Exhibit 2.1
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Agreement and Plan of Merger
dated as of July 6, 2007
entered into by
Stericycle, Inc.
TMW Acquisition Corporation,
and
MedSolutions, Inc.
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Table of Contents
Article 1 -- Definitions.......................................................1
Article 2 -- The Merger........................................................1
2.1 Merger..............................................................1
2.2 Closing.............................................................1
2.3 Closing Events......................................................2
(a) Certificate of Merger........................................2
(b) Deliveries by Company........................................2
(c) Deliveries by Parent and MergerSub...........................2
2.4 Effect of Merger....................................................2
(a) General......................................................2
(b) Articles of Incorporation....................................3
(c) Bylaws.......................................................3
(d) Directors and Officers.......................................3
(e) Conversion of Company Common Stock...........................3
(f) Treasury Shares...............................................3
(g) Conversion of MergerSub's Stock..............................3
2.5 Exchange Fund and Procedures........................................4
(a) Exchange Fund................................................4
(b) Exchange Procedures..........................................4
(c) No Further Ownership Rights..................................5
(d) Termination of Exchange Fund.................................5
(e) Lost Certificates............................................5
(f) Stock Transfer Books..........................................5
(g) Dissenters' Rights...........................................6
(h) Stock Options................................................6
Article 3 -- Representations and Warranties of Company.........................7
3.1 Organization........................................................7
3.2 Authority...........................................................7
3.3 Enforceability......................................................7
3.4 Capital Stock.......................................................8
3.5 No Violation........................................................9
3.6 No Consent Required.................................................9
3.7 SEC Reports and Financial Statements...............................10
3.8 Equipment..........................................................10
3.9 Contracts..........................................................10
3.10 Real Property....................................................12
3.11 Permits..........................................................12
3.12 Intellectual Property............................................13
3.13 Undisclosed Liabilities..........................................13
3.14 Taxes............................................................13
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3.15 No Material Adverse Change.......................................14
3.16 Employee Benefits................................................14
3.17 Insurance........................................................15
3.18 Compliance.......................................................16
3.19 Legal Proceedings................................................16
3.20 Absence of Certain Events........................................17
3.21 Environmental Matters............................................18
3.22 Employees........................................................18
3.23 Labor Relations..................................................19
3.24 Broker's Fee.....................................................19
3.25 Takeover Statutes................................................19
3.26 Joint Disclosure Document........................................19
3.27 Vote Required....................................................19
Article 4 -- Representations and Warranties of Parent and MergerSub...........19
4.1 Organization.......................................................20
4.2 Authority..........................................................20
4.3 Enforceability.....................................................20
4.4 No Violation.......................................................20
4.5 No Consent Required................................................20
4.6 SEC Reports and Financial Statements...............................21
4.7 Broker's Fee.......................................................21
4.8 MergerSub Formation................................................21
4.9 Joint Disclosure Document..........................................21
4.10 Board Approval...................................................22
4.11 Vote Required....................................................22
Article 5 -- Events Prior to Closing..........................................22
5.1 General............................................................22
5.2 Conduct of Business by Company.....................................22
5.3 SEC Filings........................................................22
5.4 Shareholders Meeting...............................................23
5.5 Other Filings by Company...........................................24
5.6 Access to Information..............................................24
5.7 Notice of Developments.............................................24
5.8 Acquisition Proposals..............................................24
5.9 Public Announcements...............................................25
5.10 Fees and Expenses................................................26
5.11 Termination of Employment Agreements.............................26
5.12 Notice of Redemption and Repayment...............................26
Article 6 -- Conditions to Closing............................................26
6.1 Parent Closing Conditions..........................................26
6.2 Company Closing Conditions.........................................27
Article 7 -- Events Following Closing.........................................28
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7.1 Payment of Certain Liabilities.....................................28
7.2 Release of Guarantors..............................................28
7.3 Shareholder Representative.........................................28
7.4 Closing Date Adjustment............................................29
7.5 Revenue Adjustment.................................................30
7.6 Adjustment to Merger Consideration.................................31
7.7 Certain Litigation.................................................32
7.8 Post-Closing Tax Returns...........................................34
Article 8 -- Survival of Representations and Warranties and
Indemnification Claims...........................................34
8.1 Survival...........................................................34
8.2 Indemnification Claim..............................................34
8.3 Procedures.........................................................34
8.4 Reduction in Payments..............................................35
Article 9 -- Termination, Amendment and Waiver................................35
9.1 Termination by Company or Parent...................................35
9.2 Termination by Company.............................................36
9.3 Termination by Parent..............................................36
9.4 Effect of Termination..............................................37
9.5 Amendment..........................................................38
9.6 Extension and Waiver...............................................38
Article 10 -- Miscellaneous...................................................38
10.1 Confidentiality..................................................38
10.2 Notices..........................................................38
10.3 Entire Agreement.................................................39
10.4 Assignment.......................................................40
10.5 No Third Party Beneficiaries.....................................40
10.6 Severability.....................................................40
10.7 Captions.........................................................40
10.8 Construction.....................................................40
10.9 Counterparts.....................................................40
10.10 Governing Law...................................................40
10.11 Binding Effect..................................................41
Annex I -- Definitions.........................................................1
Exhibits
Form of 4.5% Indenture.............................................. A
Form of 3.5% Indenture.............................................. B
Liabilities To Be Paid Within 30 Days of Closing.................... C
Guarantors To Be Indemnified and Released........................... D
Schedule of Certain Contracts....................................... E
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Agreement and Plan of Merger
This Agreement and Plan of Merger is entered into as of July 6, 2007 by
Stericycle, Inc., a Delaware corporation ("Parent"), TMW Acquisition
Corporation, a Texas corporation and wholly-owned subsidiary of Parent
("MergerSub"), and MedSolutions, Inc., a Texas corporation (the "Company").
Background:
A. This Agreement contemplates a transaction in which Parent will acquire
all of the outstanding capital stock of the Company for cash and promissory
notes through a reverse subsidiary merger of MergerSub with and into the
Company.
B. The respective boards of directors of Parent, MergerSub and the Company
have approved, and deem it advisable and in the best interests of their
respective shareholders to consummate, this Agreement and the merger of
MergerSub with and into the Company pursuant to this Agreement.
C. The board of directors of the Company has unanimously resolved to
recommend that the shareholders of the Company approve this Agreement and the
consummation of the merger of the Company with MergerSub pursuant to this
Agreement.
Now, therefore, in consideration of their mutual promises and intending to
be legally bound, the Parties agree as follows:
Article 1
Definitions
Certain capitalized terms used in this Agreement are defined in Annex I.
Article 2
The Merger
2.1 Merger
Upon the terms and subject to the conditions of this Agreement, and in
accordance with the requirements of the TBCA and the Texas BOC, MergerSub shall
merge with and into the Company (the "Merger") at the Effective Time. The
separate corporate existence of MergerSub shall cease, and the Company shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation") and succeed to and assume all of the rights and obligations of
MergerSub in accordance with the TBCA and the Texas BOC.
2.2 Closing
The closing of the Merger ("Closing") shall take place at the offices of
Block & Garden, LLP, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the second Business Day (the "Closing Date")
following the satisfaction or, to the extent permitted by Law, waiver of all of
the Parent Closing Conditions and all of the Company Closing Conditions (other
than those conditions that by their nature are to be satisfied at Closing, but
subject to the satisfaction or waiver of those conditions at Closing), or at
such other place, time and date as the Parties may agree in writing.
2.3 Closing Events
At Closing, the following events shall take place, all of which shall be
considered to take place concurrently:
(a) Certificate of Merger
The Company and MergerSub shall execute a certificate of merger
consistent with the terms of this Agreement and complying in form and
substance with the requirements of the TBCA and the Texas BOC (the
"Certificate of Merger"), and shall file the Certificate of Merger in the
office of the Secretary of State of the State of Texas.
(b) Deliveries by Company
Company shall deliver to Parent and MergerSub an Officer's Certificate
certifying that all of the Company Closing Conditions have been either
satisfied or waived.
(c) Deliveries by Parent and MergerSub
Parent and MergerSub shall do the following:
(1) Parent and MergerSub shall deposit the Exchange Fund with
the Paying Agent in accordance with Section 2.5; and
(2) Parent and MergerSub shall deliver to the Company an
Officer's Certificate certifying that all of the Parent
Closing Conditions have been either satisfied or waived.
2.4 Effect of Merger
(a) General
The Merger shall become effective at the time (the "Effective Time")
that the Certificate of Merger is duly filed in the office of the Secretary
of State of the State of Texas or at such later time as Parent and the
Company may agree and as the Company and MergerSub specify in the
Certificate of Merger. The Merger shall have the effects described in this
Agreement and Section 10.008 of the Texas BOC and Section 5.06 of the TBCA.
The Surviving Corporation may, at any time after the Effective Time, take
any action (including executing and delivering any document) in the name
and on behalf of either the Company or MergerSub in order to carry out and
give effect to the Merger.
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(b) Articles of Incorporation
As of the Effective Time, the Surviving Corporation's articles of
incorporation shall be amended and restated to read as the certificate of
formation of MergerSub read immediately prior to the Effective Time (with
the exception that the name of the Surviving Corporation shall remain
unchanged).
(c) Bylaws
As of the Effective Time, the Surviving Corporation's bylaws shall be
amended and restated to read as the bylaws of MergerSub read immediately
prior to the Effective Time (with the exception that the name of the
Surviving Corporation shall remain unchanged).
(d) Directors and Officers
As of the Effective Time, the officers and directors of the Surviving
Corporation shall be the officers and directors of MergerSub immediately
prior to the Effective Time.
(e) Conversion of Company Common Stock
At the Effective Time, by virtue of the Merger and without any action
on the part of Parent, MergerSub, the Company or holders of any securities
of MergerSub or the Company, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than a
Dissenting Share or a share canceled pursuant to Section 2.4(f)) shall be
converted into the right to receive a payment (the "Merger Consideration")
consisting of (i) cash in the amount of $0.50 (the "Cash Consideration Per
Share"), without interest, and (ii) a note issued by Parent (the "Parent
Note") in the principal amount of $1.50 (the "Note Consideration Per
Share") and, at the election of the holder of such share of Company Common
Stock, either bearing interest at the rate of 4.5% and having the terms
provided in an indenture substantially in the form of the attached Exhibit
A, or bearing interest at the rate of 3.5%, secured by a master letter of
credit and having the terms provided in an indenture substantially in the
form of the attached Exhibit B, upon surrender of the Company Stock
Certificate representing the share pursuant to Section 2.5(b). All shares
of Company Common Stock converted into the right to receive Merger
Consideration as provided in this Section 2.4(e) ("Company Shares") shall
be canceled automatically and cease to exist. The Merger Consideration is
subject to adjustment as provided in Section 7.6.
(f) Treasury Shares
At the Effective Time, each share of Company Common Stock held in
treasury by the Company or owned by Parent, MergerSub or any direct or
indirect wholly-owned subsidiary of the Company or Parent shall be
canceled, and no payment of Merger Consideration shall be made in respect
of such share.
(g) Conversion of MergerSub's Stock
At and as of the Effective Time, each share of MergerSub's common
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stock, par value $.01 per share, shall be converted into one share of
common stock of the Surviving Corporation.
2.5 Exchange Fund and Procedures
(a) Exchange Fund
Prior to the Effective Time, Parent shall appoint LaSalle Bank
National Association, Chicago, Illinois to act as the paying agent (the
"Paying Agent") for the purpose of exchanging Company Shares for Merger
Consideration. At or prior to the Effective Time, Parent shall (a) deposit
with Holdback Escrow Agent (as defined in Section 7.3(c) below) cash in the
amount of $250,000 and (b) deposit with the Paying Agent, in trust for the
benefit of holders of Company Shares and Company Stock Options, a fund (the
"Exchange Fund"), consisting of cash and Parent Notes (registered in the
name of the Paying Agent or its nominee) sufficient in the aggregate for
the Paying Agent to make full payment to the holders of Company Shares and
Company Stock Options of the Merger Consideration payable under Section
2.4(e) and the amounts payable pursuant to Section 2.5(h), less the amount
to be deposited with the Holdback Escrow Agent pursuant to subclause (a)
above. The Paying Agent shall invest the cash included in the Exchange Fund
as directed by Parent, and any interest or other income resulting from the
investment shall be Parent's sole and exclusive property and shall be paid
to Parent upon its demand. No part of this interest or income shall accrue
to the benefit of holders of Company Shares. Parent shall promptly replace
any portion of the Exchange Fund that is lost through the Paying Agent's
investments. Parent shall pay for the expenses of the Paying Agent incurred
in connection with the Exchange Fund in an aggregate amount up to $80,000;
any reasonable expenses of the Paying Agent in excess of $80,000 shall be
paid by Parent and reimbursed by deducting the amount of such expenses from
the principal amount of the Parent Notes distributed or to be distributed
to holders of Company Shares who have duly surrendered or who may duly
surrender their Company Stock Certificates pursuant to Section 2.5(b) on a
Pro Rata Basis.
(b) Exchange Procedures
The Surviving Corporation shall cause the Paying Agent, as soon as
reasonably practicable after the Effective Time, to mail to each registered
holder of Company Shares immediately prior to the Effective Time (i) a
letter of transmittal in customary form containing such other provisions as
Parent reasonably may require (a "Letter of Transmittal") and (ii)
instructions for surrendering the stock certificate or certificates
representing the holder's Company Shares (each a "Company Stock
Certificate") in exchange for the Merger Consideration payable in respect
of the Company Shares represented by the holder's certificate or
certificates. Upon surrender of a Company Stock Certificate to the Paying
Agent for cancellation, together with a Letter of Transmittal duly executed
and completed in accordance with its instructions and such other documents
as the Paying Agent reasonably may require, the Paying Agent shall pay to
the holder of the surrendered certificate the Merger Consideration payable
in respect of the Company Shares represented by the certificate, and the
Company Stock Certificate so surrendered shall be canceled. If any portion
of the Merger Consideration payable in respect of any Company Shares is to
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be paid to a Person other than the registered holder of those shares, it
shall be a condition to the Paying Agent's making such payment that the
Company Stock Certificate representing those shares is surrendered properly
endorsed or otherwise in proper form for transfer and that the Person
requesting such payment (i) pays any transfer or other Tax required as a
result of payment to a Person other than the registered holder or (ii)
establishes to the satisfaction of the Paying Agent that any such Tax has
been paid or is not payable. At and after the Effective Time and until
surrendered as contemplated by this Section 2.5(b), each Company Stock
Certificate shall be deemed to represent for all purposes only the right to
receive the Merger Consideration payable upon such surrender.
(c) No Further Ownership Rights
From and after the Effective Time, holders of Company Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights in respect of those shares, except as otherwise provided for in this
Agreement or by applicable Law. The Merger Consideration issued and paid
upon conversion of Company Shares in accordance with the terms of this
Article 2 shall be deemed to have been issued and paid in full satisfaction
of all rights in respect of those shares.
(d) Termination of Exchange Fund
Any portion of the Exchange Fund remaining undistributed six months
after the Effective Time shall be delivered to the Surviving Corporation or
as the Surviving Corporation directs, and thereafter any holder of Company
Shares who did not comply with this Article 2 prior to such delivery shall
look, as a general creditor, solely to the Surviving Corporation for the
Merger Consideration payable in respect of those shares (subject to
abandoned property, escheat and similar Laws).
(e) Lost Certificates
Upon delivery to the Paying Agent of a "lost certificate" affidavit
and indemnity agreement in customary form to the effect that a Company
Stock Certificate has been lost, stolen or destroyed, the Paying Agent
shall deliver to the Person claiming ownership of the lost, stolen or
destroyed Company Stock Certificate the Merger Consideration payable in
respect of the Company Shares represented by the certificate; provided,
however, that the Surviving Corporation may also require, in its reasonable
discretion, delivery of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made
against the Surviving Corporation in respect of any lost, stolen or
destroyed Company Stock Certificate for 50,000 or more Company Shares.
(f) Stock Transfer Books
The Company's stock transfer books shall be closed immediately upon
the Effective Time, and there shall be no further registration of transfers
of Company Shares on the Company's stock transfer records.
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(g) Dissenters' Rights
Notwithstanding anything in this Agreement to the contrary, a
Dissenting Share shall not be converted into the right to receive Merger
Consideration, but shall instead represent only the rights of a dissenting
owner under section 5.11 et seq. of the TBCA to receive the fair value of
the dissenting owner's ownership interest through appraisal, unless and
until the Dissenting Shareholder fails to perfect or effectively withdraws
or otherwise forfeits those rights. If a Dissenting Shareholder fails to
perfect or effectively withdraws or otherwise forfeits the rights of a
dissenting owner under Section 5.11 et seq. of the TBCA, the Dissenting
Shareholder's Dissenting Shares shall be converted into and represent for
all purposes only the right to receive the Merger Consideration payable
upon surrender of the Company Stock Certificate representing those shares
pursuant to Section 2.5(b). The Company shall give Parent (i) prompt notice
of any written demand for appraisal of any shares of Company Common Stock,
any attempted withdrawal of any demand and any other instrument served on
the Company pursuant to the TBCA relating to rights of appraisal and (ii)
the opportunity to direct all negotiations and proceedings in respect of
demands for appraisal under the TBCA. The Company shall not voluntarily
make any payment in respect of, or settle or offer to settle, any demand
for appraisal without Parent's prior written consent.
