SECURITIES PURCHASE AGREEMENT
dated as of
November 20, 1997
between
THE XXXX GROUP, INC.
and
HS FUNDING, INC.
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1. Definitions........................................... 1
Section 1.2. Accounting Terms and Determinations................... 12
ARTICLE II
PURCHASE AND SALE OF SECURITIES, TERMS OF SECURITIES
Section 2.1. Commitment to Purchase............................... 13
Section 2.2. Takedown Procedures.................................. 14
Section 2.3. Fees................................................. 15
Section 2.4. Mandatory Termination and Reduction of Commitment ... 16
Section 2.5. Optional Reduction of Commitment..................... 17
Section 2.6. Interest ............................................ 17
Section 2.7. Maturity of Notes; Prepayment of Notes............... 18
Section 2.8. Taxes................................................ 20
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Corporate Existence and Power....................... 23
Section 3.2. Authorization, Execution and Enforceability.......... 23
Section 3.3. Governmental Authorization........................... 24
Section 3.4. Contravention........................................ 24
Section 3.5. Financial Information................................ 24
Section 3.6. Litigation........................................... 25
Section 3.7. Environmental Matters................................ 26
Section 3.8. Taxes................................................ 27
Section 3.9. Subsidiaries......................................... 28
Section 3.10. Not an Investment Company............................ 28
Section 3.11. Full Disclosure...................................... 28
Section 3.12. Capitalization....................................... 28
Section 3.13. Solicitation, Access to Information.................. 28
Section 3.14. Non-fungibility...................................... 29
Section 3.15. Permits.............................................. 29
i
Section 3.16. Representations in Other Financing, Documents and in
Material Acquisition Documents....................... 29
Section 3.17. Compliance with ERISA................................ 29
Section 3.18. Labor Matters........................................ 30
Section 3.19. Leases............................................... 30
Section 3.20. Absence of Any Undisclosed Liabilities or Capital
Calls................................................ 30
Section 3.21. Governmental Regulation.............................. 30
Section 3.22. Solvency............................................. 30
Section 3.23. Company Business..................................... 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER........................ 31
Section 4.1. Purchase for Investment; Authority; Binding
Agreement ........................................... 31
ARTICLE V
CONDITIONS PRECEDENT TO PURCHASE
Section 5.1. Conditions to Purchaser's Obligation at Initial
Takedown ............................................ 32
Section 5.2. Conditions to Purchaser's Obligations on
Each Takedown ....................................... 34
ARTICLE VI
COVENANTS
Section 6.1. Information.......................................... 35
Section 6.2. Payments of Obligations.............................. 38
Section 6.3. Insurance............................................ 38
Section 6.4. Conduct of Business and Maintenance of Existence..... 38
Section 6.5. Compliance with Laws................................. 38
Section 6.6. Inspection of Property, Books and Records............ 39
Section 6.7. Investment Company Act............................... 39
Section 6.8. Limitation on Debt................................... 39
Section 6.9. Restricted Payments; Voluntary Prepayment............ 39
Section 6.10. Investments.......................................... 41
Section 6.11. Negative Pledge...................................... 41
Section 6.12. Transactions with Affiliates......................... 42
Section 6.13. Consolidations, Mergers and Sales of Assets;
Ownership of Subsidiaries............................ 42
Section 6.14. Use of Proceeds...................................... 43
Section 6.15. Restrictions on Certain Amendments................... 43
ii
Section 6.16. Permanent Financing ................................. 43
Section 6.17. Business Activities.................................. 44
Section 6.18. Tax Consolidation.................................... 44
Section 6.19. Maintenance of Corporate Separateness................ 44
Section 6.20. Packer Avenue Proceeding............................. 44
Section 6.21. Financial Statements................................. 44
Section 6.22. Subordinated Notes................................... 44
Section 6.23. Use of MBC Leasing Proceeds.......................... 45
Section 6.24. Deloitte & Touche Financials......................... 45
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. Events of Default Defined; Acceleration of Maturity;
Waiver of Default.................................... 45
ARTICLE VIII
LIMITATION ON TRANSFERS
Section 8.1. Restrictions on Transfer............................. 48
Section 8.2. Restrictive Legends.................................. 48
Section 8.3. Notice of Proposed Transfers......................... 48
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notice............................................... 49
Section 9.2. No Waivers; Amendments............................... 50
Section 9.3. Indemnification...................................... 50
Section 9.4. Expenses............................................. 53
Section 9.5. Payment.............................................. 53
Section 9.6. Successors and Assigns............................... 54
Section 9.7. Brokers.............................................. 54
Section 9.8. New York Law; Submission to Jurisdiction; Waiver of
Jury Trial........................................... 54
Section 9.9. Severability......................................... 54
Section 9.10. Counterparts......................................... 55
EXHIBIT A................................................... A-1
EXHIBIT B................................................... B-1
Annex I to Exhibit B........................................ B-5
iii
EXHIBIT C ........................................................ C-1
Annex A to Exhibit C.............................................. C-9
iv
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT dated as of NOVEMBER 20, 1997
between THE XXXX GROUP, INC. and HS FUNDING, INC.
The parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
Section 1.1. Definitions. The following terms, as used herein, shall
have the following meanings:
"Acquisition" means the acquisition of 100% of the outstanding common
stock of NPR Holdings all pursuant to and in accordance with the Stock Purchase
Agreement.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For purposes of this definition, "control" including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with", as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" means this Securities Purchase Agreement, as amended,
restated or otherwise modified from time to time in accordance with its terms.
"Asset Sale" means any sale, lease or other disposition (including any
such transaction effected by way of merger or consolidation) by any Credit Party
of any asset, including without limitation any sale-leaseback transaction, but
excluding (i) dispositions of inventory and used, surplus or worn out equipment
in the ordinary course of business, (ii) dispositions to a wholly-owned
Subsidiary of any Credit Party, (iii) operating and real property leases entered
into in the ordinary course of business and (iv) cash payments otherwise
permitted under this Agreement; provided that any disposition not excluded
pursuant to clauses (i)
through (iv) shall constitute an Asset Sale only if, and solely to the extent
that, the Net Cash Proceeds therefrom, together with the Net Cash Proceeds from
all other such dispositions effected by any Credit Party after the date hereof,
exceed, in the aggregate, $1,000,000.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the Cities of New York or Philadelphia are authorized
or required by law or other government action to close.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit of any domestic commercial bank (including a domestic
branch of a foreign bank) whose outstanding senior long-term debt securities are
rated either A- or higher by Standard & Poor's Ratings Services or A3 or higher
by Xxxxx'x Investors Service, Inc., (iii) repurchase obligations with a term of
not more than 7 days for underlying securities of the types described in clause
(i) entered into with any bank meeting the qualifications specified in clause
(ii) above, (iv) commercial paper rated at least A-1 or the equivalent thereof
by Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof
by Xxxxx'x Investors Service, Inc., maturing within one year after the date of
acquisition, and (v) investments in money market funds substantially all of
whose assets are comprised of securities of the types described in clauses (i)
through (iv) above.
"Change of Control" means such time as (a) Xxxx, his spouse, any lineal
descendent of Xxxx or any spouse of such lineal descendent (including without
limitation (i) any person whose relationship is by legal adoption and (ii)
trusts for the benefit of any of the foregoing) shall cease to own beneficially
and of record 51% of the capital stock of the Company; or (b) during any period
of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of any Credit Party (together with any new
directors whose election was approved by a vote of a majority of the directors
then still in office, who either were directors at the beginning of such period
or whose election or nomination for the election was previously so approved)
cease for any reason to constitute a majority of the directors of such Credit
Party then in office.
"Closing" means the date on which all of the conditions set forth in
Section 5.1 shall have been satisfied.
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"Commission" means the Securities and Exchange Commission.
"Commitment" means $125,000,000 (subject however to Section 2.1), or
the obligation of Purchaser to purchase Notes hereunder in an aggregate
principal amount at any time outstanding not to exceed such amount, as such
amount may be reduced from time to time pursuant to Sections 2.4 and 2.5.
"Company" means The Xxxx Group, Inc., a Delaware corporation.
"Company Corporate Documents" means the articles of incorporation and
by-laws of each Credit Party.
"Consolidated Debt" means, at any date, the Debt of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Subsidiary" means, at any date with respect to any
Person, any Subsidiary or other entity, the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date.
"Contribution Agreement" means the Contribution Agreement dated as of
October 31, 1997 between Xxxx and Xxxx Shipping II, Inc., now known as The Xxxx
Group, Inc.
"Credit Party" means, individually, each one of (i) the Company, (ii)
the Xxxx Companies and (iii) the NPR Companies, and "Credit Parties" means all
of the foregoing, taken collectively.
"Debt" of any Person means, at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under Financing Leases, (c) all
obligations (contingent or otherwise) of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of credit or similar
instrument, (d) all Derivatives Obligations of such Person, (e) all Guarantee
Obligations of such Person in respect of Debt of any other Person and (f) all
liabilities of the types described in clauses (a) through (e) above secured by
any Lien on any property
3
owned by such Person even though such person has not assumed or otherwise become
liable for the payment thereof
"Debt Incurrence" means any incurrence by any Credit Party of any Debt
(including without limitation pursuant to the Permanent Financing), other than
Debt permitted under Section 6.8(a) through (d), inclusive.
"Default" means any Event of Default or any event or condition which,
with the giving of notice or lapse of time or both, would, unless cured or
waived, become an Event of Default.
"Deloitte & Touche Financials" shall mean the consolidated balance
sheets of NPR Holding for the years ended December 31, 1995 and January 4, 1997
and the related statements of operations and cash flows for the years then ended
prepared in accordance with GAAP, prepared by Deloitte & Touche.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"DLJSC" means Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, a
Delaware corporation, and its successors.
"dollars" or "$" mean lawful currency of the United States of America.
"Domestic Taxes" has the meaning set forth in Section 2.8(a).
"Engagement Letter" means an engagement letter between the Company and
DLJSC pursuant to which DLJSC shall be engaged as exclusive investment banker
for the Credit Parties for the period as set forth therein.
"Environmental Laws" means any and all statutes, laws, judicial
decisions, regulations, ordinances, rules, judgments, orders, decrees, codes,
plans, injunctions, permits, concessions, grants, franchises, licenses and
governmental
4
restrictions, whether now or hereafter in effect, relating to human health, the
environment or to emissions, discharges or releases or pollutants, contaminants,
Hazardous Materials or wastes into the environment, including ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Materials or wastes or the
clean-up or other remediation thereof.
"Equity Issuance" means the issuance of any equity securities by any
Credit Party (including without limitation any equity securities issued pursuant
to the exercise of stock options or warrants or the Permanent Financing), but
excluding equity securities issued to any other Credit Party.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company and each Subsidiary, and all members of
a controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Event of Default" has the meaning set forth in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" has the meaning set forth in Section 2.1(b).
"Financing Documents" means this Agreement, the Notes and the
Subsidiary Guaranty.
"Financing Lease" means any lease of property, real or personal, the
obligations or the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
5
"Guarantee Obligation" means as to any Person (the "guaranteeing
person"), without duplication, any obligation of (a) the guaranteeing person or
(b) another Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Debt, leases, dividends or other
obligations (the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain working
capital or equity capital or the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof, provided, however, that
the term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business or the guaranty
obligation of any primary obligation which does not constitute Debt. The amount
of any Guarantee Obligation of any guarantee person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith.
"Hazardous Materials" means (i) asbestos; (ii) polychlorinated
biphenyls; (iii) petroleum, its derivatives, by-products and other hydrocarbons;
and (iv) any other toxic, radioactive, caustic or otherwise hazardous substance
regulated under Environmental Laws.
"Hazardous Materials Contamination" means contamination (whether now
existing or hereafter occurring) of the improvements, buildings, facilities,
personalty, soil, groundwater, air or other elements on or of the relevant
property by Hazardous Materials, or any derivatives thereof, or on or of any
other
6
property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the relevant
property.
"Holder" means any holder of any Note.
"Xxxx" means Xxxxxx X. Xxxx, Xx., an individual currently residing in
Philadelphia, Pennsylvania.
"Xxxx Companies" means, collectively, Xxxx Cargo, Xxxx Hauling and
Warehousing System, Inc., Wilmington Stevedores, Inc., Xxxxxx Marine Services,
Inc. and The Riverfront Development Corporation.
"Xxxx Cargo" means Xxxx Cargo Systems, Inc., a Delaware corporation.
"Initial Takedown" means the first Takedown hereunder.
"Interest Payment Date" each December 31, March 31, June 30 and
September 30 (or, if any such date is not a Business Day, the next succeeding
Business Day).
"Interest Period" shall mean the period from the date of this Agreement
to but excluding the 30th day thereafter, and thereafter each successive 30-day
period. If any Interest Period would begin or end on a date which is not a
Business Day (as defined below), such Interest period shall begin or end, as the
case may be, on the next succeeding Business Day and any Interest Period that
would extend beyond the Maturity Date shall end on the Maturity Date. Purchaser
may, in its discretion, select Interest Periods of one day for any day on or
after the Notes shall have become due and payable in accordance with the terms
hereof.
"Investment" means, without duplication, any investment in any Person,
whether by means of share purchase, capital contribution, loan, time deposit or
otherwise.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"LIBOR Rate" with respect to each Interest Period, shall mean for any
day, as determined by Purchaser, the interest rate per annum offered for
deposits in dollars for the Interest Period in the London interbank market which
7
appears on Telerate Page 3750 or such other page as may replace Telerate Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association for the purpose of displaying such rate
(collectively, "Telerate Page 3750") as of 11:00 A.M. London time on the second
Business Day prior to any such date. If the Interest Period is of a duration
falling between the Interest Periods for which such rates appear on Telerate
Page 3750, the LIBOR Rate shall be the rate determined by interpolation between
the rates for the next shorter and the next longer Interest Periods for which
such rate appears on Telerate Page 3750, as determined by Purchaser, whose
determination shall be conclusive in the absence of manifest error. In the event
that (i) more than one such LIBOR Rate is provided, the average of such rates
shall apply or (ii) no such LIBOR Rate is published, then the LIBOR Rate shall
be determined from such comparable financial reporting company as Purchaser, in
its discretion, shall determine.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement) and any other arrangement
having substantially the same economic effect as any of the foregoing.
