulting Agreement and the Company intends to pay on or about the date hereof
any and all accrued and unpaid amounts to the Consultant; and
WHEREAS, the Company and the Consultant desire to terminate the Original
Management Consulting Agreement effective as of their entering into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
hereby agree as follows:
1. The Original Management Consulting Agreement is hereby terminated and
deemed of no further force or effect; provided, however, that the Company shall
remain obligated to pay to the Consultant (or its designee(s)) any and all fees
and expenses due thereunder.
2. The Company hereby retains the Consultant for the term of this
Agreement to render consulting services from time to time to it regarding the
Company and its subsidiaries, if any, their financial and business affairs and
their relationships with their lenders and stockholders, and the operation and
expansion of their businesses. The Consultant's personnel shall attend meetings
of the Board of Directors of the Company and its subsidiaries and shall be
available to the Company's managers, auditors and other personnel for
consultation and advice, subject to Consultant's reasonable convenience and
scheduling. Services may be rendered at the Consultant's offices or at such
other locations selected by the Consultant as the Company shall from time to
time agree upon.
3. The Company agrees to pay the Consultant a fee of $364,000 per annum,
payable in four equal quarterly installments in arrears, on the last day of each
fiscal quarter, the first payment of which shall be made (prorated for the
number of days, commencing with the date hereof, during which this Agreement was
in effect) on the last day of the fiscal quarter ending in August 1997.
4. (a) In addition to the management consulting services set forth in
paragraph 2 above, and subject to paragraph 4(b) below, the Consultant also
shall from time to time during the term of this Agreement provide financial
advisory services to the Company, and in its capacity as financial advisor to
the Company, the Consultant shall maintain its familiarity with the Company's
operations, prospects, assets, capitalization and financial position, the
trading markets for its securities if relevant, and such other related factors
as the Consultant deems relevant. The Consultant will advise the Company as to
opportunities in the financial markets for the Company, assist the Company in
all of its financing transactions and advise the Company in any future
recapitalization transactions, acquisitions or dispositions of assets or any
similar transactions.
(b) For so long as there are any directors of the Company designated
by TCW Capital or its affiliates, prior to rendering the financial advisory
services contemplated by paragraph 4(a) above, the Company shall have obtained
the consent and approval of TCW Capital or the two (2) directors of the Company
designated by TCW Capital or its affiliates.
(c) Subject to paragraph 4(b) above, in consideration of the services
to be provided by the Consultant pursuant to paragraph 4(a) above, the Company
shall make the following payments to the Consultant:
(i) for any future recapitalizations, acquisitions or
dispositions of the Company's assets, sale of the Company stock,
merger, consolidation or similar transaction, a fee of two percent
(2%) of the transaction value payable upon consummation of such
transaction; and
(ii) for any financing transaction, a fee of one percent (1%) of
the aggregate amount financed in such transaction.
5. In addition to the amounts payable pursuant to paragraphs 3 and 4(c)
above, the Company shall reimburse the Consultant for actual and direct out-of-
pocket expenses incurred by the Consultant and its personnel in performing the
services hereunder, including, but not limited to, any travel expenses and legal
and accounting fees incurred. The Company shall make such reimbursement
payments to the Consultant within 30 days of the date it receives a statement
therefor together with such supporting data as the Company may reasonably
require.
6. Notwithstanding the foregoing, the Company shall not be required to
pay, and the Consultant shall have no right to receive and keep, the foregoing
fees referred to in paragraphs 3 or 4(c) above, if and to the extent expressly
prohibited by, or deferred pursuant to, the provisions of any credit, stock,
financing or other agreements or instruments (including, without limitation, (i)
the Securities Purchase Agreement dated as of October 30, 1991, (ii) the
Indenture dated as of July 2,
2
1997, pursuant to which the 10 1/4% Senior Secured Notes were issued and (iii)
the Amended and Restated Credit Agreement dated as of July 2, 1997, each as
amended), binding upon the Company, its subsidiaries or their properties;
PROVIDED, HOWEVER, that if, as a result of the operation of such
prohibitions, deferments, nonpayments or postponements, payments otherwise
owed hereunder are not made, such payments shall not be canceled but rather
shall accrue, and shall be payable, without interest, by the Company promptly
when, and to the extent, that the Company is no longer prohibited from making
such payments.
7. The term of this Agreement shall commence on the date hereof and
continue until the fifth anniversary of the date hereof (the "Base Term");
PROVIDED, HOWEVER, that thereafter, this Agreement shall be automatically
renewed for successive one-year terms (each, a "Renewal Term") unless either
party, not earlier than sixty (60) days nor later than thirty (30) days prior to
the last day of the Base Term or any Renewal Term, notifies the other party as
to its termination of this Agreement.
8. The Consultant shall have no liability to the Company on account of
any advice which it renders to the Company provided the Consultant believed in
good faith that such advice was useful or beneficial to the Company at the time
it was rendered.
9. (a) This Agreement sets forth the entire understanding of the parties
with respect to the Consultant's rendering of services to the Company. This
Agreement or any provision hereof may not be modified, waived, terminated or
amended except expressly by an instrument in writing signed by the Consultant
and the Company.
(b) This Agreement may not be assigned by either party without the
consent of the other party but shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns upon such permitted
assignment; provided, however, that the Consultant may, without the consent of
the Company, assign its right to receive fees hereunder to any person or entity.
Any services to be performed by the Consultant pursuant to this Agreement may be
performed by affiliates of the Consultant and appropriate personnel of such
affiliates, or by independent third party contractors, in each case as may be
designated from time to time by the Consultant.
(c) In the event that any provision of this Agreement shall be held
to be void or unenforceable, in whole or in part, the remaining provisions of
this Agreement and the remaining portion of any provision not held void or
unenforceable in part shall continue in full force and effect.
(d) Except as otherwise specifically provided herein, notice given
hereunder shall be deemed sufficient if delivered personally or sent by
registered or certified mail or receipted document delivery service to the
address of the party for whom intended at the principal executive offices of
such party, or at such other address as such party may hereafter specify by
written notice to the other party.
(e) No waiver by either party of any breach of any provision of the
Agreement shall be deemed a continuing waiver or a waiver of any preceding or
succeeding breach of such
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provision or of any other provision herein contained.
(f) The Consultant and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Company.
(g) This Agreement shall be governed by the internal laws (and not
the law of conflicts) of the State of Illinois.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Management
Consulting Agreement as of the date first above written.
XXXXXX MAY HOLDINGS, INC.
By:
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Title:
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TJC MANAGEMENT CORP.
By:
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Title:
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