(h) Stock Options
The Company shall take all action necessary so that each outstanding
Company Stock Option, whether or not it is then vested or exercisable,
shall be canceled immediately prior to the Effective Time, and shall
thereafter represent, whether or not previously vested, only the right to
receive from the Surviving Corporation, at the Effective Time or as soon as
practicable thereafter, in consideration for the option's cancellation, an
amount equal to the product of (i) the number of shares of Company Common
Stock issuable upon the exercise of the option multiplied by (ii) the
excess, if any, of the Merger Consideration over the exercise price per
share payable under the option, subject to any required withholding Taxes.
The amount payable shall consist of cash and a Parent Note, and the amount
of cash and the principal amount of the Parent Note shall be in the same
relative proportions as the Cash Consideration Per Share and the principal
amount of the Note Consideration Per Share.
Promptly following the execution of this Agreement, the Company shall
mail to each person who is a holder of an outstanding Company Stock Option,
whether or not it is then vested or exercisable, a letter in a form
acceptable to Parent describing the treatment of and payment for Company
Stock Options pursuant to this Section 2.5(h) and providing instructions to
use to obtain payment for the holder's Company Stock Options under this
Agreement. The Company shall use its reasonable best efforts to obtain,
prior to the Effective Time, a release from each holder of an outstanding
Company Stock Option effectively relinquishing all rights in respect of the
holder's outstanding Company Stock Options upon payment in accordance with
this Section 2.5(h). The Company shall take all actions necessary to cause
all stock option and stock purchase plans, and any other plan, program or
arrangement relating to the issuance of equity securities of the Company or
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any Subsidiary, to be terminated effective as of the Effective Time and to
ensure that no Person shall have any rights under any such plan, program or
arrangement to acquire equity securities of the Company, any Subsidiary,
Parent or the Surviving Corporation after the Effective Time.
Article 3
Representations and Warranties
of Company
Except as disclosed in (i) a Schedule to this Article or (ii) the
Company SEC Reports, the Company represents and warrants to Parent and
MergerSub as follows:
3.1 Organization
Each Target Company is a corporation duly organized, validly existing and
in good standing under the Laws of its state of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform its obligations under all Contracts. Except as disclosed on
Schedule 3.1, each Target Company is duly qualified to do business as a foreign
corporation and is in good standing under the Laws of each state or other
jurisdiction in which qualification is required by Law (except where the failure
to be qualified and in good standing would not reasonably be expected to have a
Material Adverse Effect).
3.2 Authority
The Company has the power and authority to execute and deliver this
Agreement and, subject to receipt of Shareholder Approval, to perform its
obligations under this Agreement. By all necessary action, the board of
directors of the Company has duly and validly authorized the execution and
delivery of this Agreement and approved this Agreement and the consummation of
the Merger and declared it advisable, and has resolved to recommend that the
Shareholders of the Company approve this Agreement and the consummation of the
merger of the Company with MergerSub pursuant to this Agreement. The Company's
execution and delivery of this Agreement and, subject to receipt of Shareholder
Approval, consummation of the Merger, have been duly authorized by all necessary
action required by the Company's Organizational Documents and the TBCA.
3.3 Enforceability
This Agreement constitutes a legally valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms except as
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law) and
judicial discretion.
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3.4 Capital Stock
(a) The Company's authorized capital stock consists of 100,000,000
shares of Company Common Stock and 100,000,000 shares of Company
Preferred Stock.
(b) As of the date of this Agreement, the Company has 26,470,646
shares of Company Common Stock issued and outstanding. All of
these shares are duly authorized, validly issued, fully paid and
nonassessable, and none of them was issued in violation of or
subject to any preemptive rights. As of the date of this
Agreement, the Company holds 12,000 shares of Company Common
Stock in treasury.
(c) As of the date of this Agreement, the Company does not have any
shares of Company Preferred Stock issued and outstanding or hold
any shares of Company Preferred Stock in treasury.
(d) As of the date of this Agreement, there are outstanding Company
Stock Options to purchase a total of 964,682 shares of Company
Common Stock, as listed in Schedule 3.4(d). Schedule 3.4(d) also
provides, for each stock option listed, the name of the holder,
the number of underlying shares, the date of grant, the
applicable vesting schedule and the exercise price.
(e) As of the date of this Agreement: (i) except as described in
Section 3.4(b) , there are no outstanding shares of capital stock
or other outstanding equity securities of the Company; and (ii)
except as described in Section 3.4(d) or in Schedule 3.4(e),
there are no outstanding Company Convertible Debentures or other
debt securities of the Company convertible into or exchangeable
for shares of capital stock of the Company or Company Stock
Options, warrants, calls, puts, subscription rights, conversion
rights or other Contracts to which the Company is party or by
which it is bound providing for the Company's issuance of any
shares of Company Common Stock or Company Preferred Stock or
other equity securities.
(f) Except for the Voting Agreement, as provided in the Company's
articles of incorporation as amended to the date of this
Agreement, and the lockup agreement entered into between the
Company and certain of its Shareholders, there are no shareholder
agreements, buy-sell agreements, voting trusts or other Contracts
to which the Company or any Subsidiary is a party or by which it
is bound relating to the voting or disposition of any shares of
Company Common Stock or Company Preferred Stock or creating any
obligation of the Company to repurchase, redeem or otherwise
acquire or retire any shares of Company Common Stock or Company
Preferred Stock or any Company Stock Options or warrants.
(g) Schedule 3.4(g) lists for each Subsidiary its name and
jurisdiction of incorporation and the number of authorized shares
of each class of its capital stock. All of the issued and
outstanding shares of capital stock of each Subsidiary are duly
authorized, validly issued, fully paid and nonassessable, and
none of them was issued in violation of any preemptive rights.
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(h) Except as disclosed on Schedule 3.4(h), the Company holds of
record and owns beneficially all of the issued and outstanding
shares of capital stock of each Subsidiary, free and clear of any
Liens (other than restrictions on transfer under the Securities
Act and state securities Laws) and there are no other outstanding
equity securities or equity equivalents of any Subsidiary.
(i) There are no securities of any Subsidiary convertible into or
exchangeable for shares of capital stock or other equity
securities of the Subsidiary or options, warrants, calls, puts,
subscription rights, conversion rights or other Contracts to
which any Subsidiary is party or by which it is bound providing
for its issuance of any shares of its capital stock or any other
equity securities.
(j) There are no stockholders agreements, buy-sell agreements, voting
trusts or other Contracts to which any Subsidiary is a party or
by which it is bound relating to the voting or disposition of any
shares of the Subsidiary's capital stock or creating any
obligation of the Subsidiary to repurchase, redeem or otherwise
acquire or retire any shares of its capital stock or any stock
options or warrants.
(k) Except for the Subsidiaries or as described in the Company SEC
Reports, the Company does not own any shares of capital stock of
or other equity interest in any corporation or other Person.
3.5 No Violation
Subject only to obtaining Shareholder Approval, the Company's execution,
delivery and performance of this Agreement will not, either directly or
indirectly, and with or without Notice or the passage of time or both:
(a) violate or conflict with its Organizational Documents or those of
any Subsidiary;
(b) except as disclosed on Schedule 3.5(b), result in a breach of or
default under any Material Contract to which it or any Subsidiary
is a party or by which it is bound;
(c) result in the imposition or creation of any Lien (other than a
Permitted Lien) upon any of its assets or any of the assets of
any Subsidiary; or
(d) violate or conflict with, or give any Governmental Authority the
right to challenge the Merger or to obtain any other relief
under, any Law or Order to which it or any Subsidiary is subject.
3.6 No Consent Required
Except (i) as required by the TBCA, the Texas BOC, the Securities Act, the
Exchange Act, or applicable Takeover Statutes or (ii) disclosed on Schedule 3.6,
and except for (iii) filing and recording appropriate documents for the Merger
as required by the TBCA and the Texas BOC, the Company's execution, delivery and
9
performance of this Agreement do not require any Notice to, filing with, Permit
from or other Consent of any Governmental Authority or other Person.
3.7 SEC Reports and Financial Statements
The Company has filed with the SEC all forms, reports, schedules, exhibits
and other documents that it has been required to file (the "Company SEC
Reports"), each of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act and the related SEC
rules and regulations in effect on the date that it was filed with the SEC. None
of the Company SEC Reports, including any financial statements or schedules
included or incorporated by reference in the Company SEC Reports, contained, as
of their respective dates of filing (and, if amended or superseded by a filing
prior to the date of this Agreement or the Closing Date, then on the date of the
filing), any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or incorporated by reference or necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading. No Subsidiary is required to file
any forms, reports or other documents with the SEC.
The consolidated financial statements of the Company included in the
Company SEC Reports complied as to form in all material respects with applicable
accounting requirements and the relevant published rules and regulations of the
SEC and present fairly, in conformity with GAAP applied on a consistent basis
during the periods involved (except as otherwise noted therein), the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates indicated and their consolidated results of operations and cash
flows for the periods then ended (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments and to the lack of
footnotes and other presentation items).
3.8 Equipment
Schedule 3.8 contains a complete and accurate list of all of the Equipment
of each of the Target Companies as of the date of this Agreement having an
original purchase price of more than $10,000 per piece of Equipment and
purchased since January 1, 2004 (grouping the Equipment listed by Target
Company, and identifying each piece of Equipment by vendor, description, model
number, serial number and location).
3.9 Contracts
(a) Schedule 3.9(a) consists of 12 subschedules which contain
complete and accurate lists of the following Contracts of each
Target Company as of the date of this Agreement (grouping the
Contracts listed on each subschedule by Target Company, and
listing each Contract only once if more than one listing
otherwise would be required):
(1) a list of its largest 20 Customer Contracts (by revenues for
the 12-month period ending March 31, 2007) identifying each
Customer Contract by name of customer, billing address and
contract term (Schedule 3.9(a)(1));
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(2) all Equipment Leases involving monthly payments of more than
$1,000, identifying each Equipment Lease by (i) vendor,
description, model number, serial number and location and
(ii) lessor, lessee and term of lease (Schedule 3.9(a)(2));
(3) all current and former Facility Leases, identifying each
Facility Lease by (i) name, location and use of the Facility
in question, and (ii) for each current Facility Lease,
lessor, lessee, rent payable and term of lease (Schedule
3.9(a)(3)); provided, however, that the Target Companies
shall not be required to list any former Facility Lease
which expired or was terminated prior to January 1, 2002 or
any former Facility Lease for a Facility for which a Target
Company has entered into a new Facility Lease on or after
January 1, 2002;
(4) any Contract (or series of related Contracts) for the
purchase or sale of raw materials, parts, supplies, products
or other personal property, or for the receipt of services,
the performance of which will extend over a period of more
than 90 days or involve payments in an amount exceeding
$10,000 over the life of such Contract (Schedule 3.9(a)(4));
(5) all Contracts with lenders evidencing or securing any
indebtedness for borrowed money (Schedule 3.9(a)(5));
(6) all Contracts with distributors and sales representatives of
such Target Company (Schedule 3.9(a)(6));
(7) all Contracts guaranteeing the contractual performance of or
any payment by another Person (other than another Target
Company) (Schedule 3.9(a)(7));
(8) all Contracts creating a partnership or joint venture with
another Person (Schedule 3.9(a)(8));
(9) all Contracts restricting or purporting to restrict the
geographical area or scope of business activities or
limiting or purporting to limit the freedom to engage in any
line of business or to compete with any Person (Schedule
3.9(a)(9));
(10) all Contracts granting a right of first refusal or first
negotiation with respect to any material asset (Schedule
3.9(a)(10));
(11) all Contracts (other than Employee Benefit Plans) relating
to employee compensation, employment, termination of
employment or consulting services, including any Contract
that would result in any benefit becoming payable to any
Person following consummation of the Merger (Schedule
11
3.9(a)(11)); and
(12) any Contract (or series of related Contracts) entered into
outside of the Ordinary Course of Business and involving the
expenditure or receipt by any party of an amount exceeding
$25,000 over the life of such Contract (Schedule
3.9(a)(12)).
(b) Each Material Contract of a Target Company is a legally
valid and binding obligation of the Target Company and,
to the Knowledge of the Company, the other Person or
each of the other Persons party to the Contract.
(c) No Target Company is in Default in a material respect
under any Material Contract, and to the Company's
Knowledge, no other Person party to a Material Contract
is in Default in any material respect under the
Contract except as disclosed on Schedule 3.9(c); and no
event has occurred or circumstance exists that (with or
without Notice or the passage of time or both) would
result in a Default in a material respect by a Target
Company under a Material Contract or would give any
Person party to a Material Contract the right to
exercise any remedy under the Contract or to cancel,
terminate or modify the Material Contract.
(d) Except as disclosed on Schedule 3.9(d), no Target
Company has given Notice to or received Notice from any
other Person relating to an alleged, possible or
potential Default under any Material Contract.
(e) For each current Facility Lease listed in Schedule
3.9(a)(3), the Target Company party to the Facility
Lease has a good and valid leasehold interest in the
Facility Lease free and clear of all Liens, except for
(i) Taxes and general and special assessments not in
default and payable without penalty and interest, (ii)
easements, covenants and other encumbrances or
restrictions that do not materially impair the current
use, occupancy, value or marketability of the Target
Company's interest, (iii) any landlord's or other
statutory lien incidental to the Ordinary Course of
Business and (iv) Permitted Liens.
3.10 Real Property
Schedule 3.10 contains a complete and accurate list of all Real Property
that each Target Company owns as of the date of this Agreement (identified by
Target Company and common name). For each item of Real Property listed in
Schedule 3.10, title to the property is free and clear of all Liens, except for
(i) Taxes and general and special assessments not in default and payable without
penalty and interest, (ii) easements, covenants and other encumbrances or
restrictions that do not materially impair the current use, occupancy, value or
marketability of the property, (iii) statutory liens incidental to the Ordinary
Course of Business and (iv) Permitted Liens.
3.11 Permits
(a) Schedule 3.11 contains a complete and accurate list of all material
Permits held by each Target Company (grouping the Permits listed by
Target Company). In the case of each material Permit held by a Target
Company. Except as disclosed on Schedule 3.11:
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(1) the Permit is valid and in full force and effect;
(2) the Target Company has complied with the terms of the Permit
in all material respects;
(3) to Company's Knowledge, no event has occurred or
circumstance exists that (with or without Notice or the
passage of time or both) would constitute or result in the
Target Company's violation of or failure to comply with the
Permit or result in the revocation, withdrawal, suspension,
cancellation, termination or material modification of the
Permit;
(4) the Target Company has not received any written Notice from
any Governmental Authority or other Person that has not been
resolved regarding (i) any actual, alleged or potential
violation of or failure to comply with the Permit or (ii)
any actual, proposed or potential revocation, withdrawal,
suspension, cancellation, termination or modification of the
Permit; and
(5) since January 1, 2004the Target Company has duly filed on a
timely basis all applications that were required to be filed
for the renewal of the Permit and has duly made on a timely
basis all other filings, if any, required to have been made
in respect of the Permit.
(b) Each Target Company holds all material Permits that it
requires for the lawful conduct of the Business as it
is currently conducted.
3.12 Intellectual Property
Except as disclosed on Schedule 3.12, each Target Company owns or has the
valid and enforceable right to use all Intellectual Property of any kind
necessary for or used in its conduct of the Business as it is currently
conducted.
3.13 Undisclosed Liabilities
Except as disclosed in Schedule 3.13, no Target Company has any Liabilities
(including, for example, any indemnification Liabilities) except for (i)
Liabilities disclosed in the financial statements included in the Company's SEC
Reports or (ii) Liabilities incurred in the Ordinary Course of Business since
January 1, 2007.
3.14 Taxes
(a) Except as disclosed on Schedule 3.14(a), each Target Company has
filed all material Tax Returns that it was required to file prior
to the date of this Agreement, all of the Tax Returns that it
filed were correct and complete in all material respects, and all
material amounts of Taxes due in connection with these Tax
Returns have been paid.
(b) No federal or state income Tax Return that any Target Company
filed prior to the date of this Agreement is currently under
audit or examination by a Governmental Authority, and no Target
Company has received Notice from any Governmental Authority that
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(i) any federal or state income Tax Return that it filed will be
audited or examined or that (ii) it is or may be liable for a
material amount of additional Taxes in respect of any Tax Return
or for the payment of a material amount of Taxes in respect of a
Tax Return that it did not file (because, for example, it
believed that it was not subject to taxation by the jurisdiction
in question).
(c) Except as disclosed on Schedule 3.14(c), no Target Company had
any amount of delinquent Taxes as of April 30, 2007. The Target
Companies' consolidated net operating loss for federal income Tax
purposes was $19,384,698 as of December 31, 2006.
(d) No Target Company has extended the time in which to file any Tax
Return or extended or waived the statute of limitations for the
assessment of any Tax other than through the obtaining of
routine, automatic extensions of time to file.
(e) No Target Company has filed a consent under ss.341(f) of the
Internal Revenue Code (relating to collapsible corporations) or
made any payments, or is or could become obligated under an
existing Contract (including a Company Stock Option) to make any
payments, that are not deductible under ss. 280G of the Internal
Revenue Code (relating to "golden parachute" payments).
(f) Schedule 3.14(f) lists all federal and all material other income
Tax Returns that each of the Target Companies has filed since
January 1, 2004. No Target Company is a party to any agreement
providing for the allocation or sharing of Taxes.
(g) Company has not been at any time during the applicable period
specified in ss. 897(c)(1)(A)(ii) of the Internal Revenue Code, a
"United States real property holding corporation" within the
meaning of ss. 897(c) of the Internal Revenue Code.
(h) No Target Company has constituted either a "distributing
corporation" or a "controlled corporation" (within the meaning of
ss. 355(a)(1)(A) of the Internal Revenue Code) in a distribution
of stock qualifying for tax-free treatment under ss. 355 of the
Internal Revenue Code in the two years prior to the date of this
Agreement.