"Majority Holders" means (i) at any time prior to the issuance of the
Notes, Purchaser and (ii) at any time thereafter, the holders of more than 50%
in aggregate principal outstanding amount of Notes at such time.
"Material Acquisition Documents" means the Stock Purchase Agreement and
the Contribution Agreement.
"Material Adverse Effect" means a material adverse affect on the
assets, business, financial position, results of operations or prospects of (i)
the Company, (ii) the Xxxx Companies (taken as a whole), (iii) the NPR Companies
(taken as a whole) or (iv) the Company and its Subsidiaries (taken as a whole).
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $1,000,000.
"Maturity Date" means December 31, 1998.
8
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Cash Proceeds" means, with respect to any transaction, an amount
equal to the cash proceeds received by any Credit Party from or in respect of
such transaction (including any cash proceeds received as income or other
proceeds of any non-cash proceeds of such transaction), less (i) any expenses
(including commissions) reasonably incurred by any Credit Party in respect of
such transaction, (ii) the amount of any Debt secured by a Lien on a related
asset and discharged from the proceeds of such transaction; (iii) any taxes paid
or payable by any Credit Party with respect to such transaction (as reasonably
estimated by such Credit Party's chief financial officer in good faith) and (iv)
amounts thereof required to be paid by any Credit Party to the holders of other
senior secured indebtedness outstanding as of the date of this Agreement (or
refinancings thereof permitted hereunder).
"Notes" means the Senior Unsecured Increasing Rate Notes issued by the
Company substantially in the form set forth as Exhibit A hereto.
"NPR Companies" means, collectively, each of NPR Holding, NPR S.A.,
NPR, Inc. and NPR-Navieras.
"NPR Holding" means NPR Holding Corporation, a Delaware corporation.
"NPR, Inc." means NPR, Inc., a Delaware corporation.
"NPR-Navieras" means NPR-Navieras Receivables, Inc., a Delaware
corporation.
"NPR S.A." means NPR S.A., Inc., a Delaware corporation.
"Other Taxes" has the meaning set forth in Section 2.8(a).
"Packer Avenue Proceeding" shall mean that certain action commenced by
Xxxx Cargo, Xxxx Hauling & Warehousing System, Inc. and Astro
9
Holding, Inc. (the "Plaintiffs") in the United States District Court for the
Eastern District of Pennsylvania against the Delaware River Port Authority (the
"DRPA"), the Philadelphia Regional Port Authority (the "PRPA") and the Ports of
Philadelphia and Camden (together with the DRPA and PPC the "Defendants"). The
Plaintiffs allege that the Defendants, along with other unnamed coconspirators,
acting under the color of state law committed predatory acts under a conspiracy
designed to injure, harass and appropriate the property of the Plaintiffs.
Plaintiffs are seeking damage for Defendants' conduct which constitutes a
violation of Plaintiffs' substantive due process, equal protection and
procedural due process rights under 41 U.S.C. Section 1983.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permanent Financing" means any Debt Incurrence or Equity Issuance
following the date hereof for the purpose of refinancing the Notes and the
Subordinated Notes.
"Permits" means all domestic and foreign licenses, permits and
approvals required for the full operation of the Company and its Subsidiaries,
taken as a whole, including, without limitation, provincial, state, federal,
city and county permits and approvals.
"Permitted Liens" means Liens expressly permitted to exist by the
terms of Section 6.11 hereof.
"Permitted Transferee" means any Person that acquires Notes other than
any Person who acquires such Notes (i) in a public offering or (ii) in the open
market pursuant to sales under Rule 144 of Securities Act or otherwise.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time
10
within the preceding five years been maintained, or contributed to, by any
Person which was at such time a member of the ERISA Group for employees of any
Person which was at such time a member of the ERISA Group.
"Prime Rate" means, for any day, a rate per annum equal to the rate of
interest publicly announced by The Bank of New York (or its successor) from time
to time in New York, New York as its prime, reference or base rate, it being
understood that such rate is one of such bank's base rates and serves as a basis
upon which effective rates of interest are calculated for those loans making
reference thereto and may not be the lowest of such bank's base rates.
"Purchaser" means HS Funding, Inc., a Delaware corporation, and its
successors.
"Restricted Payment" means, with respect to any Person (i) any dividend
or other distribution on any shares of the capital stock of such Person (except
dividends payable solely in shares of capital stock of the same class of such
Person) or (ii) any payment on account of the purchase, redemption, retirement
or acquisition of (a) any shares of the capital stock of such Person or (b) any
option, warrant or other right to acquire such Person's shares of the capital
stock.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Shareholders" means the "Sellers" as such term is defined in
the Stock Purchase Agreement.
"Solvent" as to any Person shall mean that (i) the sum of the assets of
such Person, both at a fair valuation and at present fair salable value, will
exceed its liabilities, including contingent liabilities, (ii) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed at the amount
11
which, in light of all the facts and circumstances existing at the time,
represents the amount which can reasonably be expected to become an actual or
matured liability net of reasonably expected reimbursements.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated
September 25, 1997 by and among NPR Holding, each of the Selling Share holders
signatory thereto and Xxxx Cargo, as amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person.
"Subsidiary Guaranty" means the Subsidiary Guaranty in the form of
Exhibit C executed and delivered pursuant to this Agreement.
"Subordinated Notes" shall mean the $25,000,000 aggregate principal
amount of subordinated notes originally issued to the Selling Shareholders as
partial consideration in the Acquisition and any additional notes issued as
interest thereon.
"Takedown" has the meaning set forth in Section 2.2(a).
"Taxes" has the meaning set forth in Section 2.8(a).
"Transfer" means any disposition of Notes that would constitute a sale
thereof under the Securities Act.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
Section 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted,
12
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with GAAP applied on a consistent basis (except for changes concurred in by the
Company's independent public accountants).
ARTICLE 11
PURCHASE AND SALE OF SECURITIES, TERMS OF
SECURITIES
Section 2.1. Commitment to Purchase. (a) Subject to the terms and
conditions set forth herein and in reliance on the representations and
warranties contained herein and in the other Financing Documents, the Company
may at its option issue and sell, and Purchaser agrees to purchase, Notes in an
aggregate outstanding principal amount not to exceed $125,000,000. A $25,000,000
portion of such Commitment amount (the "$25M Takedown") shall only be made
available for any Takedown (as defined below) (i) which is on or prior to
February 28, 1998 and (ii) when the following condition is met: that Purchaser
shall have received audited consolidated balance sheets of NPR Holding for the
years ending December 31, 1995 and January 4, 1997 and the related statements of
operations and cash flows for the years then ended, prepared in accordance with
GAAP from a nationally recognized accounting firm (which may include BDO Xxxxxxx
LLP) which do not disclose results of operations or financial position of NPR
Holding and its Subsidiaries taken as a whole materially worse from the results
of operations or financial position of NPR Holding and its Subsidiaries set
forth in the Deloitte and Touche Financials (it being understood that materially
worse results of operations or financial position resulting from different
applications of GAAP or from the utilization of accounting principles, practices
or methods different from those utilized by Deloitte & Touche or NPR Holding in
preparation of the Deloitte & Touche Financials (so long as such different
accounting principles, practices or methods are in accordance with GAAP) or
events occurring on or after the date of the Acquisition shall not be taken into
account in determining whether the results of operations or financial position
are materially worse), which materially worse results cause DLJSC to be unable
to complete the sale of debt securities intended to refinance the Notes in
accordance with Section 6.16 after DLJSC has used its commercially reasonable
best efforts to complete such sale, it being understood that if DLJSC fails to
sell such debt securities for reasons other than as specified above (eg.
negative performance of the Xxxx Companies or negative performance of the NPR
Companies (other than negative performance of the NPR Companies for the periods
covered by the December 31, and January 4 financial statements referred to
above)), then this
13
condition shall be satisfied. The purchase price for the Notes shall be 100% of
the principal amount thereof.
(b) Termination of Commitment. The Commitment will terminate on the
earliest of (i) the termination of the Stock Purchase Agreement in accordance
with the terms thereof prior to the consummation of the Acquisition, (ii) the
delivery by the Company of a notice of termination of such obligation of
Purchaser, (iii) the consummation of the Acquisition (if such date occurs prior
to the date of the Initial Takedown), (iv) the date on which any Credit Party
commences the marketing of any proposed Permanent Financing with respect to
which DLJSC or any of its Affiliates is not the sole manager or agent or lead
underwriter, as the case may be or (v) 5:00 PM New York City time on December
31, 1997 if the Closing has not occurred by such time (such earliest date, the
"Expiration Date"); provided that if at any time on or after the date hereof an
Event of Default shall have occurred and be continuing, Purchaser may at its
option terminate the Commitment by notice to the Company, such termination to be
effective upon the giving of such notice; and provided further that the
Commitment shall automatically terminate, without notice to the Company or any
other action on the part of Purchaser, upon the occurrence of any of the events
specified in Sections 7.1(e) and 7.1(f) with respect to any Credit Party.
Notwithstanding the foregoing in no event shall the Commitment terminate
(without the consent of the majority of the holders of the Subordinated Notes)
prior to February 28, 1998.
(c) The Commitment is not revolving in nature, and principal amounts of
Notes prepaid in accordance with Section 2.7 may not be resold to Purchaser
hereunder.
Section 2.2. Takedown Procedures. (a) Notice. The Company shall give
Purchaser notice not later than 11:00 AM (New York City time) three Business
Days prior to each proposed purchase and sale of Notes hereunder (a "Takedown"),
which notice shall specify the principal amount of Notes to be purchased and
sold at such Takedown (which amount shall be $2,000,000 or a larger multiple of
$1,000,000, except that any Takedown may be in an amount equal to either (x) the
amount of interest payable on the Notes on the date of Takedown or (y) the
remaining unused amount of the Commitment) and the date of such Takedown (which
shall be a Business Day). There shall not be more than three Takedowns
subsequent to the Initial Takedown hereunder. Notwithstanding the foregoing (i)
the Purchaser acknowledges that an irrevocable notice from the Company with
respect to the $25M Takedown has been delivered at the Closing and that no
further notice from the Company with respect to the $25M Takedown
14
shall be required and that the $25M Takedown shall occur pursuant to Section 2.1
hereof without further action on the part of the Company; and (ii) in no event
shall there be any Takedown subsequent to the Initial Takedown prior to February
28, 1998 except for the S25M Takedown, the proceeds of which are used to repay
the Subordinated Notes.
(b) Funding. On the date of each Takedown other than the $25M Takedown,
Purchaser shall deliver by wire transfer, to the account number of the Company
specified by the Company in writing no later than 2:00 PM (New York City time)
two Business Days prior to the date of such Takedown, immediately available
funds in an amount equal to the aggregate purchase price of the Notes to be
purchased by Purchaser hereunder on such date, less the aggregate amount of fees
payable by the Company to Purchaser on such date pursuant to Section 2.3 and
expenses (if any) payable to Purchaser on such date pursuant to Section 9.4. No
more than one Takedown may occur in any calendar week (Sunday through Saturday).
The $25M Takedown shall occur without any further action on the part of the
Company three Business Days after receipt of the audited financial statements
which satisfy the condition to the $25M Takedown set forth in Section 2.1 and
the Purchaser shall deliver by wire transfer, to an account number of the
Selling Shareholders specified by a majority of the Selling Shareholders in
writing no later than 2:00 P.M. (New York City time) two Business Days prior to
the date of such 25M Takedown, immediately available funds in an amount equal to
$25,000,000.
(c) Delivery of Notes. At each Takedown, against payment as set forth
in subsection (b) of this Section 2.2, the Company shall deliver to Purchaser a
single Note representing the aggregate principal amount of Notes to be purchased
at such Takedown registered in the name of Purchaser, or, if requested by
Purchaser, separate Notes in such other denominations and registered in such
name or names as shall be designated by Purchaser by notice to the Company at
least two Business Days prior to the date of such Takedown. The Purchaser
acknowledges receipt of a Note with respect to the $25M Takedown as of the
Closing and agrees to hold such Note in escrow until the time of the occurrence
of such $25M Takedown.
Section 2.3. Fees. (a) Commitment Fee. The Company shall pay Purchaser
a commitment fee in the amount equal to one and one-half percent (1.50%) of the
principal amount of the Notes subject to the Commitment (the "Commitment Fee"),
which shall be fully earned upon the execution and delivery of this Agreement by
the parties hereto and shall be payable in full in dollars on
15
(1) the date of the consummation of the Acquisition (regardless of whether the
Initial Takedown has occurred on or prior to such date), (ii) the closing of any
other transaction or series of transactions in which any Credit Party or any of
its affiliates acquires or recapitalizes any or all of the NPR Companies within
the next two years or (iii) the payment to the Credit Parties of any break-up
fee or similar reimbursement pursuant to the Stock Purchase Agreement (in which
case Purchaser will be entitled to receive the lesser of (i) 50% of such
break-up fee or (ii) the Commitment Fees).
(b) Takedown Fee. On the date of each Takedown hereunder, the Company
shall pay to Purchaser a takedown fee in an amount equal to one and one-half
percent (1.50%) of the aggregate outstanding principal amount of the Notes being
purchased at such Takedown.
(c) Funding Fee. If the Notes are still outstanding on the first
anniversary of the date of the Initial Takedown (the "First Anniversary"), the
Company shall pay a cash duration fee (the "Funding Fee") in an amount equal to
three percent (3%) of the principal amount of the Notes outstanding on the First
Anniversary, payable, in dollars, to Purchaser; provided, that the portion of
such Funding Fee set forth below will be creditable against fees due to DLJSC in
connection with the Permanent Financing in the event that such Permanent
Financing occurs during the corresponding period from the First Anniversary:
Period from Amount
First Anniversary of Credit
----------------- ---------
0-44 days 2.75%
45-89 days 2.50%
90-179 days 2.0%
180-269 days 1.0%
Thereafter 0%
Section 2.4. Mandatory Termination and Reduction of Commitment.