3.15 No Material Adverse Change
Since January 1, 2007, (i) there has not been any change in the Company's
consolidated financial position, results of operations or assets, and (ii) no
event has occurred or circumstance exists relating to Company or any Subsidiary
that, in either such case, individually or in the aggregate, has had or would be
reasonably expected to have a Material Adverse Effect.
3.16 Employee Benefits
(a) Schedule 3.16(a) contains a complete and accurate list of all
Employee Benefit Plans under which each Target Company has any
obligation or Liability whether contingent or otherwise (grouping
14
the Employee Benefit Plans by Target Company).
(b) In the case of each Employee Benefit Plan listed in Schedule
3.16(a):
(1) the plan has been maintained and operated in material
compliance with the applicable requirements of ERISA, the
Internal Revenue Code and any other Law;
(2) all required contributions to or premiums or other payments
in respect of the plan have been timely paid;
(3) to the Company's Knowledge, there have been no "prohibited
transactions" (as defined in ss. 406 of ERISA and ss.4975 of
the Internal Revenue Code) in respect of the plan which
could reasonably result in Liability to a Target Company;
and
(4) no Suit in respect of the administration or operation of the
plan or the investment of plan assets is pending or, to
Company's Knowledge, Threatened, and to Company's Knowledge,
there is no basis for any such Suit.
(c) Except to the extent required by ss. 4980B of the Internal
Revenue Code or any similar state law, no Target Company provides
health or other welfare benefits to any retired or former
employee or is obligated to provide health or other welfare
benefits to any active employee following his or her retirement
or other termination of service.
(d) No Target Company maintains or has ever maintained an Employee
Benefit Plan that is or was subject to the "minimum funding
standards" of ss. 302 of ERISA or Title IV of ERISA.
(e) No Target Company contributes to or at any time has been required
to contribute to any "multiemployer plan" (as defined in ss.
3(37) of ERISA).
(f) Each Employee Benefit Plan listed in Schedule 3.16(a) and any
related trust intended to qualify under ss. 401(a) of the
Internal Revenue Code has received a determination from the
Internal Revenue Service that it so qualifies.
(g) Except as contemplated by this Agreement, neither the execution
of this Agreement nor the consummation of the Merger will result
in an increase in benefits under any Employee Benefit Plan listed
in Schedule 3.16(a) or any Contract with any current, former or
retired employee of the Company or an acceleration of the time of
payment or vesting of any benefits.
3.17 Insurance
(a) Schedule 3.17(a) consists of three subschedules:
15
(1) all insurance policies in effect on the date of this
Agreement under which any Target Company or any director or
officer of a Target Company (in his or her capacity as a
director or officer) is insured (Schedule 3.17(a)(1));
(2) all self-insurance arrangements by any Target Company in
effect on the date of this Agreement (Schedule 3.17(a)(2));
and
(3) all obligations of any Target Company to provide insurance
coverage to any Person other than an employee (Schedule
3.17(a)(3)).
(b) Except as disclosed on Schedule 3.17(b), in the case of each
pending claim under an insurance policy listed on Schedule
3.17(a), the insured Target Company has not received (i) any
refusal of coverage, (ii) any Notice that a defense will be
afforded with a reservation of rights or (iii) any Notice of
cancellation or any other indication that the policy is no longer
in full force or effect or will not be renewed or that the
insurance company is unwilling or unable to perform its
obligations.
3.18 Compliance
(a) Except as disclosed in Schedule 3.18, since January 1, 2004, each
Target Company has complied with, and is currently in compliance
with, each Law and Order that is or was applicable to it or to
the conduct of the Business by such Target Company, except for
any such Laws or Orders the violation of which would not have a
Material Adverse Effect.
(b) No Target Company has received any written Notice from any
Governmental Authority or other Person that has not been resolved
regarding (i) any actual, alleged or potential violation of or
failure to comply with any applicable Law or Order or (ii) any
actual, alleged or potential obligation to undertake or bear all
or any portion of the cost of any remedial action of any kind.
3.19 Legal Proceedings
(a) Schedule 3.19(a) consists of two subschedules and lists:
(1) all Suits pending as of the date of this Agreement in which
any Target Company is a party (Schedule 3.19(a)(1)); and
(2) all other Suits since January 1, 2004 through the date of
this Agreement involving monetary claims of more than
$50,000 or requests for injunctive relief in which any
Target Company was a party (Schedule 3.19(a)(2)).
(b) Except as disclosed on Schedule 3.19(b), none of the pending
Suits listed in Schedule 3.19(a)(1) would reasonably be
expected to have a Material Adverse Effect.
(c) To Company's Knowledge, there is no Suit Threatened or
16
investigation pending against any Target Company as of the
date of this Agreement.
3.20 Absence of Certain Events
Except as disclosed in Schedule 3.20, since January 1, 2007 through the
date of this Agreement, no Target Company has:
(a) sold, leased, transferred or disposed of any of its assets (but
not including any assets pledged or hypothecated) used, held for
use or useful in conduct of the Business except in the Ordinary
Course of Business;
(b) entered into any Contract, other than any Contracts relating to
this Merger, relating to the Business except in the Ordinary
Course of Business;
(c) terminated, accelerated or modified any Material Contract
relating to the Business to which it is or was a party or by
which it is or was bound, or has agreed to do so, or has received
Notice that another party has done so or intends to do so, except
in the case of Contracts that expired in accordance with their
terms or that were terminated in the Ordinary Course of Business;
(d) imposed or permitted any Lien (other than a Permitted Lien) on
any of its assets except in the Ordinary Course of Business;
(e) delayed or postponed beyond its normal practice payment of its
vendor accounts payable and other Liabilities;
(f) cancelled, compromised, waived or released any claim or right
outside of the Ordinary Course of Business;
(g) experienced any damage, destruction or loss to any material
portion of its assets used, held for use or useful in conduct of
the Business (whether or not covered by insurance);
(h) changed the base compensation or other terms of employment of any
of its employees except in the Ordinary Course of Business;
(i) paid a bonus to any employee;
(j) adopted a new Employee Benefit Plan, terminated any existing plan
or increased the benefits under or otherwise modified any
existing plan except as contemplated in this Agreement;
(k) amended its Organizational Documents;
(l) issued, sold, redeemed or repurchased, or effected any split,
combination or reclassification of, any shares of its capital
stock or other securities or retired any indebtedness;
17
(m) granted any stock options;
(n) declared or paid any dividends or made any other distributions in
respect of its capital stock;
(o) made, or guaranteed, any loans or advances to another Person,
other than a Target Company or advances to employees of bonus or
salary that have been repaid or earned in full prior to the date
hereof, or made any investment or commitment to invest in any
Person other than a Target Company;
(p) made any capital expenditures in excess of $25,000 in the
aggregate;
(q) made any change in its accounting principles or methods; or
(r) entered into any Contract to do any of the matters described in
the preceding clauses (a)-(q).
3.21 Environmental Matters
(a) Except as disclosed on Schedule 3.21(a), each Target Company is,
and has been at all times since January 1, 2004, in compliance in all
material respects with all applicable Environmental Laws and Occupational
Safety and Health Laws, and to the Company's Knowledge, there are no facts,
circumstances or conditions that would reasonably be expected to prevent
compliance in the future.
(b) Except as disclosed on Schedule 3.21(b), no Target Company has
received any Notice from any Governmental Authority, any private citizen
acting in the public interest, the current or prior owner or operator of
any current or former Facility, or any other Person, of (i) any actual or
potential violation or failure to comply with any Environmental Laws or
(ii) any actual or potential Cleanup Liability or other Environmental
Liability.
3.22 Employees
Schedule 3.22 contains a complete and accurate list of the following
information for the employees of each Target Company as of the date of this
Agreement (grouping the employees by Target Company), including employees on
leave of absence: name; job title; date of hire; current base compensation; and
changes in base compensation since January 1, 2006 (or date of hire, if later).
Except as disclosed on Schedule 3.22, to the Company's Knowledge, no employee of
any Target Company is a party to or is otherwise bound by any Contract or
arrangement, including any confidentiality, noncompetition or proprietary rights
agreement, that presently limits or restricts the scope of his or her duties as
an employee of the Surviving Corporation (or of a Subsidiary of the Surviving
Corporation).
18
3.23 Labor Relations
No Target Company is or has ever been a party to any collective bargaining
agreement or other labor Contract other than individually negotiated employment
or similar agreements. No Target Company is experiencing, or has experienced at
any time, and, to Company's Knowledge, there is no reasonable basis to expect
any Target Company to experience: (i) any strike, slowdown, picketing or work
stoppage by or lockout of its employees; (ii) any Suit relating to the alleged
violation of any Law or Order relating to labor relations or employment matters
(including any charge or complaint filed by an employee or union with the U.S.
National Labor Relations Board or Equal Employment Opportunity Commission or any
other comparable Governmental Authority); (iii) any other labor or employment
dispute that would reasonably be expected to have a Material Adverse Effect; or
(iv) any activity to organize or establish a collective bargaining unit, trade
union or employee association.
3.24 Broker's Fee
No Target Company has any Liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
3.25 Takeover Statutes
No "fair price", "moratorium", "control share acquisition" or other similar
anti-takeover statute or regulation enacted under state or federal Laws
applicable to the Company ("Takeover Statutes") is applicable to the Merger.
3.26 Joint Disclosure Document
None of the information supplied by the Company for inclusion or
incorporation by reference in the Joint Disclosure Proxy Statement (and each
amendment of or supplement to the Joint Disclosure Document, if any) will, on
the date it is mailed to the Shareholders and at the time of the Shareholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or incorporated by reference or
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
3.27 Vote Required
Assuming the redemption at or prior to Closing of all of the issued and
outstanding shares of Company Preferred Stock, the affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock is the
only vote of holders of any class or series of Company's capital stock necessary
to adopt this Agreement and to consummate the Merger.
Article 4
Representations and Warranties of
Parent and MergerSub
Except as disclosed in the Parent SEC Reports, Parent and MergerSub
represent and warrant to Company as follows:
19
4.1 Organization
Each of Parent and MergerSub is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware and Texas,
respectively, with full corporate power and authority to conduct its business as
it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform its obligations under all Contracts.
Parent directly owns all of the issued and outstanding shares of MergerSub's
capital stock.
4.2 Authority
Each of Parent and MergerSub has the power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by Parent and MergerSub,
including without limitation the issuance of the Parent Notes by Parent, have
been duly authorized by all necessary action required by their respective
Organizational Documents and applicable Law.
4.3 Enforceability
This Agreement constitutes a legally valid and binding obligation of Parent
and MergerSub, enforceable against them in accordance with its terms except as
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law) and
judicial discretion.
4.4 No Violation
The execution, delivery and performance of this Agreement by Parent and
MergerSub will not, in the case of each of them, either directly or indirectly
(and with or without Notice or the passage of time or both):
(a) violate or conflict with its Organizational Documents;
(b) result in a breach of or default under any material Contract to
which it is a party or by which it is bound;
(c) result in the imposition or creation of any Lien (other than a
Permitted Lien) upon any of its assets; or
(d) violate or conflict with, or give any Governmental Authority or
other Person the right to challenge the Merger or to obtain any other
relief under, any Law or Order to which it is subject.
4.5 No Consent Required
Except (i) as required by the Securities Act, the Exchange Act, The Nasdaq
20
Stock Market, Inc. or applicable Takeover Statutes, and except for (ii) filing
and recording appropriate documents for the Merger as required by the TBCA and
the Texas BOC, the execution, delivery and performance of this Agreement by
Parent and MergerSub do not require any Notice to, filing with, Permit from or
other Consent of any Governmental Authority or other Person.
4.6 SEC Reports and Financial Statements
Parent has filed with the SEC all forms, reports, schedules, exhibits and
other documents that it has been required to file ("Parent SEC Reports"), each
of which complied in all material respects with all applicable requirements of
the Securities Act and the Exchange Act and the related SEC rules and
regulations in effect on the date that it was filed with the SEC. None of the
Parent SEC Reports, including any financial statements or schedules included or
incorporated by reference in the Parent SEC Reports, contained, as of their
respective dates (and, if amended or superseded by a filing prior to the date of
this Agreement or the Closing Date, then on the date of the filing), any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or incorporated by reference or necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
The consolidated financial statements of Parent included in the Parent SEC
Reports complied as to form in all material respects with applicable accounting
requirements and the relevant published rules and regulations of the SEC and
present fairly, in conformity with GAAP applied on a consistent basis during the
periods involved (except as otherwise noted therein), the consolidated financial
position of Parent and its consolidated subsidiaries as of the dates indicated
and their consolidated results of operations and cash flows for the periods then
ended (subject, in the case of the unaudited interim financial statements, to
normal year-end adjustments and to the lack of footnotes and other presentation
items).
4.7 Broker's Fee
Neither Parent nor MergerSub has any Liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
4.8 MergerSub Formation
MergerSub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement. Since the date of its incorporation, MergerSub
has not carried on any business or conducted any operations other than the
execution of this Agreement, the performance of its obligations under this
Agreement and related ancillary matters.
4.9 Joint Disclosure Document
None of the information supplied or to be supplied by Parent and MergerSub
for inclusion or incorporation by reference in the Joint Disclosure Proxy
Statement (and each amendment of or supplement to the Joint Disclosure Document,
if any) will, on the date it is mailed to the Shareholders and at the time of
the Shareholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or incorporated by
21
reference or necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
4.10 Board Approval
The board of directors of MergerSub, by unanimous written consent, has
unanimously approved this Agreement and declared it advisable and in the best
interests of MergerSub's sole stockholder.
4.11 Vote Required
The affirmative vote of Parent, as the sole stockholder of MergerSub, is
the only vote of the stockholders of Parent or the stockholders of MergerSub
necessary to adopt this Agreement.
Article 5
Events Prior to Closing
5.1 General
Pending Closing, each Party shall use its reasonable best efforts to take
all actions and to do all things necessary in order to consummate the Merger
(including, in the case of Company, satisfaction, but not waiver, of the Company
Closing Conditions in its control, and in the case of Parent and MergerSub,
satisfaction, but not waiver, of the Parent Closing Conditions in their
respective control).
5.2 Conduct of Business by Company
Pending Closing:
(a) the Company shall, and shall cause each Subsidiary to, conduct the
Business only in the Ordinary Course of Business and with no less diligence
and effort than would be applied in the absence of this Agreement; and
(b) without the prior written consent of Parent, such consent not to
be unreasonably withheld, delayed or conditioned, the Company shall not,
and shall cause each Subsidiary not to, take any affirmative action that
results in the occurrence of an event described in Section 3.20 or fail to
take any reasonable action within its control that would avoid the
occurrence of an event described in Section 3.20.
5.3 SEC Filings
(a) As promptly as practicable after the date of this Agreement, the
Company shall prepare and file with the SEC a preliminary proxy statement
under the Exchange Act containing the information required to be furnished
to the Shareholders in connection with the vote of the Shareholders at the
Shareholders Meeting.
(b) As promptly as practicable after the date of this Agreement,
Parent shall prepare and file with the SEC a registration under Securities
Act relating to the offering and issuance of the Parent Notes (the
22
"Registration Statement") and a statement of eligibility and qualification
under the Trust Indenture Act on Form T-1.
(c) In each case, the filing Party shall use its reasonable best
efforts to respond to the comments of the SEC and, in the case of the
Company, to clear the preliminary proxy statement with the SEC as promptly
as practicable and, in the case of Parent, to have the Registration
Statement declared effective under the Securities Act as promptly as
practicable.
(c) The Company and Parent shall provide one another with whatever
information and assistance with these filings that the other reasonably may
request, and shall provide copies to one another of all written comments
from the SEC and inform one another of all oral comments.
(d) Parent shall use its reasonable best efforts to keep the
Registration Statement effective for as long as necessary to consummate the
Merger, and shall take all actions that may be necessary in connection with
the offering and issuance of the Parent Notes.
5.4 Shareholders Meeting
Once the preliminary proxy statement has been cleared by the SEC and the
Registration Statement has been declared effective, the Company shall call a
special meeting of the Shareholders (the "Shareholders Meeting") to be held as
soon as practicable for the purpose of obtaining Shareholder Approval and shall
mail the Joint Disclosure Document to the Company's Shareholders. In this
regard:
(a) the Company's board of directors shall recommend approval and
adoption of this Agreement and the Merger by Company's Shareholders and,
except as permitted by Section 5.8(c), shall not withdraw, amend, or modify
its recommendation in a manner adverse to Parent (or announce publicly its
intention to do so);
(b) the Joint Disclosure Document shall contain the recommendation of
the Company's board of directors that the Shareholders vote in favor of
adoption of this Agreement and the Merger;
(c) subject to the fiduciary duties of the board of directors and
Section 5.8, the Company shall use its reasonable best efforts to obtain
Shareholder Approval;
(d) the Company shall otherwise comply in all material respects with
all legal requirements applicable to the Shareholders Meeting; and
(e) prior to mailing the Joint Disclosure Statement, the Company shall
obtain the opinion of Van Amburgh Valuation Associates, Inc., as financial
advisor to the Company, to the effect that the Merger Consideration to be
received by the holders of shares of Company Common Stock is fair to such
holders from a financial point of view.
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5.5 Other Filings by Company
As promptly as practicable after the date of this Agreement, the Company
shall give each Notice, make each filing and obtain each Permit or other Consent
listed on Schedule 3.6, if any. To the extent that the cooperation of Parent and
MergerSub is necessary or, in the Company's reasonable judgment, desirable,
Parent and MergerSub shall cooperate with the Company in regard to any Notices,
filings, Permits and other Consents listed on Schedule 3.6.