(a) The Commitment shall terminate on the Expiration Date.
(b) After February 28, 1998, the Commitment shall be reduced by an
amount equal to the Net Cash Proceeds received by any Credit Party in respect of
any Asset Sale, Debt Incurrence or Equity Issuance minus the amount of such
16
Net Cash Proceeds applied to repay outstanding Notes in accordance with Sections
2.7(d). Each such reduction shall be effective on the date of the related
prepayment of the Notes, or if no Notes are at the time outstanding, on the date
of receipt of such Net Cash Proceeds.
Section 2.5. Optional Reduction of Commitment. The Company (with, prior
to February 28, 1998, the consent of a majority of the holders of the
Subordinated Notes) may, upon not less than three Business Days' notice to
Purchaser, terminate the unused Commitment at any time or reduce the unused
Commitment from time to time in amounts equal to $5,000,000 or any larger
multiple of $1,000,000.
Section 2.6. Interest. (a) Payment Dates. Interest on each Note shall
be payable in dollars quarterly in arrears, on each Interest Payment Date of
each year in which such Note remains outstanding, commencing with the first
Interest Payment Date after the date of issuance thereof, on the principal sum
of such Note outstanding. Interest on each Note shall be calculated at the rate
per annum set forth in subsection (b) below, and shall accrue from and including
the most recent Interest Payment Date to which interest has been paid on such
Note (or if no interest has been paid on such Note, from the date of issuance
thereof) to but excluding the date on which payment in full of the principal sum
of such Note has been made.
(b) Interest Rate. Interest shall be payable at the Prime Rate plus a
spread (the "Spread") or the LIBOR Rate plus the Spread, at the Company's
option. In the event that the Company elects the Prime Rate option, the Spread
will initially be 200 basis points. In the case of a LIBOR option, the Spread
will be 450 basis points. If the Notes are not retired in whole by the end of
the first six month period following the date of their issuance, the Spread will
increase by 100 basis points and shall continue to increase by an additional 50
basis points at the end of each subsequent three month period until the First
Anniversary.
Commencing on the First Anniversary, interest shall be payable at the
greater of the following as of the beginning of each quarterly period: (i) the
Prime Rate plus 400 basis points, increasing by an additional 50 basis points at
the end of each subsequent three month period for so long as the Notes are
outstanding; (ii) the Treasury Rate (as defined below) plus 750 basis points,
increasing by an additional 50 basis points at the end of each subsequent three
month period for so long as the Notes are outstanding; (iii) the DLJ High Yield
Index Rate plus 150 basis points, increasing by an additional 50 basis points at
the
17
end of each subsequent three month period for so long as the Notes are
outstanding; and (iv) the rate in effect on the day immediately preceding the
First Anniversary plus 50 basis points, increasing by an additional 50 basis
points at the end of each subsequent three month period for so long as the Notes
are outstanding. "Treasury Rate" means the rate applicable to the most recent
auction of direct obligations of the United States having a maturity closest to
the Notes, as published by the Board of Governors of the Federal Reserve System.
Notwithstanding anything to the contrary set forth above, at no time
shall the per annum interest rate on the Notes exceed seventeen percent (17%).
In addition, at the option of the Company, that portion, if any, of any interest
payment representing a per annum interest rate in excess of fifteen percent
(15%) shall be paid by issuing Notes with a principal amount equal to such
excess portion of interest. Interest on each Note will be calculated on the
basis of a 365-day year and paid for the actual number of days elapsed.
Section 2.7. Maturity of Notes; Prepayment of Notes. (a) Maturity Date.
The Notes shall mature on the Maturity Date; provided, however, that the
maturity of the Notes will be automatically extended until six and one-half
years after the First Anniversary if, on the First Anniversary, the following
conditions are met: (i) there shall exist no Default; (ii) there shall exist no
default under any other Debt of any Credit Party; and (iii) all fees due to
Purchaser and DLJSC as of such date shall have been paid in full.
(b) Optional Redemption. The Notes may be redeemed, in whole or in
part, upon not less than 10 days written notice, at the option of the Company,
at any time at par plus accrued interest to the redemption date; provided, that
the redemption price shall be one hundred three percent (103%) of par plus
accrued interest if the Notes are refunded (whether at the time of redemption or
maturity) with or in anticipation of funds (other than from (x) internally
generated funds or (y) the Net Cash Proceeds from Asset Sales, (x) and (y)
together not to exceed $35,000,000 in aggregate (the "35M Basket")) raised by
any means other than a transaction in which DLJSC has acted as sole underwriter
or exclusive agent to any Credit Party; provided further, that after the First
Anniversary, the Notes may be redeemed at 100% of principal plus accrued
interest unless DLJSC has delivered a Bona Fide Proposal (as defined below) or
the Company and DLJSC have agreed in their reasonable judgment that no such Bona
Fide Proposal could be made during the time period through such First
Anniversary.
18
(c) Fixed Rate Option. Commencing on refusal by the Company to execute a Bona
Fide Proposal (as defined in subsection (d) below), the Notes may be sold by
Purchaser, upon 10 days prior notice, to third party purchasers (subject to
applicable law) on a fixed rate basis at an interest rate no greater than
eighteen percent (18%). In such event, the Notes may not be redeemed until the
fifth anniversary of Initial Takedown; thereafter, the Notes may be redeemed, in
whole or in part, upon not less than 10 days written notice, at the option of
the Company, at any time at par plus accrued interest plus a premium equal to
the coupon in effect on the date on which such Notes were sold to third party
purchasers with such premium declining ratably to par one year prior to the
maturity of the Notes.
(d) Mandatory Prepayments. (i) The Company shall, within five days of
receipt by any Credit Party of the Net Cash Proceeds of any Asset Sale, Debt
Incurrence or Equity Issuance, prepay a principal amount of the Notes equal to
the amount of such Net Cash Proceeds (less any amounts not required to be paid
as a result of the requirement in subsection (e) of this Section 2.7 that all
such prepayments be made in multiples of $1,000), at a redemption price equal to
one hundred percent (100%) of the principal amount of the Notes so prepaid
together with accrued interest to the date of prepayment; provided, that the
redemption price shall be one hundred three percent (103%) of par plus accrued
interest if the Notes are redeemed with or in anticipation of funds raised by
any means other than a transaction in which DLJSC has acted as sole underwriter
or exclusive agent to any Credit Party; provided, however, that mandatory
prepayments required hereunder due to Asset Sales, in the aggregate not
exceeding the 35M Basket, may be prepaid at a redemption price equal to one
hundred percent (100%) of the principal amount the Notes so prepaid together
with accrued interest to the date of prepayment; and provided further, that
after the First Anniversary, the Notes may be redeemed at one hundred percent
(100%) of principal plus accrued interest unless (x)(i) prior to such First
Anniversary DLJSC delivered to the Company a proposal to market securities of
all or any Credit Party to one or more financially responsible institutional
investors (or a commitment from DLJSC or another nationally recognized
investment banking firm to underwrite the public sale of such securities, on a
firm commitment basis), on financial and other terms and conditions no less
favorable to the Company than those generally available in the United States
capital markets to issuers of securities having a creditworthiness comparable to
that of the Company, in an amount sufficient to redeem all the Notes (a "Bona
Fide Proposal"), and (ii) the Company did not authorize DLJSC to execute such
Bona Fide Proposal; it being understood that no such proposal shall be deemed to
be a Bona Fide Proposal if DLJSC fails to execute such proposal on
19
substantially the terms proposed, or (y) the Company and DLJSC have agreed in
their reasonable judgment that no such Bona Fide Proposal could be made.
(ii) The Company shall, within five (5) days of receipt by any Credit
Party of the proceeds (net of legal fees) of the Packer Avenue Proceeding,
prepay a principal amount of the Notes equal to the amount of such proceeds, at
a redemption price equal to one hundred percent (100%) of the principal amount
of the Notes so prepaid together with accrued interest to the date of
prepayment.
(e) Minimum Amount. Any prepayment of the Notes pursuant to Section
2.7(b) or (c) shall be in a minimum amount of at least $1,000,000, unless less
than $1,000,000 of the Notes remain outstanding, in which case all of the Notes
must be prepaid. Any prepayment of the Notes pursuant to Section 2.7(d) shall be
in a minimum amount which is a multiple of $1,000 times the number of Holders at
the time of such prepayment.
(f) Partial Prepayments. Any partial prepayment shall be made so that
the Notes then held by each Holder shall be prepaid in a principal amount which
shall bear the same ratio, as nearly as may be, to the total principal amount
being prepaid as the principal amount of such Notes held by such Holder shall
bear to the aggregate principal amount of all Notes then outstanding. In the
event of a partial prepayment, upon presentation of any Note the Company shall
execute and deliver to or on the order of the Holder, at the expense of the
Company, a new Note in principal amount equal to the remaining outstanding
portion of such Note.
Section 2.8. Taxes. (a) For the purposes of this Section, the following
terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by any
Credit Party pursuant to this Agreement or under any Note or any other Financing
Document, and all liabilities with respect thereto, excluding, in the case of
Purchaser or any other Holder, taxes imposed on the net income of Purchaser or
such Holder and franchise or similar taxes imposed on Purchaser or such Holder,
by a jurisdiction under the laws of which Purchaser or such Holder is organized
or in which its principal executive office, or the office which holds the Notes
or other Financing Document, is located (all such excluded taxes being
hereinafter referred to as "Domestic Taxes").
20
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or under any Note or any
other Financing Department or from the execution, delivery, registration,
recordation or enforcement of, or otherwise with respect to, this Agreement or
any Note or any other Financing Document.
(b) All payments by any Credit Party to or for the account of Purchaser
or any other Holder under any Financing Document shall be made without deduction
for any Taxes or Other Taxes; provided that, if any Credit Party shall be
required by law to deduct any Taxes or Other Taxes from any such payment, the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), Purchaser or such Holder (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, the
Credit Party shall make such deductions, the Credit Party shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and the Company shall promptly furnish to the
Purchaser or such Holder (as the case may be) the original or a certified copy
of a receipt evidencing payment thereof.
(c) The Company agrees to indemnify Purchaser and each other Holder for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section) paid by Purchaser or such Holder (as the case may be) and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto.
(d) The Company shall have no obligations for Taxes under Section
2.8(a) or Section 2.8(b) for or on account of
(i) any Taxes (other than Other Taxes) imposed by way of deduction
or withholding that would not have been so imposed but for the existence of any
present or former connection between such Holder and the jurisdiction imposing
the Tax other than merely holding such Note or any Financing Document, or the
receipt of payments in respect thereof, including, without limitation, such
Holder being or having been a citizen or resident thereof, or being or having
been engaged in a trade or business or having a permanent establishment or other
fixed base therein, or making or having made an election to the effect of which
is to subject such Holder to such Tax;
21
(ii) any Taxes (other than (A) Other Taxes or (B) any Taxes imposed
by way of deduction or withholding) that would not have been so imposed but for
the existence of any present or former connection between such Holder or the
beneficial owner (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such Holder or beneficial owner,
if such Holder or beneficial owner is an estate, a trust, a partnership or
corporation) and the jurisdiction imposing the Tax other than merely holding
such Note or any Financing Document, or the receipt of payments in respect
thereof, including, without limitation, such Holder or beneficial owner (or such
fiduciary, settlor, beneficiary, member, shareholder, or possessor) being or
having been a citizen or resident thereof, or being or having been engaged in a
trade or business or having a permanent establishment or other fixed base
therein, or making or having made an election to the effect of which is to
subject such Holder or beneficial owner (or such fiduciary, settlor,
beneficiary, member, shareholder or possessor) to such Tax;
(iii) any Taxes in the nature of estate, inheritance or gift taxes;
(iv) any Tax that is imposed or withheld by reason of the failure of
the Holder or beneficial owner of a Note to comply with a written request by the
Company addressed to such Holder or beneficial owner to provide (A) information
concerning the nationality, residence or identity of such Holder or beneficial
owner that is required under a statute, treaty, regulation or administrative
practice of the jurisdiction imposing such Tax as a precondition to exemption
from all or part of such Tax or (B) the applicable signed form required to be
received by the Credit Parties to qualify for an exemption or reduction of such
Tax;
(v) in the case of a Holder other than the Purchaser or a person
described in Section 8.3(a)(ii), any Taxes imposed on any payment on a Note to a
Holder that is a fiduciary or partnership or other than sole beneficial owner of
such payment to the extent a beneficiary or settlor with respect to such
fiduciary or a member of such partnership or a beneficial owner would not have
been entitled to the payment of taxes had such beneficiary, settlor, member or
beneficial owner directly received its beneficial or distributive share of such
payment;
(vi) any Tax that is imposed or withheld, to the extent that the
Holder would have been subject to such Tax at the time of the original
22
purchase of the Notes upon their original issuance if the Holder had purchased
the Note at that time; and
(vii) any combination of items (i) through (vi) above.
(e) Notwithstanding anything in Section 2.8(d) to the contrary, the
Company agrees to indemnify Purchaser and each other Holder for all Domestic
Taxes of Purchaser or such other Holder (calculated based on a hypothetical
basis at the maximum marginal rate for a corporation) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, in each case to the extent that such Domestic Taxes result from any
payment or indemnification pursuant to this Section 2.8. This indemnification
shall be paid within 15 days after Purchaser or such Holder (as the case may be)
makes demand therefor.
(f) The Company agrees that the provisions of this Section shall inure
to the benefit of any transferee of any Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to Purchaser (both before and after
giving effect to the Acquisition) as set forth below:
Section 3.1. Corporate Existence and Power. Each Credit Party is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and as proposed to be conducted after the
Acquisition except for such governmental licenses, authorizations, consents and
approvals as to which the failure to so maintain could not reasonably be
expected to have a Material Adverse Effect.
Section 3.2. Authorization, Execution and Enforceability. The
execution, delivery and performance by each Credit Party party to each of the
Financing Documents and the Material Acquisition Documents and the issuance of
the Notes by the Company have been duly and validly authorized and are within
each such Credit Party's corporate powers. Each of the Financing Documents
(other than the Notes) and Material Acquisition Documents has been duly executed
and delivered by the Credit Parties party thereto and constitutes their valid
and binding agreement, enforceable in accordance with its terms, subject to
23
applicable bankruptcy, insolvency and other similar laws affecting creditors'
rights generally and equitable principles of general applicability. When
executed and delivered by the Company against payment therefor in accordance
with the terms hereof, the Notes will constitute valid and binding obligations
of the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency and other similar laws affecting creditors'
rights generally and equitable principles of general applicability.
Section 3.3. Governmental Authorization. The execution and delivery by
the Credit Parties party to each of the Financing Documents and Material
Acquisition Documents did not and will not, the issuance and sale of the Notes
by the Company will not, and the consummation of the transactions contemplated
hereby and thereby will not, require any action by or in respect of, or filing
with, any governmental body, agency or governmental official except actions and
filings which, if not taken or made, will not affect in any manner the validity
or enforceability of the Financing Documents or the Material Acquisition
Documents or could reasonably be expected to have a Material Adverse Effect.
Section 3.4. Contravention. The execution and delivery by the Credit
Parties party to each of the Financing Documents and the Material Acquisition
Documents did not and will not, and the issuance and sale of the Notes by the
Company will not, and the consummation of the transactions contemplated hereby
and thereby will not, contravene or constitute a default under or violation of
any provision of applicable law or regulation, any Company Corporate Documents
or any agreement, judgment, injunction, order, decree or other instrument
binding upon any Credit Party or any of its assets, or result in the creation or
imposition of any Lien on any asset of any Credit Party.
Section 3.5. Financial Information.
(a) The Xxxx Companies (i) unaudited financial statements for the Xxxx
Companies for the three years ended December 31, 1994, 1995 and 1996 (to include
two balances sheets as of December 31, 1995 and 1996, and income statements and
cash flow statements for the three years) and (ii) unaudited financial
statements for the 9 months ended September 30, 1997 and 1996 (to include
balance sheets as of September 30, 1997 and December 31, 1996, and income
statements and cash flow statements for the two 9-month periods) fairly present,
in conformity with GAAP, the consolidated financial position of such entities as
of each such date and their consolidated results of operations, changes in
stockholders' equity and cash flows for each period.
24
(b) The NPR Companies (i) audited financial statements for the NPR
Companies for the period from March 5, 1995 to December 31, 1995 and the year
ended December 31, 1996 (to include two balance sheets as of December 31, 1995
and 1996, and income statements and cash flow statements for the two periods)
and (ii) unaudited financial statements for the 9 months ended September 30,
1997 and 1996 (to include balance sheets as of September 30, 1997 and December
31, 1996, and income statements and cash flow statements for the two 9-month
periods) fairly present, in conformity with GAAP, the consolidated financial
position of such entities as of each such date and their consolidated results of
operations, changes in stockholders' equity and cash flows for each period.
(c) The unaudited pro forma financial statements as of September 30,
1997 (to include one balance sheet as of September 30, 1997, and three income
statements for the year ended December 31, 1996, and the nine months ended
September 30, 1996 and 1997, as adjusted for the issuance and sale of the Notes
and the consummation of the Acquisition fairly present the pro forma
consolidated financial condition of the Company as of such date.
(d) There has occurred no material adverse change, or development that
could reasonably be expected to result in a material adverse change, in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company, the Xxxx Companies, the NPR Companies or
the Company and its Subsidiaries, in each case taken as a whole, since September
30, 1997 or in the facts and information supplied to Purchaser through November
20, 1997 with respect thereto.
Section 3.6. Litigation. Except as set forth on Schedule 3.6, there is
no action, suit or proceeding pending or, to the knowledge of any Credit Party,
threatened against any Credit Party before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which could have a Material Adverse Effect or which
challenges the validity of any Financing Document or of the Acquisition;
provided, however, that except as noted on such Schedule 3.6, all matters listed
therein are covered by adequate insurance. Xxxx Cargo and Xxxx Hauling &
Warehousing System, Inc. are named plaintiffs to the Packer Avenue Proceeding
and have a direct right to receive any and all proceeds of the litigation or any
settlement thereof (the "Packer Avenue Proceeds").
25
Section 3.7. Environmental Matters. Except as provided on Schedule
3.7:
(a) Except to the extent the following would not result in a Material
Adverse Effect, other than the generation, use and storage of Hazardous
Materials in compliance with all applicable Environmental Laws: (i) no Hazardous
Materials are located on any properties owned, leased or operated by any Credit
Party; (ii) no Hazardous Materials have been released into the environment or
deposited, discharged, placed or disposed of, at, on, under or near any of such
properties; (iii) no portion of any such property is being used for the
disposal, storage, treatment, processing or other handling of Hazardous
Materials; (iv) no such property is affected by Hazardous Materials
Contamination; (v) to the best of any Credit Party's knowledge, no previous
owner or occupant of such properties has used any portion of the properties for
the treatment, storage, disposal, processing or other handling of Hazardous
Materials; (vi) with respect to properties previously owned, leased or operated
by any Credit Party, to the best of any Credit Party's knowledge, no Hazardous
Materials have been released into the environment, or deposited, discharged,
placed or disposed of, at, on, under or near any such properties during the time
of any Credit Party's ownership, lease or operation thereof.
(b) Except to the extent the following would not result in a Material
Adverse Effect, no asbestos or asbestos-containing materials are present on any
of the properties now or previously owned, leased or operated by any Credit
Party.
(c) Except to the extent the following would not result in a Material
Adverse Effect, no polychlorinated biphenyls are located on or in any properties
now or previously owned, leased or operated by any Credit Party, in the form of
electrical transformers, fluorescent light fixtures with ballasts, cooling oils
or any other device or form.
(d) Except to the extent the following would result in a Material
Adverse Effect, no underground storage tanks are located on any properties now
or previously owned, leased or operated by any Credit Party, or were located on
any such property and subsequently removed or filled.
(e) Except as to the extent the following (or the matters referred to
in any of the following) would not result in a Material Adverse Effect, no
notice, notification, demand, request for information, complaint, citation,
26
summons, investigation, administrative order, consent order and agreement,
litigation or settlement directed at any Credit Party or any property owned,
leased or operated by any Credit Party with respect to Hazardous Materials or
Hazardous Materials Contamination is in existence or, to any Credit Party's
knowledge, proposed, threatened or anticipated with respect to or in connection
with the operation of any properties now or previously owned, leased or operated
by any Credit Party. Except as to the extent the following would not result in a
Material Adverse Effect, all such properties and their existing and prior uses
comply and at all times have complied with any applicable governmental
requirements relating to environmental matters of Hazardous Materials and there
is no condition on any of such properties which is in violation of any
applicable governmental requirements relating to Hazardous Materials, and no
Credit Party has received any communication from or on behalf of any
governmental authority that any such condition exists.
(f) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which any Credit Party has knowledge in
relation to the current or prior business of any Credit Party or any property or
facility now or previously owned, leased or operated by any Credit Party which
has not been delivered to the Purchaser at least five days prior to the date
hereof.
(g) For purposes of this Section 3.7, the term "Credit Party" shall
include any business or business entity (including a corporation) which is, in
whole or in part, a predecessor of any Credit Party.
Section 3.8. Taxes. (a) Except as set forth on Schedule 3.8, all income
tax returns and all other material tax returns which are required to be filed by
or on behalf of any Credit Party have been filed and all taxes shown as due on
such returns have been paid or adequate reserves have been established on the
books of the applicable Credit Party. The charges, accruals and reserves on the
books of the applicable Credit Party and in respect of taxes or other
governmental charges have been established in accordance with GAAP.
(b) There is no tax, levy, impost, deduction, charge or withholding
imposed by any governmental instrumentality either (i) on or by virtue of the
execution, delivery, performance, enforcement or admissibility into evidence of
any Financing Document or (ii) on any payment to be made by the Company pursuant
to any Financing Document. The Company is permitted under applicable laws to pay
any additional amounts payable by it under Section 2.8.
27
Section 3.9. Subsidiaries. The only Subsidiaries of the Company are the
Xxxx Companies and the NPR Companies.
Section 3.10. Not an Investment Company. No Credit Party is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 3.11. Full Disclosure. The information heretofore furnished by
the Credit Parties to Purchaser for purposes of or in connection with the
Financing Documents or any transaction contemplated hereby does not, and all
such information hereafter furnished by the Credit Parties to Purchaser will not
(in each case taken together and on the date as of which such information is
furnished), contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they are made, not misleading. The
Credit Parties have disclosed to Purchaser any and all facts which materially
and adversely affect or may affect (to the extent the Company can now reasonably
foresee), the business, operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or the ability of the Company and its
Subsidiaries, taken as a whole, to perform the obligations under the Financing
Documents or to complete the Permanent Financing.
Section 3.12. Capitalization. At the date of the Initial Takedown and
after giving effect to the Acquisition, the capitalization of each Credit Party
will be as set forth on Schedule 3.12. All of the issued and outstanding shares
of capital stock of each Credit Party are validly issued, fully paid and
nonassessable and free and clear of any Lien or other right or claim and the
holders thereof are not entitled to any preemptive or other similar rights.
Other than as set forth on Schedule 3.12, there are no subscriptions, options,
warrants, rights, convertible securities, exchangeable securities or other
agreements or commitments of any character pursuant to which any Credit Party is
required to issue any shares of its capital stock.
Section 3.13. Solicitation, Access to Information. No form of general
solicitation or general advertising was used by any Credit Party or, to the best
of its knowledge, any other Person acting on behalf of any Credit Party, in
connection with the offer and sale of the Notes. Neither any Credit Party nor
any Person acting on behalf of any Credit Party has, either directly or
indirectly, sold or offered for sale to any Person any of the Notes or any other
similar security of any Credit Party except as contemplated by this Agreement,
and the Company
28
represents that neither it nor any Credit Party nor any person acting on its
behalf other than Purchaser and its Affiliates will sell or offer for sale to
any Person any such security to, or solicit any offers to buy any such security
from, or otherwise approach or negotiate in respect thereof with, any Person or
Persons so as thereby to bring the issuance or sale of any of the Notes within
the provisions of Section 5 of the Securities Act.
Section 3.14. Non-fungibility. When the Notes are issued and delivered
pursuant to this Agreement, the Notes will not be of the same class (within the
meaning of Rule 144A under the Securities Act) as securities which are (i)
listed on a national securities exchange registered under Section 6 of the
Exchange Act or (ii) quoted in a U.S. automated inter-dealer quotation system.
Section 3.15. Permits. Except to the extent any of the following would
not result in a Material Adverse Effect: (a) each Credit Party has all Permits
as are necessary for the conduct of their respective businesses as it has been
carried on; (b) all such Permits are in full force and effect, and each Credit
Party has fulfilled and performed all material obligations with respect to such
Permits; (c) no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination by the issuer thereof or which
results in any other impairment of the rights of the holder of any such Permit;
and (d) each Credit Party has no reason to believe that any governmental body or
agency is considering limiting, suspending or revoking any such Permit.
Section 3.16. Representations in Other Financing Documents and in
Material Acquisition Documents. (a) Each of the representations and warranties
of the Credit Parties set forth in any of the Financing Documents is true and
correct in all material respects.
(b) Each of the representations and warranties of the Credit Parties
set forth in any of the Material Acquisition Documents is true and correct in
all material respects.
Section 3.17. Compliance with ERISA. Except as set forth on Schedule
3.17, each member of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue Code with respect to
each Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code with respect to
each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Internal Revenue Code in
29
respect of any Plan, (ii) failed to make any contribution or payment to any Plan
or Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security under
ERISA or the Internal Revenue Code or (iii) incurred any liability under Title
IV or ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.
Section 3.18. Labor Matters. Except as set forth on Schedule 3.18, (x)
there are no collective bargaining agreements or Multiemployer Plans covering
the employees of any Credit Party and (y) none of such Persons has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the
last five years and none of the foregoing is now threatened or imminent.
Section 3.19. Leases. Except as disclosed on Schedule 3.19 hereto, no
Credit Party is a party to any lease.
Section 3.20. Absence of Any Undisclosed Liabilities or Capital Calls.
There are no liabilities of any Credit Party of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than (i) those
liabilities provided for in the financial statements delivered pursuant to
Section 3.5 hereof, (ii) the liabilities set forth in Schedule 3.20 and (iii)
other undisclosed liabilities which, individually or in the aggregate, are not
material to any Credit Party.
Section 3.21. Governmental Regulation. No Credit Party is, or will be
upon the issuance and sale of the Notes and the use of the proceeds described
herein, subject to regulation under the Public Utility Holding Company Act of
1935 or the Federal Power Act (each, as amended) or to any federal or state
statute or regulation in a manner which would limit its ability to issue the
Notes and perform its obligations under any Financing Document.
Section 3.22. Solvency. On the date of the Closing and after giving
effect to the transactions under the Stock Purchase Agreement, each Credit Party
will be Solvent.
Section 3.23. Company Business. The Company conducts no business other
than the direct or indirect ownership of 100% of the capital stock of the Xxxx
Companies and the NPR Companies and has no assets or liabilities
30
other than those reflected in the financial statements delivered pursuant to
this Agreement. At any time after Closing, the Company will conduct no business
other than that expressly permitted hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1. Purchase for Investment; Authority; Binding Agreement.
Purchaser represents and warrants to the Company that:
(a) Purchaser is an Accredited Investor within the meaning of Rule
501(a) under the Securities Act and the Notes to be acquired by it pursuant to
this Agreement are being acquired for its own account and Purchaser will not
offer, sell, transfer, pledge, hypothecate or otherwise dispose of the Notes
unless pursuant to a transaction either registered under, or exempt from
registration under, the Securities Act;
(b) the execution, delivery and performance of this Agreement and the
purchase of the Notes pursuant hereto are within Purchaser's corporate powers
and have been duly and validly authorized by all requisite corporate action;
(c) this Agreement has been duly executed and delivered by Purchaser;
(d) this Agreement constitutes a valid and binding agreement of
Purchaser enforceable in accordance with its terms; and
(e) Purchaser has such knowledge and experience in financial and
business matters so as to be capable or evaluating the merits and risks of its
investment in the Notes and Purchaser is capable of bearing the economic risks
of such investment.