5.6 Access to Information
Pending Closing, the Company shall, and shall cause each Subsidiary to (i)
give Parent and its representatives (including counsel, financial advisors and
accountants) access during normal business hours (but without unreasonable
interference with operations) to its Facilities and Books and Records and other
documents and (ii) make its officers and employees available to respond to
reasonable inquiries regarding the Company, the Subsidiaries and the Business.
The Company shall furnish Parent and its representatives with all information
and copies of all documents concerning the Company, the Subsidiaries and the
Business that Parent and its representatives reasonably request. The Company
shall furnish to Parent, at the earliest time that they are available, such
monthly and quarterly financial statements and data as are routinely prepared by
Company.
5.7 Notice of Developments
Pending Closing, each Party shall promptly give Notice to the other Party
of: (i) any fact or circumstance of which a Party becomes aware that causes or
constitutes an inaccuracy in any of Party's representations and warranties in
Articles 3 or 4 on the date of this Agreement that would reasonably be expected
to result in a failure to satisfy any Parent Closing Condition or Company
Closing Condition; (ii) any breach of or default of any Party's other
obligations in this Article 5 that would reasonably be expected to result in a
failure to satisfy any Parent Closing Condition or Company Closing Condition; or
(iii) the occurrence of any event that may make satisfaction of any Parent
Closing Condition or Company Closing Condition impossible or unlikely. The
delivery of any Notice pursuant to this Section 5.8 shall not, however, cure any
inaccuracy, breach or default or limit or otherwise affect the rights,
obligations or remedies available to any Party under this Agreement.
5.8 Acquisition Proposals
(a) Immediately after the execution and delivery of this Agreement,
the Company shall cease and terminate any existing activities, discussions
or negotiations with any parties previously conducted in respect of any
possible Acquisition Proposal, and shall cause its affiliates and their
respective officers, directors, employees, investment bankers, attorneys,
accountants and other advisors and representatives to do the same. The
Company shall take all necessary steps promptly to inform the individuals
or entities referred to in the next sentence of this Section 5.8(a) of the
obligations undertaken in this Section 5.8(a). From the date of this
Agreement and prior to the earlier of the Effective Time or the date on
which this Agreement is terminated in accordance with its terms, the
Company shall not, and shall not authorize or cause any Subsidiary or any
24
officer, director or employee of Company or any Subsidiary, or any
investment banker, attorney, accountant or other advisor or representative
of Company or any Subsidiary, to directly or indirectly: (i) solicit,
initiate or knowingly encourage the submission of any Acquisition Proposal;
or (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any information in respect of, or take any other
action to facilitate, any Acquisition Proposal or any inquiries or the
making of any proposal that constitutes, or reasonably would be expected to
lead to, any Acquisition Proposal.
(b) Notwithstanding the limitation in clause (ii) of the third
sentence of Section 5.8(a), if the Company receives a bona fide written
proposal or offer that the Company's board of directors determines in good
faith is or would reasonably be expected to result in a third party making
a Superior Company Proposal, the Company may (i) furnish information with
respect to the Company to the Person making such proposal or offer (if the
Person first enters into a confidentiality agreement with Company
containing restrictions as to confidentiality substantially equivalent to
or more protective of the Company than those in the confidentiality
agreement between the Company and Parent), and (ii) participate in
discussions or negotiations with such person regarding such proposal or
offer.
(c) Except as expressly permitted by this Section 5.8, the Company's
board of directors shall not approve or recommend to Shareholders any
Acquisition Proposal. Nothing contained in this Agreement shall prohibit
Company from complying with Rule 14e-2 under the Exchange Act with regard
to any Acquisition Proposal or making any disclosure to Company's
Shareholders which, in the good faith reasonable judgment of the Company's
board of directors, is required under applicable Law. Notwithstanding
anything contained in this Agreement to the contrary, any action by the
Company's board of directors permitted by, and taken in accordance with,
this Section 5.8 shall not constitute a breach of this Agreement by the
Company.
(d) In the event that the Company receives a Superior Company
Proposal, nothing contained in this Agreement shall prevent the Company's
board of directors or an Authorized Officer of the Company from executing
or entering into an agreement relating to such Superior Company Proposal
and recommending such Superior Company Proposal to the Shareholders; and in
such a case, the Company's board of directors may withdraw, modify or
refrain from making its recommendation (including a declaration of
advisability) of the Merger and/or adoption of this Agreement, and, to the
extent the board does so, that Company may refrain from calling, providing
notice of and holding the Shareholders Meeting to adopt this Agreement and
from soliciting proxies or consents to secure the vote or written consent
of its stockholders to adopt this Agreement and may terminate this
Agreement.
5.9 Public Announcements
Each of Parent, Subsidiary and Company shall consult with one another
before issuing any press release or otherwise making any public statements in
respect of the transactions contemplated by this Agreement, including the
Merger, and shall not issue any such press release or make any such public
25
statement prior to such consultation, except as required by Law or the rules of
The Nasdaq National Market, Inc.
5.10 Fees and Expenses
If the Merger is consummated, the Surviving Corporation shall pay the
Company's Transaction Expenses, up to (i) $100,000 plus (ii) the aggregate
amount of Transaction Expenses included in the Company's Adjusted Liabilities.
If the Merger is not consummated, all Transaction Expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the Party incurring them.
5.11 Termination of Employment Agreements
At or prior to Closing, the Company shall terminate all of its existing
employment agreements and accrue all severance payments and other termination
liabilities to its employees. The Company shall obtain an appropriate release
from each employee whose employment agreement is terminated.
5.12 Notice of Redemption and Repayment
When the Joint Disclosure Document is mailed to Shareholders, the Company
shall also concurrently give notice to all of the holders of the Company
Convertible Debentures that the Company will repay all of its indebtedness under
the Company Convertible Debentures at Closing.
Article 6
Conditions to Closing
6.1 Parent Closing Conditions
The respective obligations of Parent and MergerSub to consummate the Merger
and to take the other actions that they are respectively required to take at
Closing are subject to the satisfaction of each of the following conditions (the
"Parent Closing Conditions") prior to or at Closing:
(a) the Company's representations and warranties in Article 3, as
qualified or limited by any exceptions in the Schedules to Article 3, are
true and correct in all material respects on the Closing Date as if made at
and as of Closing (other than representations and warranties that address
matters only as of a certain date, which need be true and correct in all
material respects only as of that date), except to the extent that such
representations and warranties are qualified by the term "in all material
respects," in which case such representations and warranties as so written
shall be true and correct in all respects on the Closing Date as if made at
and as of Closing (other than representations and warranties that address
matters only as of a certain date, which need be true and correct in all
respects only as of that date);
(b) the Company has performed, complied with or satisfied in all
26
material respects all of the its obligations, agreements and conditions
under this Agreement that it is required to perform, comply with or satisfy
at or prior to Closing;
(c) holders of shares of Company Common Stock representing no more
than 7.5% of the outstanding shares of Company Common Stock have exercised
(and not withdrawn or otherwise forfeited) the rights of a dissenting owner
under Section 5.11 et seq. of the TBCA with respect to their shares of
Company Common Stock;
(d) Shareholder Approval has been obtained;
(e) Parent has entered into consulting agreements and noncompetition
agreements on mutually acceptable terms with each of the officers,
directors, employees and Shareholders listed on Schedule 6.1(e);
(f) no temporary restraining order, preliminary or permanent
injunction or other Order issued by a court or Governmental Authority has
been issued and is in effect making the Merger illegal or otherwise
prohibiting consummation of the Merger; and
(e) the registration of the Parent Notes under the Securities Act has
been declared effective by the SEC.
Parent and MergerSub may waive any Parent Closing Condition specified in
this Section 6.1 by a written waiver delivered to Company at any time prior to
or at Closing.
6.2 Company Closing Conditions
The obligation of Company to consummate the Merger and to take the other
actions that it is required to take at Closing is subject to the satisfaction of
each of the following conditions (the "Company Closing Conditions") prior to or
at Closing:
(a) the representations and warranties of Parent and MergerSub in
Article 4 are true and correct in all material respects on the Closing Date
as if made at and as of Closing (other than representations and warranties
that address matters only as of a certain date, which need be true and
correct in all material respects only as of that date), except to the
extent that such representations and warranties are qualified by the term
"in all material respects," in which case such representations and
warranties as so written shall be true and correct in all respects on the
Closing Date as if made at and as of Closing (other than representations
and warranties that address matters only as of a certain date, which need
be true and correct in all respects only as of that date);
(b) Parent and MergerSub have performed, complied with or satisfied in
all material respects all of the their respective obligations, agreements
and conditions under this Agreement that they are required to perform,
comply with or satisfy at or prior to Closing;
(c) Shareholder Approval has been obtained; and
27
(d) no temporary restraining order, preliminary or permanent
injunction or other Order issued by a court or Governmental Authority has
been issued and is in effect making the Merger illegal or otherwise
prohibiting consummation of the Merger.
The Company may waive any Company Closing Condition specified in this
Section 6.2 by a written waiver delivered to Parent and MergerSub at any time
prior to or at Closing.
Article 7
Events Following Closing
7.1 Payment of Certain Liabilities
Parent shall cause the Surviving Corporation to pay all of the Liabilities
listed on the attached Exhibit C no later than 30 days after Closing.
7.2 Release of Guarantors
As of Closing, Parent shall indemnify each officer, director and other
person listed on the attached Exhibit D against any loss, damage, cost or
expense (including reasonable attorneys' fees) as such loss, damages, costs and
expenses are incurred by reason of his guaranty of the Liability or Liabilities
specified opposite his name on Exhibit D, and shall obtain his release from each
of his guaranties no later than 30 days after Closing.
7.3 Shareholder Representative
(a) As of the Effective Time, without further act of any holder of
Company Shares, the Shareholder Representative shall be appointed as agent
and attorney-in-fact for each holder of Company Shares, to give and receive
notices and communications and to take any and all action on behalf of the
holders of Company Shares pursuant to this Agreement and in connection with
the Parent Notes, including, but not limited to, asserting, prosecuting or
settling any claim against the Surviving Corporation or Parent or defending
or settling any claim asserted by the Surviving Corporation or Parent. Such
Shareholder Representative may be changed by the consent of holders
representing a majority of the Company Shares immediately prior to the
Effective Time from time to time upon written notice given to the Surviving
Corporation and the Shareholder Representative. Any vacancy in the position
of Shareholder Representative may be filled by the remaining Shareholder
Representative, if any, subject to the right of holders representing a
majority of the outstanding Company Shares immediately prior to the
Effective Time to replace any Shareholder Representative so appointed. No
bond shall be required of the Shareholder Representative. Notices or
communications to or from the Shareholder Representative shall constitute
notice to or from each of the holders of Company Shares. The Shareholder
Representative shall not be liable to any Shareholder or other Person for
any action taken, or declined to be taken, in good faith and in the
exercise of reasonable judgment.
(b) A decision, act, consent or instruction of the Shareholder
Representative (acting in its capacity as the Shareholder Representative)
shall constitute a decision of all the holders of Company Shares and shall
be final, binding and conclusive upon each of such holders, and the
Surviving Corporation and Parent may rely upon any such decision, act,
28
consent or instruction of the Shareholder Representative as being the
decision, act, consent or instruction of each such holder of Company
Shares.
(c) $250,000 from the aggregate Cash Consideration Per Share shall be
placed by Parent at Closing into an escrow account (the "Shareholder
Representative Holdback Account") with Park Cities Bank, Dallas, Texas (the
"Holdback Escrow Agent"), which amount shall be made available for use by the
Shareholder Representative for the costs and expenses, including, without
limitation, the costs of the Holdback Escrow Agent and legal fees, incurred by
the Shareholder Representative in fulfilling the duties of such position
hereunder, including without limitation those duties set forth in Section 7.7
hereof. Any funds remaining in the Shareholder Representative Holdback Account
on the date of the last payment payable under the Parent Notes shall be
distributed on a Pro Rata Basis to holders of Company Shares who have duly
surrendered or who may duly surrender their Company Stock Certificates pursuant
to Section 2.5(b).
7.4 Closing Date Adjustment
(a) Following Closing, Parent and the Shareholder Representative shall
determine and agree on, following the procedures described in subsections
(d), (e), (f) and (g) of this Section 7.4, (i) the Company's Adjusted
Liabilities and (ii) its consolidated total current assets as of the
Closing Date determined in accordance with GAAP ("Adjusted Current
Assets").
(b) If the excess of the Company's Adjusted Liabilities over its
Adjusted Current Assets (the "Liability Excess") is less than the
Threshold, the aggregate Merger Consideration shall be increased by an
amount equal to the Threshold less the Liability Excess. If the Liability
Excess is more than the Threshold, the aggregate Merger Consideration shall
be reduced by an amount equal to the Liability Excess less the Threshold.
In either case, this adjustment shall be made in accordance with Section
7.6.
(c) As used in this Section 7.4, "Threshold" means $4,340,000
(including no more than $90,000 in capital expenditures since June 1,
2007). To the extent that the sum of (i) the Merger Consideration payable
under Section 2.4(e) and (ii) the amounts payable pursuant to Section
2.5(h) in respect of Company Stock Options exceeds $54,350,000, the
Threshold shall be reduced dollar-for-dollar by the amount of the excess.
(d) Parent shall prepare a schedule of Adjusted Liabilities and
Adjusted Current Assets (the "Post-Closing Schedule") no later than 75 days
after Closing and promptly furnish a copy of such Post-Closing Schedule to
the Shareholder Representative.
(e) If the Shareholder Representative accepts Parent's Post-Closing
Schedule, or if the Shareholder Representative fails to give Notice to
Parent of any objection within 30 days after receipt of a copy of such
schedule, Parent's Post-Closing Schedule shall become binding.
29
(f) If the Shareholder Representative gives Notice to Parent of an
objection to Parent's Post-Closing Schedule within 30 days after receipt of
a copy thereof, Parent and the Shareholder Representative shall attempt in
good faith to resolve their differences. In this regard, Parent shall make
copies of all relevant Books and Records, workpapers and other information
available to the Shareholder Representative and his accounting
representatives. If Parent and the Shareholder Representative are able to
resolve all of their differences, Parent's Post-Closing Schedule, as
modified to reflect the resolution of the differences between Parent and
the Shareholder Representative, shall become binding.
(g) If Parent and the Shareholder Representative are unable to resolve
all of their differences within 30 days after the Shareholder
Representative gives Notice to Parent of an objection to Parent's
Post-Closing Schedule, Parent and the Shareholder Representative shall
submit any disputed items to a mutually acceptable accounting firm for a
determination of the correct amounts; provided, however, that in the event
that Parent and the Shareholder Representative are not able to agree upon a
mutually acceptable accounting firm within 10 calendar days of the date on
which both such parties become aware of such dispute, Parent shall select
an accounting firm that is not the regular accounting firm of Parent, the
Shareholder Representative shall select an accounting firm that was not the
regular accounting firm of the Company, and the two firms so selected shall
select a third accounting firm that is not the regular accounting firm of
Parent and was not the regular accounting firm of the Company which shall
serve as the accounting firm to resolve such dispute for purposes of this
Section 7.4. The accounting firm shall have access to all relevant Books
and Records, workpapers and other information available. The accounting
firm's determination shall be binding on Parent and the Shareholder
Representative, and Parent's Post-Closing Schedule, as modified to reflect
(i) those differences, if any, that Parent and the Shareholder
Representative were able to resolve and (ii) the accounting firm's
determination with regard to the remaining disputed items, shall become
binding.
7.5 Revenue Adjustment
(a) Following Closing, Parent and the Shareholder Representative shall
determine and agree on, following the procedures described in subsections
(c), (d), (e) and (f) of this Section 7.5, the Company's Annualized
Additional Revenues.
(b) If Measured Revenues are $16,000,000 or more, there shall not be
any adjustment to the aggregate Merger Consideration. If Measured Revenues
are less than $16,000,000, the aggregate Merger Consideration shall be
reduced by an amount equal to the product of (i) $16,000,000 less the
amount of Measured Revenues multiplied by (ii) 3.375. This adjustment shall
be made in accordance with Section 7.6.
(c) Parent shall prepare a schedule of Annualized Additional Revenues
(the "Revenues Schedule") no later than 45 days after the expiration of the
Measurement Period and promptly furnish a copy to the Shareholder
Representative.
30
(d) If the Shareholder Representative accepts Parent's Revenues
Schedule, or if the Shareholder Representative fails to give Notice to
Parent of any objection within 30 days after receipt of a copy of such
schedule, Parent's Revenues Schedule shall become binding.
(e) If the Shareholder Representative gives Notice to Parent of an
objection to Parent's Revenues Schedule within 30 days after receipt of a
copy thereof, Parent and the Shareholder Representative shall attempt in
good faith to resolve their differences. In this regard, Parent shall make
copies of all relevant Books and Records, workpapers and other information
available to the Shareholder Representative and his accounting
representatives. If Parent and the Shareholder Representative are able to
resolve all of their differences, Parent's Revenues Schedule, as modified
to reflect the resolution of the differences between Parent and the
Shareholder Representative, shall become binding.