31
ARTICLE V
CONDITIONS PRECEDENT TO PURCHASE
Section 5.1. Conditions to Purchaser's Obligation at Initial Takedown.
The obligation of Purchaser to purchase the Notes to be issued and sold at the
Initial Takedown hereunder is subject to the satisfaction of the following
conditions contemporaneously with such Takedown:
(a) (i) Each of the conditions to the parties' obligations under the
Material Acquisition Documents shall have been satisfied or, with the prior
written consent of Purchaser, waived, (ii) the Acquisition shall have been
completed on the terms set forth in the Material Acquisition Documents (as such
terms may have been amended or waived with the consent of Purchaser) and (iii)
the aggregate amount of funds required by the Company with respect to the
Acquisition (including without limitation for the payment of fees, commissions
and expenses) shall not exceed $125,000,000;
(b) Each of the Material Acquisition Documents, the Financing Documents
and the Company Corporate Documents shall be in full force and effect and no
term or condition thereof shall have been amended, waived or otherwise modified
without the prior written consent of Purchaser;
(c) Purchaser shall have received the financial statements referred to
in Section 3.5 hereof;
(d) Purchaser shall have received evidence satisfactory to it that all
governmental, shareholder and third party consents and approvals necessary in
connection with the Acquisition and the other transactions contemplated by the
Financing Documents and by the Material Acquisition Documents (including without
limitation any Xxxx-Xxxxx-Xxxxxx filings) have been received and all applicable
waiting periods shall have expired without any action being taken by any
competent authority that could restrain, prevent or impose any materially
adverse conditions on the Acquisition or such other transactions or that could
seek or threaten any of the foregoing, and no law or regulation shall be
applicable which in the judgment of Purchaser could have any such effect;
(e) No Credit Party shall have indebtedness for borrowed money other
than (i) the Notes and (ii) as listed on Schedule 5. 1 (e), all of which such
indebtedness for borrowed money will contain terms and conditions satisfactory
in
32
all respects to Purchaser. No Credit Party shall have preferred stock issued and
outstanding;
(f) Purchaser shall have completed and be satisfied in all respects
with its business, financial, tax, legal and environmental due diligence
investigations;
(g) The corporate, tax, capital and ownership structure (including
articles of incorporation and by-laws), shareholders agreements and management
of the Credit Parties before and after the Acquisition shall, except as
contemplated by the Acquisition, be consistent with that previously disclosed to
Purchaser, and shall not have been modified other than without the prior written
consent of Purchaser;
(h) Absence of any material adverse change in the business, condition
(financial or otherwise), operations, performance, properties, prospects or
projections of the Xxxx Companies, the NPR Companies and their subsidiaries, in
each case taken as a whole, since the end of the most recently ended fiscal year
for which audited financial statements have been provided to Purchaser or in the
facts and information as represented to date;
(i) Except as set forth on Schedule 3.6, there shall exist no pending
or threatened material litigation, proceedings or investigations which (x) would
contest the consummation of the Acquisition or (y) could reasonably be expected
to have a material adverse effect on the business, assets, debt service
capacity, liabilities (including environmental liabilities), financial
condition, operations, prospects or projections of any Credit Party;
j) Purchaser shall have received satisfactory opinions of counsel to
the Company as to the transactions contemplated hereby (including without
limitation the tax aspects thereof and compliance with all applicable securities
laws), and such corporate resolutions, certificates and other documents as
Purchaser shall reasonably request;
(k) Absence of any Event of Default or event that, with notice and/or
the passage of time, could become an Event of Default and accuracy of all
representations and warranties in all material respects;
33
(l) Absence of any disruption or adverse change in the financial or
capital markets generally which could reasonably be expected to materially
adversely affect the purchase of the Notes or the refinancings thereof;
(m) Purchaser shall have received necessary consent from lenders to the
Credit Parties, if any, concerning the anticipated terms and conditions of the
Notes, and the Permanent Financing including the application of the proceeds
from any such financing;
(n) The Engagement Letter shall have been executed;
(o) Purchaser shall have received a solvency certificate substantially
in the form of Exhibit B hereto executed by the Chief Financial Officer of the
Company dated as of the Closing;
(p) Purchaser shall have received a Subsidiary Guaranty in the form of
Exhibit C executed by each Credit Party other than the Company; and
(q) All fees and expenses payable to Purchaser or DLJSC hereunder,
under the Engagement Letter or otherwise in connection with the transactions
contemplated hereby, shall have been paid in full.
Section 5.2. Conditions to Purchaser's Obligations on Each Takedown.
The obligation of Purchaser to purchase the Notes to be issued and sold by the
Company hereunder is subject to the satisfaction of the following conditions
contemporaneously with each Takedown (exclusive of the $25M Takedown, the
proceeds of which are to be used to repay the Subordinated Notes):
(a) There shall have occurred no material adverse change in the assets,
business, financial position, results of operations or prospects of the Company
and its Subsidiaries, taken as a whole, since June 30, 1997 or in the facts and
information as represented to Purchaser through November 20, 1997 with respect
thereto.
(b) There shall not have occurred any disruption or adverse change in
the financial or capital markets generally which could reasonably be expected to
materially adversely affect the purchase of the Notes or the refinancing
thereof.
34
(c) The representations and warranties of the Credit Parties contained
in the Financing Documents shall be true and correct in all material respects on
and as of such Takedown as if made on and as of such time and each of the Credit
Parties shall have performed and complied with all covenants and agreements
required by the Financing Documents to be performed by it or complied with by it
at or prior to such Takedown.
(d) There shall not exist any Default.
(e) Purchaser shall have received the Notes to be issued at such
Takedown, duly executed by the Company in the denominations and registered in
the names specified in or pursuant to Section 2.2.
(f) Purchaser shall have received payment of all fees and expenses
payable to or for the account of Purchaser hereunder at or prior to such time.
ARTICLE VI
COVENANTS
The Company agrees (and agrees that it shall cause each Credit Party to
agree) that, from and after the date of the Initial Takedown and so long as the
Commitment remains in effect or any Notes remain outstanding and unpaid or any
other amount is owning to Purchaser or the Holders, and for the benefit of
Purchaser and the Holders:
Section 6. 1. Information. The Company will deliver to Purchaser:
(a) as soon as available and in any event within 120 days after the end
of each fiscal year of the Company, a consolidated balance sheet of the Company
and its Consolidated Subsidiaries as of the end of such fiscal year and the
related statements of income and cash flows and stockholders' equity (deficit)
for such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on in a manner acceptable to the
Commission by the Company or other independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Company, a
35
consolidated balance sheet of the Company and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
cash flows and stockholders' equity (deficit) for each quarter and for the
portion of the fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter and the
corresponding portion of the previous fiscal year, all certified (subject to
footnote presentation and normal year-end adjustments) as to fairness of
presentation, GAAP and consistency by the chief financial officer or the chief
accounting officer of the Company;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer of the Company (i) setting
forth in reasonable detail the calculations required to establish whether the
Company was in compliance with the requirements of Sections 6.8 through 6.11,
inclusive, on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Company or any of the
Credit Parties are taking or propose to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) within five days after any officer of any Credit Party obtains
knowledge of a Default or a default under the Subordinated Notes, a certificate
of the chief financial officer or the chief accounting officer of such Credit
Party setting forth the details thereof and the action which such Credit Party
is taking or proposes to take with respect thereto;
(f) promptly upon the filing thereof, copies of all applications,
registration statements or reports which any Credit Party shall have filed with
the Commission or any other national stock exchange;
(g) promptly upon the mailing thereof to the shareholders of any Credit
Party generally, copies of all financial statements, reports and proxy
statements so mailed;
36
(h) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer of
the relevant Credit Party setting forth details as to such occurrence and
action, if any, which the relevant Credit Party or applicable member of the
ERISA Group is required or proposes to take;
(i) promptly following the commencement thereof, notice and a
description in reasonable detail of any litigation or proceeding to which any
Credit Party is a party in which the amount involved is $1,000,000 or more;
(j) promptly following the occurrence thereof, notice and a description
in reasonable detail of any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole;
(k) as soon as available and in any event within 45 days after the date
of the Initial Takedown, a combined pro forma balance sheet of the Company and
its Subsidiaries, dated as of September 30, 1997, prepared by management in
conformity with GAAP, adjusted to give effect to (i) the transactions
contemplated by the Material Acquisition Documents, (ii) the purchase of the
Notes purchased
37
on the date of the Initial Takedown and (iii) the payment of all legal,
accounting and other fees related thereto; and
(l) from time to time such additional information regarding the
financial position or business of any Credit Party, as Purchaser may reasonably
request.
Section 6.2. Payments of Obligations. The Company will pay and
discharge, and will cause each Credit Party to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Credit Party to maintain, in accordance with GAAP, appropriate reserves for the
accrual of any of the same.
Section 6.3. Insurance. The Company shall, and shall cause each Credit
Party to, keep its insurable properties adequately insured at all times by
financially sound and reputable insurers, maintain such other insurance, to such
extent and against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses operating in the same or similar locations, including (i) public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about, in connection with the use of any properties
owned, occupied or controlled by it and (ii) business interruption insurance and
such other insurance as may be required by law.
Section 6.4. Conduct of Business and Maintenance of Existence. The
Company will continue, and will cause each Credit Party to continue, to engage
in business of the same general type as now conducted, and will preserve, renew
and keep in full force and effect, and will cause each Subsidiary to preserve,
renew and keep in full force and effect their respective corporate existence and
their respective rights, privileges and franchises necessary or desirable in the
normal conduct of business, except that a Credit Party may discontinue any
immaterial line of business if the Board of Directors of such Credit Party
determines that such discontinuation is in the best interest of the Company and
its Subsidiaries, taken as a whole, and could not cause a Material Adverse
Effect.
Section 6.5. Compliance with Laws. The Company will comply, and cause
each Credit Party to comply, in all respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including,
38
without limitations, Environmental Laws and ERISA and the rules and regulations
thereunder) except where the failure to so comply could not cause a Material
Adverse Effect.
Section 6.6. Inspection of Property, Books and Records. The Company
will keep, and will cause each Credit Party to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities, and will permit,
and will cause each Subsidiary to permit representatives of Purchaser, at the
expense of the Purchaser, to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective executive officers and independent public accountants at such
reasonable times and as often as may reasonably be desired.
Section 6.7. Investment Company Act. No Credit Party is or will become
an open-end investment trust, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act of 1940, as amended.
Section 6.8. Limitation on Debt. No Credit Party will create, incur,
assume or suffer to exist any Debt, except:
(a) Debt evidenced by the Notes;
(b) the Debt described on Schedule 5.1(e) including refinancings
thereof at or within 30 days of the final maturity;
(c) other Debt incurred after the date hereof, in an aggregate
principal amount not to exceed $11,000,000;
(d) Debt evidenced by the Subordinated Notes; and
(e) other Debt the terms and conditions of which shall have been
approved by the Majority Holders and the Net Cash Proceeds of which are applied
in accordance with Sections 2.4 and 2.7.
Section 6.9. Restricted Payments; Voluntary Prepayments. (a) No Credit
Party will (i) declare or make any Restricted Payment or (ii) make any capital
expenditures not contained on Schedule 6.9; provided, however, that a
39
Credit Party may, with respect to each tax year that a Credit Party qualifies as
an S Corporation under the Internal Revenue Code, or any similar provision of
state or local law, make distributions of Tax Amounts (as defined below). Prior
to any distribution of Tax Amounts a knowledgeable and duly authorized officer
of the Credit Party making such distribution certifies, and counsel reasonably
acceptable to the Purchaser opines, that such Credit Party qualifies as an
S Corporation for Federal income tax purposes and for the states in respect of
which such distributions are being made and that at the time of such
distributions, the most recent audited financial statements of the Company
covering such Credit Party provide that such Credit Party was treated as an
S Corporation for Federal income tax purposes for the period of such financial
statements.
"Tax Amounts" with respect to any year means (a) an amount equal to the
higher of (i) the product of (A) the taxable income of the relevant Credit Party
for such year as determined in good faith by its Board of Directors; and (B) the
Tax Percentage (as defined below), and (ii) the product of (A) the alternative
minimum taxable income attributable to such Credit Party for such year as
determined in good faith by its Board of Directors; and (B) the Tax Percentage,
in either case, reduced by (b) to the extent not previously taken into account,
any income tax benefit attributable to such Credit Party solely as a result of
its investment in the Credit Parties (including without limitation, tax losses,
alternative minimum tax credits, other tax credits and carryforwards and
carrybacks thereof to the extent such benefit is realized in the year for which
the Tax Amount is being determined); provided, however, that in no event shall
such Tax Percentage exceed the greater of (1) the highest aggregate applicable
statutory marginal rate of Federal, state and local income tax (or, when
applicable, alternative minimum tax), to which a corporation doing business in
New York City would be subject in the relevant year of determination (as
certified to Purchaser by a nationally recognized tax accounting firm); and (2)
50%. Any part of the Tax Amount not distributed in respect of a tax period for
which it is calculated shall be available for distribution in subsequent tax
periods. The term "Tax Percentage" is the highest aggregate applicable statutory
marginal rate of Federal, state and local income tax or, when applicable,
alternative minimum tax, to which an individual shareholder of the Credit Party
could be subject in the relevant year of determination (calculated in good faith
by the Credit Party and certified to the Purchaser by a nationally recognized
tax accounting firm). Distributions of Tax Amounts may be made from time to time
with respect to a tax year based on reasonable estimates, with a reconciliation
within 40 days of the earlier of (i) the Credit Party's filing of the Internal
Revenue Service Form 1120S for the applicable taxable year; and (ii) the last
date such form is required to be filed (without regard
40
to any extensions). The stockholders of each Credit Party will enter into a
binding agreement with each Credit Party to reimburse the applicable Credit
Party for certain positive differences between the distributed amount and the
Tax Amount, which difference must be paid at the time of such reconciliation.