(f) If Parent and the Shareholder Representative are unable to resolve
all of their differences within 30 days after the Shareholder
Representative gives Notice to Parent of an objection to Parent's Revenues
Schedule, Parent and the Shareholder Representative shall submit any
disputed items to a mutually acceptable accounting firm for a determination
of the correct amounts; provided, however, that in the event that Parent
and the Shareholder Representative are not able to agree upon a mutually
acceptable accounting firm within 10 calendar days of the date on which
both such parties become aware of such dispute, Parent shall select an
accounting firm that is not the regular accounting firm of Parent, the
Shareholder Representative shall select an accounting firm that was not the
regular accounting firm of the Company, and the two firms so selected shall
select a third accounting firm that is not the regular accounting firm of
Parent and was not the regular accounting firm of the Company which shall
serve as the accounting firm to resolve such dispute for purposes of this
Section 7.5. The accounting firm shall have access to all relevant Books
and Records, workpapers and other information available. The accounting
firm's determination shall be binding on Parent and the Shareholder
Representative, and Parent's Revenues Schedule, as modified to reflect (i)
those differences, if any, that Parent and the Shareholder Representative
were able to resolve and (ii) the accounting firm's determination with
regard to the remaining disputed items, shall become binding.
7.6 Adjustment to Merger Consideration
When both the Post-Closing Schedule under Section 7.4 and the Revenues
Schedule under Section 7.5 have become binding, the aggregate Merger
Consideration shall be adjusted as follows:
(a) If there is an increase in the aggregate Merger Consideration
pursuant to Section 7.4(b) and no adjustment to the aggregate Merger
Consideration pursuant to Section 7.5(b), Parent shall within three
calendar days of such determination deposit cash equal to the increase in
the aggregate Merger Consideration with the Paying Agent for distribution
on a Pro Rata Basis to holders of Company Shares who have duly surrendered
or who may duly surrender their Company Stock Certificates pursuant to
31
Section 2.5(b).
(b) If there is an increase in the aggregate Merger Consideration
pursuant to Section 7.4(b) and a reduction in the aggregate Merger
Consideration pursuant to Section 7.5(b), the two amounts shall be added
together to determine the net adjustment to the aggregate Merger
Consideration, and
(1) if the net adjustment is an increase in the aggregate Merger
Consideration, Parent shall within three calendar days of such
determination deposit cash equal to the increase in the aggregate
Merger Consideration with the Paying Agent for distribution on a Pro
Rata Basis to holders of Company Shares who have duly surrendered or
who may duly surrender their Company Stock Certificates pursuant to
Section 2.5(b); and
(2) if the net adjustment is a reduction in the aggregate Merger
Consideration, the principal amount of the Parent Notes distributed or
to be distributed to holders of Company Shares who have duly
surrendered or who may duly surrender their Company Stock Certificates
pursuant to Section 2.5(b) shall be reduced (or deemed to be reduced),
retroactive to the Closing Date, on a Pro Rata Basis in an aggregate
amount equal to the reduction in the aggregate Merger Consideration.
(c) If there is a reduction in the aggregate Merger Consideration
pursuant to Section 7.4(b) and a reduction in the aggregate Merger
Consideration pursuant to Section 7.5(b), the two amounts shall be added
together to determine the combined reduction in the aggregate Merger
Consideration, and the principal amount of the Parent Notes distributed or
to be distributed to holders of Company Shares who have duly surrendered or
who may duly surrender their Company Stock Certificates pursuant to Section
2.5(b) shall be reduced (or deemed to be reduced), retroactive to the
Closing Date, on a Pro Rata Basis in an aggregate amount equal to the
combined reduction in the aggregate Merger Consideration.
7.7 Certain Litigation
(a) On May 14, 2007, a Texas jury found EnviroClean Management
Services, Inc., a Texas corporation and a subsidiary of the Company
("EMSI") liable in connection with case number 05-04255-E in the ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇. ▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ titled ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇,
Independent Executor of the Estate of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ v. MedSolutions,
Inc., EnviroClean Management Services, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Ford
Air, Inc. and FAF, Inc (the "Lawsuit"). Following the consummation of the
Merger, the Shareholder Representative shall have the sole power and
authority on behalf of EMSI pursuant to the terms set forth in this Section
7.7 to (1) appeal any judgment rendered in connection with the Lawsuit on
behalf of EMSI, including without limitation any appeals conducted through
EMSI's insurance provider, Zurich American Insurance ("Zurich"); (2) pursue
any claims against Zurich for the amount of any judgment in excess of
EMSI's policy limits; and (3) settle any of the matters described in
32
subclauses (1) and (2) above (collectively with the Lawsuit, the
"Litigation"). The Shareholder Representative shall also have the sole
power and authority to select and retain legal counsel and any other
consultants as it deems necessary or proper for the prosecution, defense or
settlement of the Litigation, to incur costs and expenses in connection
therewith to be paid out of the Shareholder Representative Holdback
Account, and to take any and all other actions it deems necessary or proper
to resolve or settle the Litigation. The Shareholder Representative shall
have the authority on behalf of EMSI to enter into a binding settlement
agreement with respect to the Lawsuit, without the prior written consent of
Parent, if and only if such settlement provides (x) for payment by EMSI of
an aggregate amount after the application of all available insurance
coverage not to exceed the then outstanding aggregate principal and
interest owing under the Parent Notes and (y) for the complete release of
EMSI and its affiliates, including without limitation the Surviving
Corporation and Parent; otherwise, the Shareholder Representative must
obtain the prior written consent of Parent, in its absolute discretion,
prior to entering into any binding settlement agreement on behalf of EMSI
with respect to the Lawsuit. The Shareholder Representative shall provide,
upon request therefor, written update memorandums to the Surviving
Corporation as to the status of the Litigation and the balance in the
Shareholder Representative Holdback Account until such time as the
Litigation has been finally resolved, and shall promptly notify the
Surviving Corporation upon the final resolution of the Litigation;
provided, however, that in no event shall the Shareholder Representative be
obligated to provide more than one such memorandum to the Surviving
Corporation per calendar month. Parent hereby covenants and agrees that it
shall pay for all costs and expenses incurred in connection with the
prosecution, defense or settlement of the Litigation in excess of the
Shareholder Representative Holdback Amount ("Excess Litigation Expenses"),
and the principal amount of the Parent Notes shall be reduced by all such
Excess Litigation Expenses that Parent pays. To the extent that EMSI's
liability with respect to the Lawsuit after the Litigation has been finally
resolved exceeds the insurance coverage available therefor, the principal
amount of the Parent Notes shall be reduced by the amount of EMSI's payment
(or the payment by the Surviving Corporation or Parent on EMSI's behalf) in
excess of EMSI's insurance coverage (the "Resolved Liability Payment").
Notwithstanding any provision of this Section 7.7 to the contrary, in the
event that the Litigation has not been finally resolved (including without
limitation by way of settlement) on or before the 90th day immediately
preceding the seventh anniversary of the Closing Date, the Surviving
Corporation may satisfy the judgment rendered in connection with the
Lawsuit (as reduced by any successful appeal) in full, without the prior
consent of the Shareholder Representative, and to the extent that EMSI's
liability with respect to the Lawsuit exceeds the insurance coverage
available therefor, the principal amount of the Parent Notes shall be
reduced by the amount of the EMSI's payment (or the payment by the
Surviving Corporation or Parent on EMSI's behalf) in excess of EMSI's
insurance coverage (the "Judgment Satisfaction Payment").
(b) The amount of any reduction in the principal amount of the Parent
Notes pursuant to Section 7.7(a) by reason of (i) Parent's payment of any
Excess Litigation Expenses or (ii) a Resolved Liability Payment or Judgment
Satisfaction Payment by EMSI, the Surviving Corporation or Parent shall be
33
effective as of the date of the payment. The amount of the principal
reduction shall be increased to that amount payable upon maturity of the
Parent Notes which has a present value (as of the date of payment) equal to
the amount of the payment, using a discount rate equal to 8.0% less the
weighted average interest rate of all Parent Notes outstanding as of the
date of payment. The principal reduction shall be made on a pro rata basis
in respect of the principal amounts of all such Parent Notes.
7.8 Post-Closing Tax Returns
Parent shall prepare or cause to be prepared and file all Tax Returns for
the Company and the Subsidiaries that are required to be filed after the Closing
Date in respect of a taxable period including or ending on the Closing Date.
Parent shall permit the Shareholder Representative, at the Shareholder
Representative's request, to review and comment on each such Tax Return before
it is filed.
Article 8
Survival of Representations and Warranties
and Indemnification Claims
8.1 Survival
The Parties' respective representations and warranties in Article 3 and
Article 4 shall survive Closing and continue until the first anniversary of the
Closing Date, with the exception of the Company's representations and warranties
in Sections 3.14 and 3.21, which shall survive Closing and continue until the
date 90 days after the expiration of the underlying Tax or other statute of
limitations.
8.2 Indemnification Claim
Parent may assert an indemnification claim for any loss, damage, cost or
expense (including reasonable attorneys' fees) that is caused by, arises out of
or relates to any breach of any representation and warranty by the Company in
Article 3 or in the Officer's Certificate delivered at Closing pursuant to
Section 2.3(c) if the indemnification claim is asserted during the survival of
the representation and warranty in question. Parent may not assert an
indemnification claim until the aggregate amount for which indemnification is
sought exceeds $100,000. If this threshold is reached, Parent may assert an
indemnification claim for the portion of the claim in excess of $100,000 and may
assert any subsequent indemnification claim without regard to any threshold.
8.3 Procedures
(a) Parent may assert an indemnification claim by giving Notice of the
indemnification claim to the Shareholder Representative. Parent's Notice
shall provide reasonable detail of the facts giving rise to the
indemnification claim and a statement of Parent's indemnifiable loss or an
estimate of the indemnifiable loss that Parent reasonably anticipates that
it will suffer. Parent may amend or supplement its indemnification claim at
any time (and more than once) by Notice to the Shareholder Representative.
34
(b) If the Shareholder Representative does not object to an
indemnification claim during the 30-day period following receipt of
Parent's Notice of its indemnification claim (the "Objection Period"),
Parent's indemnification claim shall be considered undisputed, and Parent
shall be entitled to recover the full amount of its Indemnifiable Loss (or
estimate of its Indemnifiable Loss), subject, in the case of an
indemnification claim by Parent, to the limitation set forth in Section
8.4.
(c) If the Shareholder Representative gives Notice to Parent within
the Objection Period that the Shareholder Representative objects to
Parent's indemnification claim, the Shareholder Representative and Parent
shall attempt in good faith to resolve their differences during the 30-day
period following Parent's receipt of the Shareholder Representative's
Notice of its objection. If they fail to resolve their disagreement during
this 30-day period, either of them may unilaterally submit the disputed
indemnification claim for binding arbitration before the American
Arbitration Association in Chicago, Illinois or Dallas, Texas in accordance
with its rules for commercial arbitration in effect at the time. The award
of the arbitrator or panel of arbitrators may include attorneys' fees to
the prevailing party.
8.4 Reduction in Payments
To the extent that any indemnification claim by Parent is undisputed or is
resolved in Parent's favor, either by agreement with the Shareholder
Representative or by an award of an arbitrator or panel of arbitrators pursuant
to Section 8.3(c), the indemnification claim shall reduce on a Pro Rata Basis
the aggregate amounts next becoming due under the Parent Notes. This reduction
shall be Parent's sole means of satisfying its indemnification claim.
Article 9
Termination, Amendment and Waiver
9.1 Termination by Company or Parent
This Agreement may be terminated:
(a) at any time prior to the Effective Time, whether before or after
Shareholder Approval, by written consent of the Parties authorized by their
respective boards of directors (or by committees of their respective boards
of directors delegated with such authority);
(b) by either the Company or Parent, if the Merger shall not have been
consummated by the Outside Date (but the right to terminate this Agreement
under this Section 9.1(b) shall not be available to any Party whose failure
to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date);
(c) by either the Company or Parent, if any Governmental Authority has
issued an Order, decree or ruling or taken any other action, permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and the Order, decree, ruling or other
35
action has become final and nonappealable (but neither the Company nor
Parent may terminate this Agreement pursuant to this Section 9.1(c) unless
the Party seeking to terminate this Agreement has used its reasonable best
efforts to oppose any such governmental order or decision or to have such
order or decision vacated or made inapplicable to the Merger contemplated
by this Agreement);
(d) By the Company if there has been a material breach of any
representation, warranty, covenant or agreement on the part of Parent or
MergerSub set forth in this Agreement, or by Parent if there has been a
material breach of any representation, warranty, covenant or agreement on
the part of the Company, which breach has not been cured within 15 Business
Days following receipt by the breaching party of written notice of such
breach; or
(e) By the Company if one or more of the Company Closing Conditions
are not satisfied or capable of being satisfied on or before the Outside
Date as a result of Parent's or MergerSub's failure to comply with their
respective obligations under this Agreement, or by Parent if one or more
Parent Closing Conditions are not satisfied or capable of being satisfied
on or before the Outside Date as a result of the Company's failure to
comply with its obligations under this Agreement.
9.2 Termination by Company
The Company may terminate this Agreement:
(a) if the Company enters into a definitive agreement providing for
the implementation of a Superior Company Proposal; or
(b) at any time following 10 days' prior Notice to Parent (during
which Parent may exercise any right that it may have to terminate this
Agreement under Section 9.3(a)(3)), if Shareholder Approval is not obtained
at the Shareholders Meeting by reason of the failure to obtain the required
vote at such meeting or any adjournment of the meeting.
9.3 Termination by Parent
Parent may terminate this Agreement:
(a) if:
(1) the Company's board of directors withdraws or materially and
adversely to Parent modifies its approval of this Agreement and the
Merger or its recommendations to the Shareholders (other than as a
result of a material breach by Parent or MergerSub of a
representation, warranty or covenant under this Agreement, which
remains uncured for a period of two Business Days from the receipt of
Notice except to the extent that such representation, warranty or
covenant is qualified by the term "in all material respects," in which
36
case only a breach of such representation, warranty or covenant is
required) or the failure of any Company Closing Condition) (it being
understood, however, that for all purposes of this Agreement, the fact
that the Company has supplied any Person with information regarding
the Company or has entered into discussions or negotiations with such
Person as permitted by this Agreement, or the public disclosure of
such facts, shall not be deemed a withdrawal or modification of the
approval of this Agreement and the Merger or its recommendations to
the Shareholders);
(2) the Company enters into a definitive agreement to implement
an Acquisition Proposal; or
(3) Shareholder Approval is not obtained by reason of the
violation of the Voting Agreement by one or more of the Company's
shareholders who are party to the Voting Agreement; or
(b) if Shareholder Approval is not obtained at the Shareholder Meeting
by reason of the failure to obtain the required vote at the meeting or any
adjournment of the meeting.
9.4 Effect of Termination
(a) In the event of the termination of this Agreement pursuant to this
Article 9, the Merger shall be abandoned and this Agreement (other than
this Section 9.4, Section 5.10 and Section 10.1) shall become void and of
no effect, without (subject to this Section 9.4) any Liability on the part
of any Party (or of any of its directors, officers, employees, agents,
legal and financial advisors, or other representatives).
(b) The Company shall pay a termination fee of $2,500,000 to Parent
if:
(1) Parent terminates this Agreement pursuant to Section 9.3(a);
or
(2) the Company terminates this Agreement pursuant to Section
9.2(a).
Any termination fee payable under this Paragraph 9.4(b) shall be paid by a wire
transfer of immediately available funds within two Business Days after receipt
of demand for payment by Parent accompanied by appropriate wire transfer
instructions.
(c) The Parties acknowledge that the agreements contained in Section
9.4(b) are an integral part of the transactions contemplated by this
Agreement and constitute liquidated damages and not a penalty, and that,
without these agreements, the Parties would not have entered into this
Agreement. If a Party fails to pay a termination fee that it is required to
pay under Section 9.4(b), and, in order to obtain payment, the Party to
whom the fee is owed brings suit which results in a judgment against the
defaulting Party, the defaulting Party shall pay the costs and expenses of
the Party bringing suit (including attorneys' fees), together with interest
from the date of termination of this Agreement on all of the amounts owed
at the prime rate of Bank of America, N.A., in effect from time to time
37
during such period plus 2.0%.
9.5 Amendment
This Agreement may be amended by the Parties, by action taken or authorized
by their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the shareholders of
Company, but, after any such approval, no amendment shall be made which by law
requires further approval by such shareholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the Parties.
9.6 Extension and Waiver
At any time prior to the Effective Time, the Parties, by action taken or
authorized by their respective boards of directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other Parties, (ii) waive any inaccuracies in the
representations and warranties of the other Party in this Agreement or in any
document delivered pursuant this Agreement and (iii) waive compliance with any
of the agreements or conditions contained in this Agreement.
The rights and remedies of the Parties are cumulative and not alternative.
The failure or any delay by either Party in exercising any right under this
Agreement or any document referred to in this Agreement shall not operate as a
waiver of that right, and no single or partial exercise of any right shall
preclude any other or further exercise of that right or the exercise of any
other right. All extensions and waivers shall be in writing signed by the Party
to be charged with the waiver, and no waiver that may be given by a Party shall
be applicable except in the specific instance for which it is given.
Article 10
Miscellaneous
10.1 Confidentiality
Pending Closing and following termination of this Agreement for any reason,
the Confidentiality Agreement executed by the Parties on March 8, 2007 shall
remain in full force and effect.
10.2 Notices
All Notices under this Agreement shall be in writing and sent by certified
or registered mail, overnight messenger service, personal delivery or facsimile,
as follows:
(a) if to the Company, to:
MedSolutions, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
38
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
Block & Garden, LLP
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
Dallas, Texas 75251
Attention: ▇▇. ▇▇▇▇▇▇ ▇. Block
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Parent or MergerSub, to:
Stericycle, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ten Brink
Executive Vice President
and Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇▇▇ and Colmar
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notices sent by certified or registered mail shall be considered to have
been given three Business Days after being deposited in the mail. All Notices
sent by overnight courier service, personal delivery or facsimile shall be
considered to have been given when actually received by the intended recipient.
A Party may change its or their address or facsimile number for purposes of this
Agreement by Notice in accordance with this Section 10.2.
10.3 Entire Agreement
This Agreement (including the documents and the instruments required to be
delivered by the parties hereto in connection with the consummation of the
transactions contemplated hereby) supersedes all prior agreements between the
Parties with respect to its subject matter and constitutes (together with the
Schedules and the Parties' Closing Documents) a complete and exclusive statement
of the terms of the agreement between the Parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement signed
39
by the Party to be charged with the amendment.
10.4 Assignment
No Party may assign any of its rights under this Agreement without the
prior written consent of the other Party or Parties.
10.5 No Third Party Beneficiaries
Except for Section 7.2 (which is intended to be for the benefit of the
Persons covered by that provision and may be enforced by them), nothing in this
Agreement shall be considered to give any Person other than the Parties any
legal or equitable right, claim or remedy under or in respect of this Agreement
or any provision of this Agreement, and this Agreement and all of its provisions
are for the sole and exclusive benefit of the Parties and their respective
successors and permitted assigns.
10.6 Severability
If any provision of this Agreement is held invalid or unenforceable by a
court of competent jurisdiction, the other provisions of this Agreement shall
remain in full force and effect. Any provision of this Agreement which is held
invalid or unenforceable only in part shall remain in full force and effect to
the extent not held invalid or unenforceable.
10.7 Captions
The captions of articles and sections of this Agreement are for convenience
only and shall not affect the construction or interpretation of this Agreement.
10.8 Construction
All references in this Agreement to "Section" or "Sections" refer to the
corresponding section or sections of this Agreement. All words used in this
Agreement shall be construed to be of the appropriate gender or number as the
context requires. Unless otherwise expressly provided, the word "including" does
not limit the preceding words or terms.
10.9 Counterparts
This Agreement may be executed in one or more counterparts, including by
facsimile signature, each of which shall be considered an original copy of this
Agreement and all of which, when taken together, shall be considered to
constitute one and the same agreement.
10.10 Governing Law
This Agreement shall be governed and construed in accordance with the laws
of the State of Texas, without regard to the laws that might be applicable under
conflicts of law principles.
40
10.11 Binding Effect
This Agreement shall apply to, be binding in all respects upon and inure to
the benefit of Parties and their respective successors and permitted assigns.
41
In witness, the Parties have executed this Agreement.
Stericycle, Inc.
By /s/ ▇▇▇▇▇ ▇.▇. ten Brink
------------------------------------------------
▇▇▇▇▇ ▇.▇. ten ▇▇▇▇▇
Executive Vice President
and Chief Financial Officer
TMW Acquisition Corporation
By /s/ ▇▇▇▇▇ ▇.▇. ten Brink
-----------------------------------------------
▇▇▇▇▇ ▇.▇. ten ▇▇▇▇▇
Vice President
MedSolutions, Inc.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
42
I-9
Annex I
Definitions
Acquisition Proposal means an inquiry, offer or proposal (other than the
transaction contemplated by this Agreement) regarding any of the following
matters:
(a) an investment in the Company representing (on a post-investment
basis) more than 25% of the Company's capital stock or a purchase from the
Company of more than 25% of the shares of its capital stock or any debt
securities convertible into or exchangeable for more than 25% of the shares
of its capital stock;
(b) a merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction involving all of the
Company's equity interests or all shares of the Company Common Stock;
(c) the sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all the Company's assets in a single
transaction or a series of related transactions;
(d) a tender offer or exchange offer for 25% or more of the
outstanding shares of the Company's capital stock or the filing of a
registration statement under the Securities Act of 1933 in connection with
such a tender offer or exchange offer; or
(e) any public announcement of a proposal, plan or intention to do, or
any agreement to engage in, any of the matters described in the preceding
clauses (a), (b), (c) or (d).
Adjusted Current Assets is defined in Section 7.4(a).
Adjusted Liabilities means the Company's consolidated total Liabilities as
of the Closing Date determined in accordance with GAAP increased by (i)
severance payments and other termination liabilities under employment agreements
with the Company's employees or otherwise and (ii) the Company's unpaid
Transaction Expenses (except, in the case of both (i) and (ii), to the extent
already accrued), and reduced by (iii) the first $100,000 of the Company's
unpaid Transaction Expenses.
Annualized Additional Revenues means the annualized gross revenues of the
Company (or Parent or any affiliate of Parent), net of returns, rebates and
chargebacks ("Net Revenues"), during the Measurement Period from such of the
Customer Contracts listed on Exhibit E that (a) remain in force at the end of
the Measurement Period or (b) were terminated by the Company (or Parent or any
affiliate of Parent) prior to the expiration of the Measurement Period for any
reason other than non-payment by the customer relating thereto. These Net
Revenues shall be annualized on a Contract-by-Contract basis as follows: (i) if
there are three full months of service, the Net Revenues for the three months
shall be annualized by multiplying them by 4; (ii) if there are only two full
I-1
months of service, the Net Revenues for the two months shall be annualized by
multiplying them by 6; (iii) if there is only one full month of service, the Net
Revenues for that month shall be annualized by multiplying them by 12; and (iv)
if there is less than one full month of service, the average weekly Net Revenues
for such month shall be annualized by multiplying them by 52. The Net Revenues
so determined shall then be reduced by the amount of Net Revenues from that
Customer Contract reflected in the Company's Base Revenue Run Rate (which
amounts are shown on Exhibit E for the Customer Contracts listed thereon as of
the date of this Agreement); provided, however, that in no event shall the Net
Revenues so determined be reduced to less than $0. Exhibit E may be amended by
the Company at any time prior to the Effective Time of the Merger to add an
additional Customer Contract, and the Net Revenues with respect to any such
additional Customer Contract shall be determined in accordance with the method
set forth in this definition of "Annualized Additional Revenues."
Authorized Officer means a corporate officer of a corporation who is
duly authorized to perform the specified action.
Base Revenue Run Rate means $15,655,352.
Books and Records means books, records, ledgers, files, documents,
correspondence, lists, reports, creative materials, advertising and
promotional materials and other printed or written materials.
Business means Company's business of collecting, transporting,
treating and disposing of medical waste.
Business Day shall mean any day other than a Saturday, Sunday, or any
day on which banks located in Dallas, Texas are authorized to be closed by
applicable law.
Cash Consideration Per Share is defined in Section 2.4(e).
Certificate of Merger is defined in Section 2.3(b).
Cleanup Liability means any Liability under any Environmental Law for
corrective action, including any investigation, cleanup, removal,
containment or other remedial or response action or activity of the type
covered by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
Closing is defined in Section 2.2.
Closing Date is defined in Section 2.2.
Closing Documents means, in respect of a Party, the documents,
instruments and agreements that it is required to deliver or enter into at
Closing pursuant to the terms of this Agreement.
Company means MedSolutions, Inc., a Texas corporation.
I-2
Company Closing Conditions is defined in Section 6.2.
Company Common Stock means the Company's common stock, par value $.001
per share.
Company Convertible Debentures means (i) the Company's 15% Convertible
Redeemable Subordinated Debentures, (ii) the Company's 10% Convertible
Redeemable Debentures and (iii) all other debentures, promissory notes and
other debt instruments and securities convertible into or exchangeable for
shares of Company Common Stock.
Company Preferred Stock means the Company's preferred stock, par value
$.001 per share, 500,000 shares of which have been designated as Series A
10% Convertible Preferred Stock.
Company SEC Reports is defined in Section 3.7.
Company Shares is defined in Section 2.4(e).
Company Stock Certificate is defined in Section 2.5(b).
Company Stock Option means an option to purchase shares of Company
Common Stock, whether granted under the Company's 2002 Stock Plan or
otherwise.
Consent means any approval, consent, ratification, waiver or other
authorization (including any Permit).
Contract means any legally binding contract, agreement, obligation,
promise or undertaking (whether written or oral, and whether express or
implied).
Copyrights means all copyrights and copyrightable works, and all
related applications, registrations and renewals in the United States
Copyright Office.
Customer Contract means a Contract with a customer relating to the
collection, transportation, treatment or disposal of medical waste,
including sharps and sharps containers.
Default means, in respect of a Contract, a breach or violation of or
default under the Contract, or the occurrence of an event which with notice
or the passage of time (or both) would constitute a breach, violation or
default or permit termination, modification or acceleration of the
Contract.
Dissenting Share means a share of Company Common Stock which is issued
and outstanding immediately prior to the Effective Time and which is held
by a Shareholder who did not vote in favor of or consent in writing to the
Merger and who is entitled to exercise the rights of a dissenting owner
under Section 5.11 et seq. of the TBCA.
Dissenting Shareholder means a Shareholder who holds a Dissenting
Share.
I-3
Effective Time is defined in Section 2.4(a).
Employee Benefit Plan means (i) an "employee pension plan" as defined
in ss. 3(2) of ERISA, (ii) an "employee welfare benefit plan" as defined in
ss. 3(1) of ERISA or (iii) any other employee benefit or fringe benefit
plan or program, whether established by Law, a written agreement or other
instrument, or custom or informal understanding.
EMSI is defined in Section 3.4(h).
Environmental Laws means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 and Resource Conservation and
Recovery Act of 1976, and all other applicable Laws relating to or imposing
Liability or standards of conduct for the use, handling, generation,
manufacturing, distribution, processing, collection, transportation,
transfer, storage, treatment, disposal, clean-up, or Release of Hazardous
Materials.
Environmental Liability means any Cleanup Liability or any other
Liability under any Environmental Law or Occupational Safety and Health
Law, including any Liability arising from a Release of Hazardous Materials
at, on, in or under any Facility or other Real Property.
Equipment means machinery, equipment, spare parts, furniture, fixtures
and other items of tangible personal property of any type or kind used,
held for use or useful in the conduct of the Business (but not including
inventories or Leasehold Improvements).
Equipment Lease means a Contract for the lease of Equipment or for the
purchase of Equipment under a conditional sales or title retention
agreement.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and the related regulations issued by the Internal Revenue Service
and Department of Labor.
Exchange Act means the Securities Exchange Act of 1934, as amended,
and the related rules and regulations promulgated by the SEC.
Excess Litigation Expenses is defined in Section 7.7(a).
Exchange Fund is defined in Section 2.5(a).
Facility means any office, manufacturing facility, warehouse or other
location or site that any Target Company currently leases, operates,
occupies or uses, or that it formerly leased, operated, occupied or used,
in the conduct of the Business.
Facility Lease means a lease of or other right to operate, occupy or
use a Facility that any Company currently leases, operates, occupies or
uses in connection with the conduct of the Business.
GAAP means United States generally accepted accounting principles.
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Governmental Authority means (i) any federal, state, provincial,
local, municipal, foreign or other government and (ii) any governmental or
quasi-governmental body of any kind (including any administrative or
regulatory agency, department, branch, commission or other entity).
Hazardous Materials means any waste or other substance of any kind
that is listed, defined, designated or classified under any Law or Order as
hazardous, radioactive or toxic.
Holdback Escrow Agent is defined in Section 7.3(c).
Internal Revenue Code means the U.S. Internal Revenue Code of 1986, as
amended.
Intellectual Property means the Patents, Marks, Copyrights and
Proprietary Information.
Joint Disclosure Document means the disclosure document combining (i)
the definitive proxy statement for the Shareholders Meeting and (ii) the
final prospectus relating to the registration of the Parent Notes under the
Securities Act.
Judgment Satisfaction Payment is defined in Section 7.7(a).
Knowledge means the actual awareness of a particular fact or other
specified matter. As applied to the Company, the term means the actual
awareness of the particular fact or other specified matter by ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, J. ▇▇▇▇▇▇ ▇▇▇▇▇, or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇. As applied to Parent or
MergerSub, the term means the actual awareness of the particular fact or
other specified matter by ▇▇▇▇▇ ▇.▇. ten Brink or any other executive
officer of Parent or officer of MergerSub.
Law means any law, ordinance, code, regulation, rule, or judicial
decision of any Governmental Authority.
Leasehold Improvements means depreciable or amortizable improvements
made by (or on behalf of) the tenant under a Facility Lease which belong to
the tenant and not to the landlord.
Letter of Transmittal is defined in Section 2.5(b).
Liability means any liability or obligation, whether or not known or
unknown, absolute or contingent, liquidated or unliquidated, or due or to
become due.
Liability Excess is defined in Section 7.4(b).
Lien means any lien, security interest, claim, community property
interest, equitable interest, option, pledge, right of first refusal or
other encumbrance.
Litigation is defined in Section 7.7(a).
I-5
Marks means trade marks, service marks, trade names, assumed names,
brand names and logotypes (including translations, adaptations, derivations
and combinations) and related applications, registrations and renewals.
Material Adverse Effect means, when used in respect of the Company or
in respect of a representation and warranty by the Company, any adverse
change, circumstance or effect that, individually or in the aggregate with
all other adverse changes, circumstances and effects, is or is reasonably
likely to be materially adverse to the business, operations, assets,
liabilities, financial condition or results of operations of Company and
the Subsidiaries taken as a whole or on the ability of Company to
consummate the transactions contemplated by this Agreement. The term does
not include (i) any change, circumstance, event or effect that relates to
or results primarily from the announcement or other disclosure or
consummation of the transactions contemplated by this Agreement or (ii)
changes in general economic conditions, financial markets or conditions
generally affecting the medical waste management industry.
Material Contract means (i) a Contract disclosed in a Company SEC
Report or a Schedule to Article 3 or (ii) of a type described in clause
(10) of Item 601 of Regulation S-K under the Securities Act.
Measurement Period means the period of three calendar months beginning
with the month following the month in which Closing occurs.
Measured Revenues means the sum of the Company's Base Revenue Run Rate
and Annualized Additional Revenues.
Merger is defined in Section 2.1.
Merger Consideration is defined in Section 2.4(e).
MergerSub means TMW Acquisition Corporation, a Texas corporation and
wholly owned subsidiary of Parent.
Net Revenues is defined within the definition of Annualized Additional
Revenues above.
Note Consideration Per Share is defined in Section 2.4(e).
Notice means any written notice, demand, charge or complaint from any
Person.
Objection Period is defined in Section 8.3(b).
Occupational Safety and Health Laws means the Occupational Safety and
Health Act of 1970, as amended, and all other applicable Laws and Orders
intended to provide safe and healthful working conditions and to reduce
occupational safety and health hazards.
Officer's Certificate means a certificate signed by an Authorized
Officer whose responsibilities extend to the subject matter of the
certificate.
I-6
Order means any order, judgment, decree, ruling, consent decree,
settlement agreement, stipulation or injunction entered or issued by any
court, Governmental Authority or arbitrator.
Ordinary Course of Business means, in respect of a Party, an action
taken by it which is consistent with its past practices and is taken in the
ordinary course of the normal day-to-day operations.
Organizational Documents means the certificate or articles of
incorporation and by-laws of a corporation, each as amended to date.
Outside Date means September 30, 2007.
Parent means Stericycle, Inc., a Delaware corporation.
Parent Closing Conditions is defined in Section 6.1.
Parent Note is defined in Section 2.4(e).
Parent SEC Reports is defined in Section 4.6.
Party means both Parent and MergerSub (or either one of them, as the
context requires) or the Company, and Parties means all of them.
Patents means patents, patent applications and patent disclosures and
related reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations.
Paying Agent is defined in Section 2.5(a).
Permit means any approval, consent, license, permit, registration,
certificate, waiver, confirmation or other authorization issued, granted or
otherwise made available by any Governmental Authority.
Permitted Lien means (i) any Lien for Taxes that are not yet due and
payable or (ii) any carrier's, warehouseman's, mechanic's, materialman's,
repairman's, landlord's, lessor's or similar statutory Lien incidental to
the Ordinary Course of Business.
Person means any individual, corporation, general or limited
partnership, limited liability company, joint venture, association,
organization, estate, trust or other entity or any Governmental Authority.
Post-Closing Schedule is defined in Section 7.4(c).
Proprietary Information means trade secrets and proprietary or
confidential business information, including: (i) ideas, formulas,
discoveries and inventions (whether patentable or unpatentable, and whether
or not reduced to practice), (ii) know-how, and (iii) computer source
codes, programs, software and documentation.
I-7
Pro Rata Basis, with respect to any item, shall mean a pro rata
portion thereof based on a Shareholder's ownership of Company Common Stock.
Real Property means land or an interest in land (other than an
interest in a Facility Lease).
Registration Statement is defined in Section 5.3(b).
Release means a spill, leak, emission, discharge, deposit, dumping or
other release into the environment, whether intentional or unintentional.
Resolved Liability Payment is defined in Section 7.7(a).
Revenues Schedule is defined in Section 7.5(c).
Schedule means a schedule to this Agreement.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and the
related rules and regulations promulgated by the SEC.
Shareholder means a Person who is the owner of record of one or more
shares of Company Common Stock as of Closing.
Shareholder Approval means the adoption of this Agreement by the
affirmative approval of the holders of a majority of the outstanding shares
of Company Common Stock as of the record date fixed for such action.
Shareholder Representative means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇., collectively.
Shareholder Representative Holdback Account is defined in Section
7.3(c).
Shareholders Meeting is defined in Section 5.4.
Subsidiary means EMSI, SharpSolutions, Inc., ShredSolutions, Inc.,
Positive Impact Waste Servicing, Inc., SteriLogic Waste Systems, Inc. and
EnviroClean Transport Services, Inc., and Subsidiaries means all of them.
Suit means any action, suit, proceeding or arbitration (whether civil,
criminal, administrative or investigative in nature, and whether formal or
informal) by, before or in any court, Governmental Authority or arbitrator.