(b) No Credit Party will directly or indirectly, optionally redeem,
retire, purchase, acquire, defease or otherwise make any payment other than
required interest payments in respect of any Debt other than (i) the Notes or
the Subordinated Notes, (ii) existing Debt described on Schedule 5.1(e) and
(iii) payments in respect of Debt owing to any other Credit Party.
Section 6.10. Investments. The Company will not, nor will it permit any
Credit Party to, make or acquire any Investment in any Person other than (i)
Investments in direct or indirect wholly-owned Subsidiaries and (ii) Investments
in Cash Equivalents.
Section 6.11. Negative Pledge. No Credit Party will create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except:
(a) existing Liens listed on Schedule 6.11;
(b) (i) inchoate mechanics, workmen's and carriers' liens for charges
not delinquent, incident to current construction, (ii) mechanics,
warehousemen's, unpaid vendors' and carriers' liens incident to such
construction, (iii) statutory and common law Liens of landlords under leases to
which any Credit Party is party and (iv) Liens of carriers, warehousemen,
mechanics and materialmen or other similar statutory Liens, in each case
incurred in the ordinary course of business for sums the payment of which is not
delinquent or which are the subject of good faith proceedings by any Credit
Party;
(c) Liens incurred on deposits made in the ordinary course of business
in connection with workers' compensation, performance bonds, unemployment
insurance and other types of social security, other than any Lien imposed by or
under ERISA;
(d) Liens for taxes not yet due;
(e) easements, rights of way, permits, licenses, zoning ordinances,
covenants, restrictions, defects, minor irregularities of title and other
similar Liens
41
on property which in the case of any particular parcel of real property do not
materially detract from the value or utilization of such real property;
(f) Liens incurred in connection with Debt permitted pursuant to
Section 6.8(c); and
(g) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any obligation in an amount exceeding
$100,000 and (iii) do not in the aggregate materially detract from the value of
the assets of the Company and its Subsidiaries, taken as a whole, or materially
impair the use thereof in the operation of its business.
Section 6.12. Transactions with Affiliates. The Company will not, nor
will it permit any Credit Party to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate, except (a) on terms no less favorable than terms that could be
obtained from a Person that is not an Affiliate, as determined in good faith by
the Board of Directors of the relevant Credit Party; provided that no
determination of the Board of Directors shall be required with respect to any
such transactions entered into (i) in the ordinary course of business, (ii) if
such transaction, together with all related transactions, does not involve
property, funds, investments or services with a fair market value in excess of
$100,000 or (iii) in connection with the execution or performance of the
Company's obligations under the Engagement Letter; and (b) transactions with
Affiliates in effect on the date hereof and set forth on Schedule 6.12 hereof.
Section 6.13. Consolidations, Mergers and Sales of Assets; Ownership of
Subsidiaries. (a) No Credit Party will consolidate or merge with or into any
other Person unless the surviving entity is a Credit Party. No Credit Party will
sell, lease or otherwise transfer, directly or indirectly, any substantial part
of the assets of any Credit Party to any other Person which is not a Credit
Party.
(b) Each Credit Party will at all times continue to own, directly or
indirectly, 100% of the capital stock of each Person which is currently, or
hereafter becomes a Subsidiary of such Credit Party. No new Subsidiaries will be
created after the Closing unless the same execute and deliver the Subsidiary
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Guaranty and any other documents Purchaser reasonably requests in connection
therewith.
Section 6.14. Use of Proceeds. The proceeds from the issuance and sale
of the Notes by the Company pursuant to this Agreement at the Initial Takedown
shall be used to finance in part the consummation of the Acquisition. The
proceeds from the issuance and sale of the Notes by the Company pursuant to this
Agreement at any Takedown (other than the Initial Takedown) shall be used
for general corporate purposes.
Section 6.15. Restrictions on Certain Amendments. No Credit Party will
amend or waive, or suffer to be amended or waived, any Company Corporate
Document or any Material Acquisition Document from the respective forms thereof
delivered to Purchasers pursuant to Section 5.1 without the prior written
consent of Purchaser.
Section 6.16. Permanent Financing. (a) The Company will, and will cause
each Credit Party to, take all the actions which, in the reasonable judgment of
DLJSC, are necessary or desirable to obtain Permanent Financing as soon as
practicable through issuance of securities at such interest rates and other
terms as are, in the reasonable opinion of DLJSC, prevailing for new issues of
securities of comparable size and credit rating in the capital markets at the
time such Permanent Financing is consummated and obtained in comparable
transactions made on an arm's length basis between unaffiliated parties. The
amount to be financed shall be in an amount at least sufficient to repay or
redeem the Notes in full in accordance with their terms. The Company hereby
covenants and agrees that the proceeds from the Permanent Financing shall be
used to the extent required to redeem in full the Notes in accordance with their
terms.
(b) The Company covenants that it will, and will cause each Credit
Party to, enter into such agreements as in the judgment of DLJSC are customary
in connection with the Permanent Financing, make such filings under the
Securities Act, the Exchange Act, the Trust Indenture Act of 1939, as amended,
and state securities laws as in the reasonable judgment of DLJSC shall be
required to permit consummation of the Permanent Financing and take such steps
as in the judgment of DLJSC are necessary or desirable to cause such filings to
become effective or in the judgment of DLJSC are otherwise required to
consummate the Permanent Financing.
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Section 6.17. Business Activities. The Company will not, and it will
not permit any Credit Party to, enter into any business, either directly or
through any Subsidiary or joint venture, except for those businesses of the same
type as or related to those in which the Credit Parties are engaged on the date
of this Agreement.
Section 6.18. Tax Consolidation. The Company will not consent to or
permit the filing of or be a party to any consolidated income tax return on
behalf of itself or any of its Subsidiaries with any Person (other than a
consolidated return of the Company and its own Subsidiaries).
Section 6.19. Maintenance of Corporate Separateness. The Company will,
and will cause each of its Subsidiaries to, satisfy customary corporate
formalities, including the holding of regular board of directors' and
shareholders' meetings or action by directors or shareholders without a meeting
and the maintenance of corporate offices and records. Other than pursuant to any
Subsidiary Guaranty entered into pursuant to this Agreement, neither the Company
nor any of its Subsidiaries shall make any payment to a creditor of any other
Subsidiary in respect of any liability of any such Subsidiary. Any financial
statements distributed to any creditors of any Subsidiary shall clearly
establish or indicate the corporate separateness of such Subsidiary from the
Company and its other Subsidiaries. Neither the Company nor any of its
Subsidiaries shall take any action, or conduct its affairs in a manner, which is
likely to result in the corporate existence of the Company or any of its
Subsidiaries being ignored, or in the assets and liabilities of the Company or
any of its Subsidiaries being substantively consolidated with those of any other
such Person in a bankruptcy, reorganization or other insolvency proceeding.
Section 6.20. Packer Avenue Proceeding. Each of Xxxx Cargo and Xxxx
Hauling & Warehousing System, Inc. shall cause all Packer Avenue Proceeds to be
payable directly solely to them and not to Astro Holding, Inc.
Section 6.21. Financial Statements. The Company shall deliver audited
financial statements covering the items in Section 3.05(a) no later than fifteen
(15) Business Days after the date of Closing.
Section 6.22. Subordinated Notes. Neither the Company nor any Credit
Party shall amend or consent to any amendment of the Subordinated Notes.
44
Section 6.23. Use of MBC Leasing Proceeds. To the extent there are
additional borrowings made after the date of Closing under the financing with
MBC Leasing, Inc., the proceeds thereof will be used to pay the indebtedness of
the Credit Parties listed under items 11 thru 22 on Schedule 5.1(e) in such
order as the Credit Parties shall determine.
Section 6.24. Deloitte & Touche Financials. No Credit Party shall
request the Deloitte & Touche Financials or send the same to Purchaser.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. Events of Default Defined; Acceleration of Maturity;
Waiver of Default. In case one or more of the following (each, an "Event of
Default"), whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation or any
administrative or governmental body, shall have occurred and be continuing:
(a) default in the payment of all or any part of the principal or
premium, if any, on any of the Notes as and when the same shall become due and
payable either at maturity, upon any redemption, by declaration or otherwise; or
(b) default in the payment of any installment of interest upon any of
the Notes or any fees payable under this Agreement as and when the same shall
become due and payable, and continuance of such default for a period of 5 days;
or
(c) failure on the part of the Company duly to observe or perform any
of the covenants contained in Sections 6.4 and 6.7 through 6.17 of the
Agreement; or
(d) failure on the part of any Credit Party duly to observe or perform
any other of the covenants or agreements contained in the Financing Documents,
if such failure shall continue for a period of 30 days after the date on which
written notice thereof shall have been given to the Company at the option of and
by a holder of a Note; or
45
(e) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect in any jurisdiction or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(f) an involuntary case or other proceeding shall be commenced against
any Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for relief shall
be entered against any Credit Party under the bankruptcy laws as now or
hereafter in effect in any jurisdiction; or
(g) there shall be a default in respect of any Debt of any Credit Party
in an aggregate principal amount in excess of $1,000,000 whether such Debt now
exists or shall hereafter be created (excluding the Notes but including Debt
owing to any Credit Party) if such default results in acceleration of the
maturity of such Debt or enables the holder of such Debt to accelerate the
maturity thereof, or any Credit Party shall fail to pay at maturity any such
Debt whether such debt now exists or shall hereafter be created; or
(h) final judgments for the payment of money which in the aggregate at
any one time exceed $1,000,000 shall be rendered against any Credit Party by a
court of competent jurisdiction and shall remain undischarged for a period
(during which execution shall not be effectively stayed) of 60 days after such
judgment becomes final; or
(i) any representation, warranty, certification or statement made or
deemed made by any Credit Party in any Financing Document or which is contained
in any certificate, document or financial or other statement furnished at any
time under or in connection with any Financing Document shall prove to have been
untrue in any material respect when made or deemed made; or
46
(j) any member of the ERISA Group has failed to pay when due an amount
or amounts aggregating in excess of $100,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
has been filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC has
instituted proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition has
existed by reason of which the PBGC is entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there has occurred a complete or
partial withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment obligation in
excess of $100,000; or
(k) a breach under the Engagement Letter has occurred; or
(1) a Change of Control has occurred;
then, and in each and every such case (other than under clauses (e) and (f) with
respect to any Credit Party), unless the principal of all the Notes shall have
already become due and payable, the Majority Holders (or, if at such time
Purchaser together with its Affiliates no longer holds at least 50% of the
aggregate outstanding principal amount of the Notes, Holders of at least 33 1/3%
of the aggregate outstanding principal amount of the Notes), by notice in
writing to the Company, may declare the entire principal amount of the Notes
together with accrued interest thereon to be, and upon the Company's receipt of
such notice the entire principal amount of the Notes together with accrued
interest thereon shall become, immediately due and payable. If an Event of
Default specified in clauses (e) or (f) with respect to any Credit Party occurs,
the principal of and accrued interest on the Notes will be immediately due and
payable without any declaration or other act on the part of the Holders. If an
Event of Default shall occur and for as long as such Event of Default shall be
continuing, the Purchaser shall have the right to appoint one representative to
sit on the Board of Directors of the Company provided, however, that such right
shall terminate if the Purchaser together with its Affiliates no longer retain
at least 50% of the outstanding Notes.
47
ARTICLE VIII
LIMITATION ON TRANSFERS
Section 8.1. Restrictions on Transfer. From and after the date of the
Initial Takedown and their respective dates of issuance, as the case may be,
none of the Notes shall be transferable except upon the conditions specified in
Sections 8.2 and 8.3, which conditions are intended to ensure compliance with
the provisions of the Securities Act in respect of the Transfer of any of such
Notes or any interest therein. Purchaser will cause any proposed transferee of
any Notes (or any interest therein) held by it to agree to take and hold such
Notes (or any interest therein) subject to the provisions and upon the
conditions specified in this Section 8.1 and in Sections 8.2 and 8.3.
Section 8.2. Restrictive Legends. (a) Each Note issued to Purchaser or
to a subsequent transferee shall (unless otherwise permitted by the provisions
of Section 8.2(b) or Section 8.3) include a legend in substantially the
following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR
SOLD, UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE
AND THEN ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH
IN THE SECURITIES PURCHASE AGREEMENT DATED AS OF NOVEMBER 20,1997, A
COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER OF THIS SECURITY AT ITS
PRINCIPAL EXECUTIVE OFFICE.
(b) Any Holders of Notes registered pursuant to the Securities Act and
qualified under applicable state securities laws may exchange such Notes on
transfer for new securities that shall not bear the legend set forth in
paragraph (a) of this Section 8.2.
Section 8.3. Notice of Proposed Transfers. (a) Five Business Days prior
to any proposed Transfer (other than Transfers of Notes (i) registered under the
Securities Act, (ii) to an Affiliate of DLJSC or a general partnership in which
DLJSC or an Affiliate of DLJSC is one of the general partners or (iii) to be
made in reliance on Rule 144A under the Securities Act) of any Notes, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such Transfer, setting forth the manner and circumstances of the proposed
Transfer,
48
and shall be accompanied by (i) an opinion of counsel reasonably satisfactory to
the Company addressed to the Company to the effect that the proposed Transfer of
such Notes may be effected without registration under the Securities Act, (ii)
such representation letters in form and substance reasonably satisfactory to the
Company to ensure compliance with the provisions of the Securities Act and (iii)
such letters in form and substance reasonably satisfactory to the Company from
each such transferee stating such transferee's agreement to be bound by the
terms of this Agreement. Such proposed Transfer may be effected only if the
Company shall have received such notice of transfer, opinion of counsel,
representation letters and other letters referred to in the immediately
preceding sentence, whereupon the holder of such Notes shall be entitled to
Transfer such Notes in accordance with the terms of the notice delivered by the
holder. Each Note transferred as above provided shall bear the legend set forth
in Section 8.2(a) except that such Note shall not bear such legend if the
opinion of counsel referred to above is to the further effect that neither such
legend nor the restrictions on Transfer in Sections 8.1 through 8.3 are required
in order to ensure compliance with the provisions of the Securities Act.
Five Business Days prior to any proposed Transfer of any Notes to be
made in reliance on Rule 144A under the Securities Act ("Rule 144A"), the holder
thereof shall give written notice to the Company of such holder's intention to
effect such Transfer, setting forth the manner and circumstances of the proposed
Transfer and certifying that such Transfer will be made (i) in full compliance
with Rule 144A and (ii) to a transferee that (A) such holder reasonably believes
to be a "qualified institutional buyer" within the meaning of Rule 144A and (B)
is aware that such Transfer will be made in reliance on Rule 144A. Such proposed
Transfer may be effected only if the Company shall have received such notice of
transfer, whereupon the holder of such Notes shall be entitled to Transfer such
Notes in accordance with the terms of the notice delivered by the holder. Each
Note transferred as above provided shall bear the legend set forth in Section
8.2(a).
ARTICLE IX
MISCELLANEOUS
Section 9.1. Notice. All notices, demands and other communications to
any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address set forth on the
signature pages hereof, or such other address as such party may hereinafter
specify for the
49
purpose. Each such notice, demand or other communication shall be effective (i)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified on the signature page hereof, or (ii) if given by overnight courier,
addressed as aforesaid or by any other means, when delivered at the address
specified in this Section.
Section 9.2. No Waivers; Amendments. (a) No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise.
(b) Any provision of this Agreement may be amended, supplemented or
waived if, but only if, such agreement, supplement or waiver is in writing and
is signed by the Company and the Majority Holders; provided, that without the
consent of each Holder of any Note affected thereby, an amendment, supplement or
waiver may not (a) reduce the aggregate principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver, (b) reduce the rate or
extend the time for payment of interest on any Note, (c) reduce the principal
amount of or extend the stated maturity of any Note or alter the redemption
provisions with respect thereto or (d) make any Note payable in money or
property other than as stated in the Notes. In determining whether the Holders
of the requisite principal amount of Notes have concurred in any direction,
consent, or waiver as provided in this Agreement or in the Notes, Notes which
are owned by the Company or any other obligor on or guarantor of the Notes, or,
by any Person controlling, controlled by, or under common control with any of
the foregoing, shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; and provided further that no such amendment,
supplement or waiver which affects the rights of Purchaser and its Affiliates
otherwise than solely in their capacities as Holders of Notes shall be effective
with respect to them without their prior written consent.
Section 9.3. Indemnification. The Company (the "Indemnifying Party")
agrees to indemnify and hold harmless Purchasers, its Affiliates, and each
Person, if any, who controls Purchaser, or any of its affiliates, within the
meaning of the Securities Act or the Exchange Act (a "Controlling Person"), and
the respective partners, agents, employees, officers and directors of Purchaser,
its Affiliates and any such Controlling Person (each an "Indemnified Party" and
50
collectively, the "Indemnified Parties"), from and against any and all losses,
claims, damages, liabilities and expenses (including, without limitation and as
incurred, reasonable costs of investigating, preparing or defending any such
claim or action, whether or not such Indemnified Party is a party thereto,
arising out of, or in connection with any activities contemplated by this
Agreement or any of the services rendered in connection herewith, including, but
not limited to, losses, claims, damages, liabilities or expenses arising out of
or based upon any untrue statement or any alleged untrue statement of a material
fact or any omission or any alleged omission to state a material fact in any of
the disclosure or offering or confidential information documents (the
"Disclosure Documents") pertaining to any of the transactions or proposed
transactions contemplated herein, including any eventual refinancing or resale
of the Notes, provided that the Indemnifying Party will not be responsible for
any claims, liabilities, losses, damages or expenses that are determined by
final judgment of court of competent jurisdiction to result from such
Indemnified Party's gross negligence, willful misconduct or bad faith. The
Indemnifying Party also agrees that Purchaser shall have no liability (except
for breach of provisions of this Agreement) for claims, liabilities, damages,
losses or expenses, including legal fees, incurred by the Indemnifying Party in
connection with this Agreement unless they are determined by final judgment of a
court of competent jurisdiction to result from (a) Purchaser's gross negligence,
willful misconduct or bad faith, (b) Purchaser's use of Disclosure Documents not
approved by the Indemnifying Party or (c) the failure of Purchaser to furnish to
any purchaser of securities any Disclosure Document furnished to Purchaser by
the Indemnifying Party which corrected any untrue statement of a material fact
or omission to state a material fact contained in a Disclosure Document
previously furnished to such purchaser by Purchaser.
If any action shall be brought against an Indemnified Party with
respect to which indemnity may be sought against the Indemnifying Party under
this Agreement, such Indemnified Party shall promptly notify the Indemnifying
Party in writing and the Indemnifying Party shall, if requested by such
Indemnified Party or if the Indemnifying Party desires to do so, assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Party and payment of all reasonable fees and expenses. The
failure to so notify the Indemnifying Party shall not affect any obligations the
Indemnifying Party may have to such Indemnified Party under this Agreement or
otherwise unless the Indemnifying Party is materially adversely affected by such
failure. Such Indemnified Party shall have the right to employ separate counsel
in such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party, unless: (i)
the Indemnifying
51
Party has failed to assume the defense and employ counsel or (ii) the named
parties to any such action (including any impleaded parties) include such
Indemnified Party and the Indemnifying Party, and such Indemnified Party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party, in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action or proceeding on behalf of such
Indemnified Party, provided, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be responsible hereunder for
the reasonable fees and expenses of more than one such firm of separate counsel,
in addition to any local counsel, which counsel shall be designated by
Purchaser. The Indemnifying Party shall not be liable for any settlement of any
such action effected without the written consent of the Indemnifying Party
(which shall not be unreasonably withheld) and the Indemnifying Party agrees to
indemnify and hold harmless each Indemnified Party from and against any loss or
liability by reasons of settlement of any action effected with the consent of
the Indemnifying Party. In addition, the Indemnifying Party will not, without
the prior written consent of Purchaser, settle or compromise or consent to the
entry of any judgment in or otherwise seek to terminate any pending or
threatened action, claim, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not any Indemnified Party is
a party thereto) unless such settlement, compromise, consent, or termination
includes an express unconditional release of Purchaser and the other Indemnified
Parties, reasonably satisfactory in form and substance to Purchaser, from all
liability arising out of such action, claim, suit or proceeding.
If for any reason the foregoing indemnity is unavailable (otherwise
than pursuant to the express terms of such indemnity) to an Indemnified Party or
insufficient to hold an Indemnified Party harmless, then in lieu of indemnifying
the Indemnified Party, the Indemnifying Party shall contribute to the amount
paid or payable by such Indemnified Party as a result of such claims,
liabilities, losses, damages, or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying Party
on the one hand and by Purchaser on the other from the transactions contemplated
by this Agreement or (ii) if the allocation provided by clause (i) is not
permitted under applicable law, in such proportion as is appropriate to reflect
not only the relative benefits received by the Indemnifying Party on the one
hand and Purchaser on the other, but also the relative
52
fault of the Indemnifying Party and Purchaser as well as any other relevant
equitable considerations. Notwithstanding the provisions of this Section 9.3,
the aggregate contribution of all Indemnified Parties shall not exceed the
amount of fees actually received by Purchaser pursuant to this Agreement. It is
hereby further agreed that the relative benefits to the Indemnifying Party on
the one hand and the Purchaser on the other with respect to the transactions
contemplated hereby shall be determined by reference to, among other things,
whether any untrue or alleged untrue statements of material fact or the omission
or alleged omission to state a material fact related to information supplied by
the Indemnifying Party or by Purchaser and the party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
The indemnification, contribution and expense reimbursement obligations
set forth in this Section 9.3(i) shall be in addition to any liability the
Indemnifying Party may have to any Indemnified Party at common law or otherwise,
(ii) shall survive the termination of this Agreement and the payment in full of
the Notes and (iii) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of Purchaser or any other
Indemnified Party.
Section 9.4. Expenses. The Company agrees to pay all reasonable out-of-
pocket costs, expenses and other payments in connection with the purchase and
sale of the Notes as contemplated by this Agreement including without limitation
(i) fees and disbursements of special counsel and any local counsel for
Purchaser incurred in connection with the preparation of this Agreement, (ii)
all reasonable out-of-pocket expenses of Purchaser, including reasonable fees
and disbursements of counsel, in connection with any waiver or consent hereunder
or any amendment hereof or any Default or alleged Default hereunder and (iii) if
an Event of Default occurs, all reasonable out-of-pocket expenses incurred by
Purchaser and each holder of Notes, including reasonable fees and disbursements
of a single counsel (which counsel shall be selected by Purchaser if Purchaser
is a holder of Notes when such Event of Default occurs), in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
Section 9.5. Payment. The Company agrees that, so long as Purchaser
shall own any Notes purchased by it from the Company hereunder, the Company will
make payments to Purchaser of all amounts due thereon by wire
53
transfer by 1:00 PM (New York City time) on the date of payment to such account
as is specified beneath Purchaser's name on the signature page hereof or to such
other account or in such other similar manner as Purchaser may designate to the
Company in writing.
Section 9.6. Successors and Assigns. This Agreement shall be binding
upon and shall insure to the benefit of the Company and Purchaser and their
respective successors and assigns; provided that the Company may not assign or
otherwise transfer its rights or obligations under this Agreement to any other
Person without the prior written consent of the Majority Holders. All provisions
hereunder purporting to give rights to DLJSC and its Affiliates or to Holders
are for the express benefit of such Persons.
Section 9.7. Brokers. The Company represents and warrants that, except
for DLJSC, neither it nor any Credit Party has employed any broker, finder,
financial advisor or investment banker who might be entitled to any brokerage,
finder's or other fee or commission in connection with the Acquisition or the
sale of the Notes.
Section 9.8. New York Law; Submission to Jurisdiction; Waiver of Jury
Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.9. Severability. If any term, provision, covenant or
restriction of the Agreement is held by a court of competent jurisdiction to be
54
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 9.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original with the same effect
as if the signatures thereto and hereto were upon the same instrument.
55
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
THE XXXX GROUP, INC.
By /s/ Xxxxxx X. Xxxx, Xx.
----------------------------
Name: Xxxxxx X. Xxxx, Xx.
Title: President
Address:
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx, Xx.
Fax No.: (000) 000-0000
HS FUNDING, INC.
By: /s/ Xxxx Xxxxxxxx III
-----------------------------
Name: Xxxx Xxxxxxxx III
Title: Director and President
Address:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx III
Fax No.: (000) 000-0000
Account Number and Bank for Payments:
Account Name: DLJ Securities Corp.
Citibank
ABA Number: 021 000 089
Account Number: 3889-6041
For Further Credit to: HS Funding, Inc.
Account Number: 275-003457
Attn: Xxxx Xxxxx
EXHIBIT A
FORM OF
NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD, UNLESS IT
HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN ONLY IN COMPLIANCE
WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER __, 1997, A COPY OF WHICH MAY BE OBTAINED FROM THE XXXX
GROUP, INC. AT ITS PRINCIPAL EXECUTIVE OFFICE.
No.____________ $____________
THE XXXX GROUP, INC.
Senior Unsecured Increasing Rate Note
THE XXXX GROUP, INC. (the "Company"), for value received hereby
promises to pay to HS FUNDING, INC., a Delaware corporation (the "Holder"), the
principal sum of [Amount in words] dollars ($[Amount in numbers]), in lawful
money of the United States of America and in immediately available funds, on
December 31, 1998 and to pay interest on the unpaid principal amount, in like
money and funds, for the period commencing on the date of this Note until
payment in full of the principal sum hereof has been made, at the rates per
annum and on the dates provided in the Agreement (as defined below).
This Senior Unsecured Increasing Rate Note is one of a duly authorized
issue of Senior Unsecured Increasing Rate Notes of the Company (the "Notes")
referred to in the Securities Purchase Agreement dated as of November __, 1997
between the Company and HS Funding, Inc. (as the same may be amended, restated
or otherwise modified from time to time in accordance with its
A-1
terms, the "Agreement"). Capitalized terms used in this Note have the respective
meanings assigned to them in the Agreement.
The Notes are transferable and assignable to one or more purchasers in
accordance with the limitations set forth in the Agreement. The Company agrees
to issue from time to time replacement Notes in the form hereof to facilitate
such transfers and assignments.
The Company shall keep at its principal office a register (the
"Register") in which shall be entered the names and addresses of the registered
holders of the Notes and particulars of the respective Notes held by them and of
all transfers of such Notes. References to the "Holder" or "Holders" shall mean
the Person listed in the Register as the payee of any Note. The ownership of the
Notes shall be proven by the Register.
Upon the occurrence of an Event of Default, the principal hereof and
accrued interest hereon shall become, or may be declared to be, forthwith due
and payable in the manner, upon the conditions and with the effect provided in
the Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW). THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:__________, 199_
THE XXXX GROUP, INC.
By:_________________________
Name:
Title:
A-2
EXHIBIT B
FORM OF
SOLVENCY CERTIFICATE
This Solvency Certificate (this "Certificate") is delivered to HS
Funding, Inc. (the "Purchaser") pursuant to Section 5.1(p) of the Securities
Purchase Agreement dated as of November _, 1997 (the "Agreement") between The
Xxxx Group, Inc. and the Purchaser. Capitalized terms used herein without
definition have the meanings provided in the Agreement.
I hereby certify to the Purchaser, in good faith and to the best of my
knowledge and belief, as follows:
1. I am the duly qualified and acting Chief Financial Officer of each
Credit Party and have been employed in positions involving responsibility for
the management of the financial affairs and the preparation of financial
statements of each Credit Party. I have, together with other officers of each
Credit Party, acted on behalf of each Credit Party in connection with the
transactions contemplated by the Agreement, the other Financing Documents and
the Material Acquisition Documents.
2. 1 have carefully reviewed the contents of this Certificate and have
conferred with legal counsel for each Credit Party for the purpose of discussing
the meaning of its contents.