Superior Company Proposal means any proposal made by a third party to
acquire more than 50% of the voting power of the equity securities or more
than 50% of the assets of Company, pursuant to a tender or exchange offer,
I-8
merger, consolidation, liquidation or dissolution, recapitalization, sale
of assets or otherwise, that, after consultation with Company's financial
advisor and after considering, among other things, (i) the likelihood and
timing of consummation of the proposed transaction and (ii) any amendments
to or modifications of this Agreement that Parent has offered or proposed
within 5 calendar days after learning of the third party's proposal, the
board of directors of the Company determines in its good faith judgment to
be more favorable from a financial point of view to Company Shareholders
than the transactions contemplated by this Agreement.
Surviving Corporation is defined in Section 2.1.
Takeover Statutes is defined in Section 3.25.
Target Company means Company or any Subsidiary, and Target Companies
means the Company and all Subsidiaries.
Tax means any federal, state, provincial, local, municipal or foreign
tax, charge, fee, levy, or similar assessment or liability, imposed by any
Governmental Authority, including without limitation, income, franchise,
gross receipts, capital stock, profits, withholding, social security,
unemployment, real property, personal property, stamp, excise, occupation,
sales, use, transfer, value added, estimated or other tax (including any
related interest, fines, penalties and additions), and any transferee
liability in respect of Taxes and any liability in respect of Taxes imposed
by contract, Tax sharing agreement, Tax reimbursement agreement, or any
similar agreement.
Tax Return means any return (including any information return),
report, statement, form or other document required to be filed with or
submitted to any Governmental Authority in connection with the
determination, assessment, collection or payment of any Tax.
TBCA means the Texas Business Corporation Act.
Texas BOC means the Texas Business Organizations Code.
Threatened means, in respect of a Suit, that Parent (in respect of a
Notice to Parent) or Company (in respect of Notice to a Target Company) has
Knowledge that Notice has been given that the Suit will be, or is likely to
be, initiated in the foreseeable future.
Transaction Expenses means all out-of-pocket expenses (including all
fees and expenses of counsel, accountants, investment bankers, experts and
consultants) incurred by a Party or on its behalf in connection with, or
related to, the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated by this
Agreement.
Voting Agreement means that certain Voting Agreement dated as of the
date of this Agreement, entered into by Parent, MergerSub and the
shareholders of the Company signatory thereto.
I-9
EXHIBIT A
Form of 4.5% Indenture
================================================================================
Indenture
Stericycle, Inc.
and
LaSalle Bank National Association,
as Trustee
Dated as of _______, 2007
$_______ 4.5% Promissory Notes Due _______, 2014
================================================================================
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Table of Contents
Article 1 -- Definitions and Rules of Construction;
Applicability of the Trust Indenture Act.......................................1
Section 1.01 Definitions..............................................1
Section 1.02 Other Definitions........................................3
Section 1.03 Rules of Construction....................................3
Section 1.04 Trust Indenture Act......................................3
Article 2 -- The Notes.........................................................4
Section 2.01 Form and Dating..........................................4
Section 2.02 Execution and Authentication.............................4
Section 2.03 Agents...................................................4
Section 2.04 Paying Agent To Hold Money in Trust......................5
Section 2.05 Noteholder Lists.........................................5
Section 2.06 Transfer and Exchange....................................5
Section 2.07 Replacement Notes........................................5
Section 2.08 Outstanding Notes........................................6
Section 2.09 Treasury Notes Disregarded for Certain Purposes..........6
Section 2.10 Temporary Notes..........................................6
Section 2.11 [Omitted]................................................6
Section 2.12 Cancellation.............................................6
Section 2.13 [Omitted]................................................7
Section 2.14 Principal Reduction......................................7
Section 2.15 Payment Reduction........................................7
Article 3 -- Payments..........................................................7
Section 3.01 Notice to Trustee........................................7
Section 3.02 Pro Rata Prepayment......................................8
Section 3.03 Notice of Payment........................................8
Section 3.04 Effect of Notice of Payment..............................8
Section 3.05 Deposit of Payment Amount................................8
Section 3.06 Notes Prepaid in Part....................................9
Section 3.07 Repayment to Company.....................................9
Article 4 -- Covenants.........................................................9
Section 4.01 Payment of Notes.........................................9
Section 4.02 SEC Reports..............................................9
Section 4.03 Compliance Certificate..................................10
Section 4.04 Notice of Certain Events................................10
Article 5 -- Successors.......................................................10
Section 5.01 When Company May Merge, etc.............................10
Section 5.02 Successor Corporation Substituted.......................10
Article 6 -- Defaults and Remedies............................................11
Section 6.01 Events of Default.......................................11
Section 6.02 Acceleration............................................12
Section 6.03 Other Remedies..........................................12
Section 6.04 Waiver of Past Defaults.................................12
Section 6.05 Control by Shareholder Representative...................13
Section 6.06 Limitation on Suits.....................................13
Section 6.07 Rights of Holders To Receive Payment....................13
Section 6.08 Priorities..............................................13
Section 6.09 Undertaking for Costs...................................14
Section 6.10 Proof of Claim..........................................14
Section 6.11 Actions of a Holder.....................................14
Article 7 -- Trustee..........................................................14
Section 7.01 Duties of Trustee.......................................14
Section 7.02 Rights of Trustee.......................................15
Section 7.03 Individual Rights of Trustee; Disqualification..........16
Section 7.04 Trustee's Disclaimer....................................16
Section 7.05 Notice of Defaults......................................16
Section 7.06 Reports by Trustee to Holders...........................16
Section 7.07 Compensation and Indemnity..............................16
Section 7.08 Replacement of Trustee..................................17
Section 7.09 Successor Trustee by Merger, etc........................18
Section 7.10 Eligibility.............................................18
Section 7.11 Preferential Collection of Claims Against Company.......18
Article 8 [Omitted] ..........................................................18
Article 9 -- Amendments.......................................................19
Section 9.01 Without Consent of Holders..............................19
Section 9.02 With Consent of Shareholder Representative or Holders...19
Section 9.03 Compliance with Trust Indenture Act and Section 12.03...19
Section 9.04 Revocation and Effect of Consents and Waivers...........20
Section 9.05 Notice of Amendment; Notation on or Exchange of Notes...20
Section 9.06 Trustee Protected.......................................20
Article 10 [Omitted]..........................................................21
Article 11 [Omitted]..........................................................21
Article 12 -- Miscellaneous...................................................21
Section 12.01 Notices...............................................21
Section 12.02 Communication by Holders with Other Holders...........21
Section 12.03 Certificate and Opinion as to Conditions Precedent....21
Section 12.04 Statements Required in Certificate or Opinion.........22
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Section 12.05 Rules by Trustee and Agents...........................22
Section 12.06 Legal Holidays........................................22
Section 12.07 No Recourse Against Others............................22
Section 12.08 Duplicate Originals...................................22
Section 12.09 Variable Provisions...................................22
Section 12.10 Governing Law.........................................23
Exhibit A (Form of Notes)....................................................A-1
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Cross Reference Table
TIA Section Indenture Section
310 (a)(1)...................................................... 7.10
(a)(2)................................................... 7.10
(a)(3)................................................... N/A
(a)(4)................................................... N/A
(a)(5)................................................... N/A
(b)...................................................... 7.08; 7.10
(c)...................................................... N/A
311 (a)...................................................... 7.11
(b)...................................................... 7.11
(c)...................................................... N/A
312 (a)...................................................... 2.05
(b)...................................................... 12.02
(c)...................................................... 12.02
313 (a)...................................................... 7.06
(b)(1)................................................... N/A
(b)(2)................................................... 7.06
(c)...................................................... 7.06
(d)...................................................... 7.06
314 (a)(1)................................................... 4.02
(a)(2)................................................... 4.02; 12.01
(a)(3)................................................... 4.02
(a)(4)................................................... 4.03
(b)...................................................... N/A
(c)................................ 2.02; 7.02(b); 8.01(3); 12.03; 12.04
(d)...................................................... N/A
(e)...................................................... 12.04
(f)...................................................... 4.03
315 (a)(1)................................................... 7.01(b)(1)
(a)(2)................................................... 7.01(b)(2)
(b)...................................................... 7.05; 12.01
(c)...................................................... 7.01(a)
(d)(1)................................................... 7.01(c)(1)
(d)(2)................................................... 7.01(c)(2)
(d)(3)................................................. 6.05; 7.01(c)(3)
(e)...................................................... 6.09
316 (a)(last sentence)....................................... 2.09
(a)(1)(A)................................................ 6.05
(a)(1)(B)................................................ 6.04
(a)(2)................................................... N/A
(b)...................................................... 6.07
(c)...................................................... 9.04
317 (a)(1)................................................... 6.03
(a)(2)................................................... 6.10
(b)...................................................... 2.04
318 (a)...................................................... 1.04
N/A means not applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
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Indenture
This Indenture dated as of _______, 2007 between Stericycle, Inc., a
Delaware corporation ("Company"), ------- and LaSalle Bank National Association
(the "Trustee"). -------
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's $_______ 4.5%
Promissory Notes due _______, 2014 (the "Notes"): -----
Article 1
Definitions and Rules of Construction;
Applicability of the Trust Indenture Act
Section 1.01 Definitions
3.5% Notes means the Company's $_______ 3.5% Promissory Notes (Letter of
Credit Supported) due _______, 2014 issued under the Other Indenture.
Affiliate means any Person controlling or controlled by or under common
control with the referenced Person. "Control" for this definition means the
power to direct the management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract, or otherwise.
The terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Agent means any Registrar or Paying Agent.
Board meanIs the Board of Directors of the Person or any officer or
committee thereof authorized to act for such Board.
Business Day means a day that is not a Legal Holiday.
Company means the party named as such above until a successor which duly
assumes the obligations upon the Notes and under the Indenture replaces it and
thereafter means the successor.
Default means any event which is, or after notice or passage of time would
be, an Event of Default.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Holder or Noteholder means a Person in whose name a Note is registered.
Indenture means this Indenture as amended from time to time, including the
terms of the Notes and any amendments thereto.
Indemnification Claim Payment Reduction means a reduction in the aggregate
amounts next becoming due under the Notes and the 3.5% Notes pursuant to Section
8.4 of the Merger Agreement.
Litigation Payment Principal Reduction means a reduction in the aggregate
principal of the Notes and the 3.5% Notes pursuant to Section 7.7(b) of the
Merger Agreement.
Maturity Date means _______, 2014.
Merger Agreement means the Merger Agreement dated _______, 2007 entered
into by the Company, ____________, a Texas corporation, and MedSolutions, Inc.,
a Texas corporation.
Merger Consideration Principal Reduction means a reduction in the aggregate
principal of the Notes and the 3.5% Notes pursuant to Section 7.6(b)(2) or
Section 7.6(c) of the Merger Agreement.
Notes means the Notes described above issued under this Indenture.
Officers' Certificate means a certificate signed by two Officers, one of
whom must be the President and Chief Executive Officer, the Chief Financial
Officer, or an Executive Vice President or other Vice President of the Company.
See Sections 12.03 and 12.04.
Opinion of Counsel means a written opinion from legal counsel who is
acceptable to the Trustee. See Sections 12.03 and 12.04.
Other Indenture means the Indenture dated as of _______, 2007 between the
Company and LaSalle Bank National Association, as Trustee for the 3.5% Notes.
Person means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
Proceeding means a liquidation, dissolution, bankruptcy, insolvency,
reorganization, receivership or similar proceeding under Bankruptcy Law, an
assignment for the benefit of creditors, any marshalling of assets or
liabilities, or winding up or dissolution, but shall not include any transaction
permitted by and made in compliance with Article 5.
SEC means the U.S. Securities and Exchange Commission.
Shareholder Representative means the Person or Persons from time to time
serving as the "Shareholder Representative" pursuant to Section 7.3 of the
Merger Agreement. The persons initially serving as the Shareholder
Representative are ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇ means the Trust Indenture Act of 1939 (15 U.S.C. ▇▇.▇▇. 77aaa-77bbbb),
as amended, as in effect on the date of this Indenture, except as provided in
Sections 1.04 and 9.03.
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Trust Officer means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters or to whom a
matter concerning the Indenture may be referred.
Trustee means the party named as such above until a successor replaces it
and thereafter means the successor.
Section 1.02 Other Definitions
Term Defined in Section
Bankruptcy Law.................................................... 6.01
Custodian......................................................... 6.01
Event of Default.................................................. 6.01
Legal Holiday..................................................... 12.06
Notice............................................................ 12.01
Officer........................................................... 12.09
Paying Agent...................................................... 2.03
Prepayment Date................................................... 3.01
Proceeding........................................................ 1.01
Registrar......................................................... 2.03
Section 1.03 Rules of Construction
Unless the context otherwise requires:
(1) a term defined in Section 1.01 or 1.02 has the meaning
assigned to it therein, and terms defined in the TIA have the meanings
assigned to them in the TIA;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in the United States;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section
or other subdivision; and
(7) "including" means including without limitation.
Section 1.04 Trust Indenture Act
The provisions of TIA Sections 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
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expressly excluded by this Indenture) are a part of and govern this Indenture
upon and so long as the Indenture and Notes are subject to the TIA. If any
provision of this Indenture limits, qualifies or conflicts with such duties, the
imposed duties shall control. If a provision of the TIA requires or permits a
provision of this Indenture and the TIA provision is amended, then the Indenture
provision shall be automatically amended to like effect.
Article 2
The Notes
Section 2.01 Form and Dating
The Notes and the certificate of authentication shall be substantially in
the form of Exhibit A, which is hereby incorporated in and expressly made a part
of this Indenture. The Notes may have notations, legends or endorsements
required by law, stock exchange rule, automated quotation system, agreements to
which the Company is subject, or usage. Each Note shall be dated the date of its
authentication.
Section 2.02 Execution and Authentication
Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time the Note is authenticated, the Note is still valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate Notes for original issue up to the amount
stated in paragraph 4 of Exhibit A in accordance with an Officers' Certificate
of the Company. The aggregate principal amount of Notes outstanding at any time
may not exceed that amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate.
Section 2.03 Agents
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and where Notes may
be presented for payment ("Paying Agent"). Whenever the Company must issue or
deliver Notes pursuant to this Indenture, the Trustee shall authenticate the
Notes at the Company's request. The Registrar shall keep a register of the Notes
and of their transfer and exchange.
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The Company may appoint more than one Registrar or Paying Agent. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. If the Company does not appoint another Registrar or
Paying Agent, the Trustee shall act as such.
Section 2.04 Paying Agent To Hold Money in Trust
On or prior to each due date of the principal and interest on any Note, the
Company shall deposit with the Paying Agent a sum sufficient to pay such
principal and interest when so becoming due. The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying Agent
will hold in trust for the benefit of Noteholders or the Trustee all money held
by the Paying Agent for the payment of the principal of or interest on the
Notes, and will notify the Trustee of any Default by the Company in making any
such payment. While any such Default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee. If the Company or any Affiliate acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund.
Section 2.05 Noteholder Lists
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. If the Trustee is not the Registrar, the Company shall furnish to
the Trustee, in writing at least 10 Business Days before each interest payment
date and again no more than six months later, and at such other times as the
Trustee may request, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Noteholders. Section 2.06
Transfer and Exchange
The Notes shall be issued in registered form and shall be transferable only
upon surrender of a Note for registration of transfer. When a Note is presented
to the Registrar with a request to register a transfer or to exchange the Note
for an equal principal amount of Notes of other denominations, the Registrar
shall register the transfer or make the exchange if its requirements for such
transactions are met and to the extent that the Note has not been prepaid. The
Company may charge a reasonable fee for any registration of transfer or exchange
but not for any exchange pursuant to Section 2.10, 3.06 or 9.05.
All Notes issued upon any transfer or exchange pursuant to the terms of
this Indenture will evidence the same debt and will be entitled to the same
benefits under this Indenture as the Notes surrendered upon such transfer or
exchange.
Section 2.07 Replacement Notes
If the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken, then, in the absence of notice to the Company that the Note
has been acquired by a protected purchaser, the Company shall issue a
replacement Note. If required by the Trustee or the Company, an indemnity bond
A-5
must be provided which is sufficient in the judgment of both to protect the
Company, the Trustee and the Agents from any loss which any of them may suffer
if a Note is replaced. The Company or the Trustee may charge the Holder for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company.
Section 2.08 Outstanding Notes
Notes outstanding at any time are all Notes authenticated by the Trustee
except for those canceled by the Registrar, those delivered to it for
cancellation and those described in this Section as not outstanding. A Note does
not cease to be outstanding because the Company or an Affiliate holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding
unless the Company receives proof satisfactory to it that the replaced Note is
held by a protected purchaser.
If Notes are considered paid under Section 4.01, they cease to be
outstanding and interest on them ceases to accrue.
Section 2.09 Treasury Notes Disregarded for Certain Purposes
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate shall be disregarded and deemed not to be outstanding,
except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Notes which
the Trustee knows are so owned shall be so disregarded. Notes so owned which
have been pledged in good faith shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right to deliver
any such direction, waiver or consent with respect to the Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
Section 2.10 Temporary Notes
Until definitive Notes are ready for delivery, the Company may use
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company considers appropriate
for temporary Notes. Without unreasonable delay, the Company shall deliver
definitive Notes in exchange for temporary Notes.
Section 2.11 [Omitted]
Section 2.12 Cancellation
The Company at any time may deliver Notes to the Trustee for cancellation.
The Paying Agent, if not the Trustee, shall forward to the Trustee any Notes
surrendered to it for payment. The Trustee shall cancel all Notes surrendered
for registration of transfer, exchange, payment or cancellation and shall
dispose of canceled Notes according to its standard procedures or as the Company
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otherwise directs. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
Section 2.13 [Omitted]
Section 2.14 Principal Reduction
The principal of the Notes is subject to reduction, retroactive to the date
of issuance of the Notes, by reason of a Merger Consideration Principal
Reduction.