3. In connection with preparing for the transactions contemplated by
the Agreement, the other Financing Documents and the Material Acquisition
Documents, I have assisted in the preparation of and I have reviewed the pro
forma combined balance sheet of the Company and its Subsidiaries as of September
30, 1997, delivered pursuant to Section 5.1(c) of the Agreement (the "Pro Forma
Balance Sheet"), a copy of which is attached hereto as Annex I. The Pro Forma
Balance Sheet was prepared on the basis of the historical financial statements
delivered pursuant to Section 3.5 of the Agreement.
4. In connection with the issuance of this Certificate and the
preparation of the Pro Forma Balance Sheet, I have assisted in the preparation
of and have reviewed the historical financial statements described in Section
3.5 of
B-1
the Agreement. I have no reason to believe that the Pro Forma Balance Sheet is
not a fair and reasonable presentation as of the date hereof of the consolidated
pro forma financial condition of the Company and its Subsidiaries, after giving
effect to the consummation of the transactions contemplated by the Agreement,
the other Financing Documents and the Material Acquisition Documents.
Based upon the foregoing, I have concluded, in good faith and to the
best of my knowledge and belief, that as of the date hereof and after giving
effect to the transactions contemplated by the Agreement, the other Financing
Documents and the Material Acquisition Documents:
(a) The fair saleable value (as defined below) of each Credit
Party's assets exceeds the total amount of liabilities (including
contingent (including full utilization of the Commitment under the
Agreement), subordinated, unmatured and unliquidated liabilities, in
each case valued at the probable liability of each such Credit Party
with respect thereto) of each Credit Party as they become absolute and
mature and, therefore, each Credit Party is not "insolvent".
(b) The present fair saleable value of the assets of each Credit
Party is not less than the amount that will be required to pay its
probable liabilities as they become absolute and matured.
(c) Each Credit Party will be able to realize upon its assets and
will have sufficient cash flow from operations to enable it to pay its
debts, other liabilities and contingent obligations as they mature in
the ordinary course of its business.
(d) Each Credit Party does not have unreasonably small capital
with which to engage in its anticipated businesses. In reaching this
conclusion, I understand that "unreasonably small capital" depends upon
the nature of the particular business or businesses conducted or to be
conducted, and I have reached my conclusion based on the needs and
anticipated needs for capital of the business conducted or anticipated
to be conducted by each Credit Party.
(e) Each Credit Party has not incurred any obligation under the
Agreement or any other Financing Document or made
B-2
any conveyance pursuant to or in connection therewith, with actual
intent to hinder, delay or defraud either present or future creditors
of such Credit Party.
For purposes of this Certificate, the "fair saleable value" of each
Credit Party's assets and investments has been determined on the basis of the
amount which I have concluded, in good faith and to the best of my knowledge and
belief, may be realized within a reasonable time, either through collection or
sale of such investments and other assets at the regular market value,
conceiving the latter as the amount which could be obtained for the property in
question within such period by a capable and diligent business person from an
interested buyer who is willing to purchase under ordinary selling conditions.
Because the sale of any business enterprise involves numerous assumptions and
uncertainties, not all of which can be quantified or ascertained prior to
engaging in an actual selling effort, I make no representation as to whether the
aggregate assets of each Credit Party would actually be sold for the amount I
believe to be their fair saleable value.
I understand that the Purchaser is relying on the truth and accuracy of
this Certificate and that the delivery of this Certificate is a material
inducement for the Purchaser to enter into the Agreement and consummate the
transactions contemplated thereby, and the undersigned hereby consents to such
reliance.
I am delivering this Certificate in my capacity as the Chief Financial
Officer of each Credit Party and not in any way in my individual capacity.
B-3
I represent the foregoing information to be, in good faith and to the
best of my knowledge and belief, true and correct and have executed this
Certificate this __ day of ________________, 1997.
------------------------------
Name:
Title: Chief Financial Officer
B-4
Annex I
to Exhibit B
Pro Forma
[to be attached]
B-5
EXHIBIT C
FORM OF
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY dated as of November __, 1997 made by each of the
corporations party hereto or party to Annex A attached hereto (each, a
"Subsidiary Guarantor").
WITNESSETH:
WHEREAS, The Xxxx Group, Inc. (the "Company") has entered into a
Securities Purchase Agreement (as amended from time to time, the "Securities
Purchase Agreement") with HS Funding, Inc. ("DLJ Bridge") pursuant to which DLJ
Bridge has agreed, subject to the terms and conditions set forth therein, to
purchase up to $125,000,000 principal amount of the Company's promissory notes;
WHEREAS, each Subsidiary Guarantor is a direct or indirect wholly-owned
Subsidiary of the Company and has received, and expects to continue to receive,
financial and other support from the Company;
WHEREAS, it is a condition to the purchase by DLJ Bridge of Notes under
the Securities Purchase Agreement that the Subsidiary Guarantors enter into a
Subsidiary Guaranty substantially in the form of this Subsidiary Guaranty; and
WHEREAS, the Subsidiary Guarantors are willing to enter into this
Subsidiary Guaranty;
NOW, THEREFORE, the Subsidiary Guarantors jointly and severally agree
as follows:
C-1
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions, References.
Terms used herein which are defined in the Securities Purchase
Agreement and not otherwise defined herein are used herein as therein defined.
The following additional terms, as used herein, have the following respective
meanings:
"Guaranteed Obligations" means (i) all obligations of the Company in
respect of principal of and interest on the Notes, (ii) all other sums payable
by the Company under the Securities Purchase Agreement or the Notes, (iii) all
sums payable by the Company under any Financing Document and (iv) all renewals
or extensions of the foregoing, in each case whether now outstanding or
hereafter arising. The Guaranteed Obligations shall include, without limitation,
any interest, costs, fees and expenses which accrue on or with respect to any of
the foregoing, whether before or after the commencement of any case, proceeding
or other action relating to the bankruptcy, insolvency or reorganization of the
Company, and any such interest, costs, fees and expenses that would have accrued
thereon or with respect thereto but for the commencement of such case,
proceeding or other action.
ARTICLE II
GUARANTIES
SECTION 2.01. The Guaranties. Subject to Section 2.03, the Subsidiary
Guarantors hereby jointly and severally unconditionally and irrevocably
guarantee to the Purchaser and each holder from time to time of any Note, and to
each of them, the due and punctual payment of all Guaranteed Obligations as and
when the same shall become due and payable, whether at maturity, by declaration
or otherwise, according to the terms thereof. In case of failure by the Company
punctually to pay the obligations guaranteed hereby, the Subsidiary Guarantors,
subject to Section 2.03, hereby jointly and severally unconditionally agree to
pay such obligations punctually as and when the same shall become due and
payable, whether at maturity or by declaration or otherwise, at the place and in
the manner specified in the applicable Financing Document, and as if such
payment were made by the Company.
C-2
SECTION 2.02. Guaranties Unconditional. Subject to Section 2.03, the
obligations of the Subsidiary Guarantors under this Article II shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by, and the
Subsidiary Guarantors, to the extent permitted by law, hereby waive any defense
to any of the obligations hereunder that might otherwise be available on account
of:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under any Financing
Document, by operation of law or otherwise;
(b) any modification or amendment of or supplement to any
Financing Document;
(c) any modification, amendment, waiver, release, nonperfection
or invalidity of any direct or indirect security, or of any guarantee
or other liability of any third party, for any obligation of the
Company under any Financing Document;
(d) any change in the corporate existence, structure or ownership
of the Company or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Company or any of its assets or any
release or discharge of any obligation of the Company contained in any
Financing Document;
(e) the existence of any claim, set-off or other rights which the
Subsidiary Guarantors may have at any time against the Company, the
Purchaser, any holder of any Note or any other Person, whether or not
arising in connection with any Financing Document; provided that
nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against the
Company for any reason of any Financing Document or any provision of
applicable law or regulation purporting to prohibit the payment by the
Company of the principal or interest on any Note or other amount
payable by the Company under any Financing Document; or
(g) any other act or omission to act or delay of any kind by the
Company, the Purchaser, any holder from time to time of any Note or any
C-3
other Person or any other circumstance whatsoever that might. but for
the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of the Subsidiary Guarantors under this
Article II.
SECTION 2.03. Limit of Liability. The obligations of each Subsidiary
Guarantor hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the Bankruptcy Code of 1978, as amended, or any comparable
provisions of applicable state law.
SECTION 2.04. Discharge; Reinstatement in Certain Circumstances. (a)
Subject to Section 2.03, the Subsidiary Guarantors' obligations under this
Article II shall remain in full force and effect until the Commitment shall have
terminated and the principal of, premium, if any, and interest on the Notes and
other amounts payable by the Company under any Financing Document shall have
been paid in full. If at any time any payment of the principal of, premium, if
any, or interest on any Note or any other amount payable by the Company under
any Financing Document is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
the Subsidiary Guarantors' obligations under this Article II with respect to
such payment shall be reinstated at such time as though such payment had become
due but had not been made at such time.
SECTION 2.05. Waiver. The Subsidiary Guarantors irrevocably waive
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Company or any other Person or any property subject to any
Lien securing any obligations of the Company or any of its Subsidiaries.
SECTION 2.06. Subrogation. Each Subsidiary Guarantor hereby irrevocably
agrees to subordinate any Subrogation Rights (as defined below) to the rights of
the Purchaser or any holder from time to time of any Note to recover from the
Company or any Credit Party with respect to such payment. "Subrogation Rights"
shall mean any and all rights of subrogation, reimbursement, exoneration,
contribution or indemnification, any right to participate in any claim or remedy
of payee now has or hereafter acquires in connection with the payment,
performance or enforcement of such Subsidiary Guarantor's obligations under this
Subsidiary Guaranty or any Financing Document, whether or not such claim, remedy
or right arises in equity, or under contract, statute or common law, including
C-4
the right to take or receive, directly or indirectly, in cash or other property
or by set-off or in any other manner. payment or security on account of such
claim or other rights. To effectuate such subordination, each Subsidiary
Guarantor hereby agrees that it shall not be entitled to any payment by the
Company or any Credit Party in respect of any Subrogation Right until all of the
Guaranteed Obligations have been indefeasibly paid in full. If any amount shall
be paid to any Subsidiary Guarantor in violation of the preceding sentence and
the Guaranteed Obligations shall not have been paid in full, such amount shall
be deemed to have been paid to such Subsidiary Guarantor for the benefit of, and
held in trust for, the Purchaser or any holder from time to time of any Note,
and shall forthwith be paid to such Purchaser or any holder from time to time of
any Note to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured. Each Subsidiary Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by the Securities Purchase Agreement and that the subordination set
forth in this Section is knowingly made in contemplation of such benefits.
SECTION 2.07. Stay of Acceleration. If acceleration of the time for
payment of any Guaranteed Obligation payable by the Company under any Financing
Document is stayed upon the insolvency, bankruptcy or reorganization of the
Company, all such Guaranteed Obligations otherwise subject to acceleration under
the terms of the Financing Documents shall nonetheless be payable by the
Subsidiary Guarantor hereunder forthwith on demand by the Agent.
Section 2.08 Right of Contribution. Each Subsidiary Guarantor hereby
agrees that to the extent that a Subsidiary Guarantor shall have paid more than
its proportionate share of any payment made hereunder, such Subsidiary Guarantor
shall be entitled to seek and receive contribution from and against any other
Subsidiary Guarantor hereunder which has not paid its proportionate share of
such payment. Each Guarantor's right of contribution shall be subject to the
terms and conditions of Section 2.06. The provisions of this Section 2.08 shall
in no respect limit the obligations and liabilities of any Subsidiary Guarantor
and each Subsidiary Guarantor shall remain liable for the full amount guaranteed
by such Subsidiary Guarantor hereunder.
C-5
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Notices. Unless otherwise specified herein, all notices,
requests and other communications to any party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or similar writing) and
shall be given in care of the Company at the Company's address or telex or
facsimile transmission number specified in or pursuant to Section 9.1 of the
Securities Purchase Agreement. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex in transmitted to the
telex number specified in or pursuant to this Section 3.01 and the appropriate
answerback is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered at the address
specified in or pursuant to this Section 3.01.
SECTION 3.02. No Waiver. No failure or delay by the Purchaser or any
holder of any Note in exercising any right, power or privilege under any
Financing Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 3.03. Amendments and Waivers. Any provision of this Subsidiary
Guaranty may be amended or waived if, and only if, such amendment or waiver is
in writing and is signed by the Subsidiary Guarantors and is consented to in
writing by the Majority Holders.
SECTION 3.04. Successors and Assigns. This Subsidiary Guaranty is for
the benefit of the Purchaser, the holders from time to time of the Notes and
their respective successors and assigns and in the event of an assignment of the
Notes or other amounts payable under the Financing Documents, the rights
hereunder, to the extent applicable to the indebtedness so assigned, shall be
transferred with such indebtedness. All of the provisions of this Subsidiary
Guaranty shall be binding upon the parties hereto and their respective
successors and assigns except that the Subsidiary Guarantors may not assign or
transfer any of their rights or obligations under this Subsidiary Guaranty.
C-6
SECTION 3.05. Governing Law, Submission to Jurisdiction; Waiver of
Jury Trial. THIS SUBSIDIARY GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE SUBSIDIARY GUARANTORS
HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT
SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS SUBSIDIARY GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY. THE SUBSIDIARY GUARANTORS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE
SUBSIDIARY GUARANTORS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSIDIARY
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
C-7
IN WITNESS WHEREOF, the Subsidiary Guarantors have caused this
Subsidiary Guaranty to be duly executed as of the date first above written.
[SUBSIDIARY GUARANTORS]
By:___________________________
Name:
Title:
C-8
Annex A
to Exhibit C
ADDITIONAL SUBSIDIARY GUARANTOR
The undersigned hereby acknowledges that it has read this Subsidiary
Guaranty and agrees to be liable pursuant to Section I of this Subsidiary
Guaranty and to be bound by the terms and provisions thereof.
IN WITNESS WHEREOF, the undersigned has caused this Subsidiary Guaranty
to be duly executed and delivered by its officer thereunto duly authorized as of
the ___ day of _________________, 19__.
Notice Address: [Name of Subsidiary Guarantor], a
[State of Incorporation]
corporation
By:_______________________________
Name:
Title:
C-9