The principal of the Notes is also subject to reduction, effective as of
the date of payment, by reason of a Litigation Payment Principal Reduction.
In the event of a Merger Consideration Principal Reduction or a Litigation
Payment Principal Reduction, the aggregate principal of all outstanding Notes
and all outstanding 3.5% Notes shall be reduced on a pro rata basis.
The Company shall promptly give notice to the Trustee of any Merger
Consideration Principal Reduction or Litigation Payment Principal Reduction (and
concurrently send a copy of its notice to the Shareholder Representative).
Section 2.15 Payment Reduction
Payments under the Notes are subject to reduction, in respect of the
payments otherwise next becoming due under the Notes, by reason of an
Indemnification Claim Payment Reduction. This reduction is in the nature of a
dollar-for-dollar offset.
In the event of an Indemnification Claim Payment Reduction, payments
otherwise next becoming due under all outstanding Notes and all outstanding 3.5%
Notes shall be reduced on a pro rata basis.
The Company shall promptly give notice to the Trustee of any
Indemnification Claim Payment Reduction (and concurrently send a copy of its
notice to the Shareholder Representative).
Article 3
Payments
Section 3.01 Notice to Trustee
If Notes are to be prepaid pursuant to paragraph 7 of the Notes, the
Company shall notify the Trustee of the prepayment date (the "Prepayment Date")
and the principal amount of Notes to be prepaid. The Company may not prepay any
portion of the principal of the Notes unless it also concurrently prepays an
equivalent fractional portion of the principal of the 3.5% Notes.
The Company shall give the notice provided for in this Section at least 50
days before the Prepayment Date unless a shorter period is satisfactory to the
Trustee. The record date relating to such prepayment shall be selected by the
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Company and given to the Trustee, which record date shall be not less than 15
days prior to the Prepayment Date.
Section 3.02 Pro Rata Prepayment
If Notes are to be prepaid in part, the prepayment shall be made in respect
of all outstanding Notes on a pro rata basis determined by their respective
principal amounts.
Section 3.03 Notice of Payment
At least 30 days but not more than 60 days before any Prepayment Date, and
at least 30 days but not more than 60 days before the Maturity Date, the Company
shall mail a notice of payment to each Holder whose Notes are to be paid.
The notice shall state that it is a notice of payment and shall state:
(1) the payment date;
(2) in the case of a prepayment, the principal amount (or percentage
of the principal amount) of the Holder's Note to be prepaid;
(3) the name and address of the Paying Agent;
(4) that Notes must be surrendered to the Paying Agent to collect the
amount to be paid; and
(5) that, unless the Company defaults in making such payment or the
Paying Agent is prohibited from making such payment pursuant to the terms
of this Indenture, interest on the Notes, or in the case of a prepayment,
interest on the prepaid principal amount of the Notes, shall cease to
accrue on and after the Maturity Date or the Prepayment Date, as the case
may be.
At the Company's request, the Trustee shall give the notice of payment in
the Company's name and at its expense.
Section 3.04 Effect of Notice of Payment
In the case of a prepayment, once notice of payment is mailed, Notes become
due and payable on the Prepayment Date for the prepayment amount. Upon surrender
to the Paying Agent, Notes shall be paid as stated in the notice, plus accrued
interest to the Prepayment Date. Failure to give notice or any defect in the
notice to any Holder shall not affect the validity of the notice to any other
Holder.
Section 3.05 Deposit of Payment Amount
On or before the Prepayment Date or the Maturity Date, as the case may be,
the Company shall deposit with the Paying Agent money sufficient to pay the
principal amount to be prepaid, in the case of a prepayment, or the entire
A-8
principal amount, in the case of a payment at maturity, together with accrued
interest through the Prepayment Date or the Maturity Date, as the case may be,
on all Notes to be paid on that date other than Notes or portions of Notes
called for payment which have been delivered by the Company to the Registrar for
cancellation.
Unless the Company shall default in the payment of Notes (and accrued
interest) called for payment, interest on Notes, or in the case of a prepayment,
interest on the prepaid principal amount of Notes, shall cease to accrue on
after the Maturity Date or the Prepayment Date, as the case may be.
Section 3.06 Notes Prepaid in Part
Upon surrender of a Note that is prepaid in part, the Company shall deliver
to the Holder (at the Company's expense) a new Note equal in principal amount to
the portion of the Note surrendered that was not prepaid.
Section 3.07 Repayment to Company
The Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for payment of principal or interest that remains unclaimed
for one year after the right to such money has matured. After payment to the
Company, Noteholders entitled to the money shall look to the Company for payment
as unsecured general creditors unless an abandoned property law designates
another Person.
Article 4
Covenants
Section 4.01 Payment of Notes
The Company shall pay the principal of and interest on the Notes on the
dates and in the manner provided in the Notes and this Indenture. Principal and
interest shall be considered paid on the date due if the Paying Agent holds in
accordance with this Indenture on that date money sufficient to pay all
principal and interest then due and the Paying Agent is not prohibited from
paying such money to the Holders on such date pursuant to the terms of this
Indenture.
The Company shall pay interest on overdue principal at the rate borne by
the Notes; it shall pay interest on overdue interest at the same rate to the
extent lawful.
Section 4.02 SEC Reports
The Company shall file with the Trustee within 15 days after it files them
with the SEC copies of the annual reports and of the information, documents and
other reports which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. The Company will also comply with the
other provisions of TIA Section 314(a). Delivery of such reports, information
and documents to the Trustee is for informational purposes only and the
Trustee's receipt of such shall not constitute notice or constructive notice of
any information contained therein or determinable from information contained
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therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
Section 4.03 Compliance Certificate
The Company shall deliver to the Trustee, within 105 days after the end of
each fiscal year of the Company, a brief certificate signed by the principal
executive officer, principal financial officer or principal accounting officer
of the Company, as to the signer's knowledge of the Company's compliance with
all conditions and covenants contained in this Indenture (determined without
regard to any period of grace or requirement of notice provided herein).
Section 4.04 Notice of Certain Events
The Company shall give prompt written notice to the Trustee and any Paying
Agent of (i) any Proceeding, (ii) any Default or Event of Default, and (iii) any
cure or waiver of any Default or Event of Default.
Article 5
Successors
Section 5.01 When Company May Merge, etc.
The Company shall not consolidate or merge with or into, or transfer all or
substantially all of its assets to, any Person unless:
(1) either the Company shall be the resulting or surviving entity
or such Person is a corporation organized and existing under the laws
of the United States, a State thereof or the District of Columbia;
(2) if the Company is not the resulting or surviving entity, such
Person assumes by supplemental indenture all the obligations of the
Company under the Notes and this Indenture; and
(3) immediately before and immediately after the transaction no
Default exists.
The Company shall deliver to the Trustee prior to the proposed transaction
an Officers' Certificate and an Opinion of Counsel, each of which shall state
that such consolidation, merger or transfer and such supplemental indenture
comply with this Article 5 and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 5.02 Successor Corporation Substituted
Upon any consolidation or merger, or any transfer of all or substantially
all of the assets of the Company in accordance with Section 5.01, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture and the
Notes with the same effect as if such successor corporation had been named as
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the Company herein and in the Notes. Thereafter the obligations of the Company
under the Notes and Indenture shall terminate except for, in the case of a
transfer, the obligation to pay the principal of and interest on the Notes.
Article 6
Defaults and Remedies
Section 6.01 Events of Default
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Note when the same
becomes due and payable and such failure continues for a period of 10
days;
(2) the Company fails to pay the principal of any Note when the
same becomes due and payable at maturity;
(3) the Company fails to comply with any of its other agreements
in the Notes or this Indenture and such failure continues for the
period and after the notice specified below;
(4) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it
in an involuntary case,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors;
(5) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary
case,
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 60 days; or
(6) an Event of Default has occurred under the 3.5% Notes or the
Other Indenture (as "Event of Default" is defined in the Other
Indenture).
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The foregoing will constitute Events of Default whatever the reason for any
such Event of Default, whether it is voluntary or involuntary, or is effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
The term "Bankruptcy Law" means title 11 of the U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clause (3) is not an Event of Default until the Trustee
notifies the Company, or the Shareholder Representative notifies the Company and
the Trustee, of the Default and the Company does not cure the Default, or it is
not waived, within 30 days after receipt of the notice. The notice must specify
the Default, demand that it be remedied to the extent consistent with law, and
state that the notice is a "Notice of Default."
Section 6.02 Acceleration
If an Event of Default occurs and is continuing, the Trustee by notice to
the Company, or the Shareholder Representative by notice to the Company and the
Trustee, may declare the principal of and accrued and unpaid interest on all the
Notes to be due and payable. The Trustee shall declare the principal of and
accrued and interest on all the Notes to be due and payable if the principal of
and accrued interest on all the 3.5% Notes have been declared to be due and
payable. Upon any such declaration the principal and interest shall be due and
payable immediately.
The Shareholder Representative by notice to the Company and the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of the acceleration.
Section 6.03 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal or interest on the Notes or
to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does notI produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder or the Shareholder Representative in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.04 Waiver of Past Defaults
The Shareholder Representative by notice to the Trustee may waive an
existing Default and its consequences except:
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(1) a Default in the payment of the principal of or interest on
any Note; or
(2) a Default with respect to a provision that under Section 9.02
cannot be amended without the consent of each Noteholder affected.
Section 6.05 Control by Shareholder Representative
The Shareholder Representative may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture, is unduly
prejudicial to the rights of Noteholders, or would involve the Trustee in
personal liability or expense for which the Trustee has not received a
satisfactory indemnity.
Section 6.06 Limitation on Suits
A Noteholder may pursue a remedy with respect to this Indenture or the
Notes only if:
(1) the Holder gives to the Trustee notice of a continuing Event
of Default;
(2) the Holders of a majority in principal amount of the Notes
make a request to the Trustee to pursue the remedy; and
(3) the Trustee either (i) gives to such Holders notice it will
not comply with the request, or (ii) does not comply with the request
within 30 days after receipt of the request.
A Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
Section 6.07 Rights of Holders To Receive Payment
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
Nothing in this Indenture limits or defers the right or ability of Holders
to petition for commencement of a case under applicable Bankruptcy Law to the
extent consistent with such Bankruptcy Law.
Section 6.08 Priorities
After an Event of Default any money or other property distributable in
respect of the Company's obligations under this Indenture shall be paid in the
following order:
First: to the Trustee (including any predecessor Trustee) for amounts due
under Section 7.07;
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Second: to Noteholders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Noteholders.
Section 6.09 Undertaking for Costs
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
or a suit by Holders of more than 10% in principal amount of the Notes.
Section 6.10 Proof of Claim
In the event of any Proceeding, the Trustee may file a claim for the unpaid
balance of the Notes in the form required in the Proceeding and cause the claim
to be approved or allowed. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment, or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any Proceeding.
Section 6.11 Actions of a Holder
For the purpose of providing any consent, waiver or instruction to the
Company or the Trustee, a "Holder" or "Noteholder" shall include a Person who
provides to the Company or the Trustee, as the case may be, an affidavit of
beneficial ownership of a Note together with a satisfactory indemnity against
any loss, liability or expense to such party to the extent that it acts upon
such affidavit of beneficial ownership (including any consent, waiver or
instructions given by a Person providing such affidavit and indemnity).
Article 7
Trustee
Section 7.01 Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
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(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are specifically
set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(4) The Trustee may refuse to perform any duty or exercise any right
or power which would require it to expend its own funds or risk any
liability if it shall reasonably believe that repayment of such funds or
adequate indemnity against such risk is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required by
law.
Section 7.02 Rights of Trustee
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or an Opinion of Counsel. The Trustee may also consult
with counsel on any matter relating to the Indenture or the Notes and the
Trustee shall not be liable for any action it takes or omits to take in good
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faith in reliance on the advice of counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) Except in connection with compliance with TIA Section 310 or 311, the
Trustee shall only be charged with knowledge of Trust Officers.
Section 7.03 Individual Rights of Trustee; Disqualification
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or an Affiliate with
the same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee is subject to TIA Sections 310(b) and
311.
Section 7.04 Trustee's Disclaimer
The Trustee shall have no responsibility for the validity or adequacy of
this Indenture or the Notes, and it shall not be responsible for any statement
in the Notes other than its authentication.
Section 7.05 Notice of Defaults
If a continuing Default is known to the Trustee, the Trustee shall mail to
the Shareholder Representative and Noteholders a notice of the Default within 90
days after it occurs. Except in the case of a Default in payment on any Note,
the Trustee may withhold the notice from Noteholders if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Noteholders. The Trustee shall mail to Noteholders
any notice it receives from Noteholder(s) under Section 6.06, and of any notice
the Trustee provides pursuant to Section 6.06(3)(i).
Section 7.06 Reports by Trustee to Holders
If required pursuant to TIA Section 313(a), within 60 days after the
reporting date stated in Section 12.09, the Trustee shall mail to Noteholders a
brief report dated as of such reporting date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b)(2).
A copy of each report at the time of its mailing to Noteholders shall be
filed with the SEC.
Section 7.07 Compensation and Indemnity
The Company shall pay to the Trustee from time to time reasonable
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compensation for its services, including for any Agent capacity in which it
acts. The Trustee's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred by it. Such expenses
shall include the reasonable compensation and out-of-pocket expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss, liability or
expense incurred by it including in any Agent capacity in which it acts. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not unreasonably be
withheld.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through its own gross negligence, willful
misconduct or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes.
Without prejudice to its rights hereunder, when the Trustee incurs expenses
or renders services after an Event of Default specified in Section 6.01(4) or
(5) occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
Section 7.08 Replacement of Trustee
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Company and the
Shareholder Representative may remove the Trustee by so notifying the Trustee.
The Company by itself may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
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If a successor Trustee is not appointed and does not take office within 30
days after the retiring Trustee resigns, the retiring Trustee may appoint a
successor Trustee at any time prior to the date on which a successor Trustee
takes office. If a successor Trustee does not take office within 45 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company
or, subject to Section 6.09, any Noteholder may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee. Within one year after a successor
Trustee appointed by the Company or a court pursuant to this Section 7.08 takes
office, the Holders of a majority in principal amount of the Notes may appoint a
successor Trustee to replace such successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Noteholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.
Section 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee, if
such successor corporation is eligible and qualified under Section 7.10.
Section 7.10 Eligibility
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Sections 310(a)(1) and 310(a)(2). The Trustee shall always have a
combined capital and surplus as stated in Section 12.09.
Section 7.11 Preferential Collection of Claims Against Company
Upon and so long as the Indenture is qualified under the TIA, the Trustee
is subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b). A Trustee who has resigned or been removed is subject to TIA
Section 311(a) to the extent indicated.
Article 8
[Omitted]
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Article 9
Amendments
Section 9.01 Without Consent of Holders
The Company and the Trustee may amend this Indenture or the Notes without
the consent of any Noteholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.01; or
(3) to make any change that does not adversely affect the rights of
any Noteholder.
Section 9.02 With Consent of Shareholder Representative or Holders
The Company and the Trustee may amend this Indenture or the Notes with the
written consent of the Shareholder Representative. However, without the consent
of each Noteholder affected, an amendment under this Section may not:
(1) reduce the interest on (other than pursuant to an Indemnification
Claim Payment Reduction) or change the time for payment of interest on any
Note;
(2) reduce the principal of (other than pursuant to a Merger
Consideration Principal Reduction, a Litigation Payment Principal Reduction
or an Indemnification Claim Payment Reduction) or change the fixed maturity
of any Note;
(3) change the Maturity Date;
(4) make any Note payable in money other than that stated in the Note;
or
(5) make any change in Section 6.04, 6.07 or 9.02 (second sentence).
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
Section 9.03 Compliance with Trust Indenture Act and Section 12.03
Every amendment to this Indenture or the Notes shall comply with the TIA as
then in effect, so long as the Indenture and Notes are subject to the TIA. The
Trustee is entitled to, and the Company shall provide, an Opinion of Counsel and
Officers' Certificate that the Trustee's execution of any amendment or
supplemental indenture is permitted under this Article 9.
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Section 9.04 Revocation and Effect of Consents and Waivers
A consent to an amendment of this Indenture requiring the consent of each
Noteholder affected or a waiver by a Holder of a Note shall bind the Holder and
every subsequent Holder of that Note or portion of the Note that evidences the
same debt as the consenting Holder's Note, even if notation of the consent or
waiver is not made on the Note. However, any such Holder or subsequent Holder
may revoke the consent or waiver as to such Holder's Note or portion of the Note
if the Trustee receives the notice of revocation before the date the amendment
or waiver becomes effective. After an amendment of this Indenture requiring the
consent of each Noteholder becomes effective, it shall bind every Noteholder,
and after a waiver by a Holder of a Note becomes effective, it shall bind the
Holder and every subsequent Holder of that Note or portion of the Note that
evidences the same debt as the waiving Holder's Note, even if notation of the
waiver is not made on the Note.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Noteholders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Noteholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or take
any such action, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 120 days
after such record date.
Section 9.05 Notice of Amendment; Notation on or Exchange of Notes
After any amendment under this Article becomes effective, the Company shall
mail to Noteholders a notice briefly describing such amendment. The failure to
give such notice to all Noteholders, or any defect therein, shall not impair or
affect the validity of an amendment under this Article.
The Company or the Trustee may place an appropriate notation about an
amendment or waiver on any Note thereafter authenticated. The Company may issue
in exchange for affected Notes new Notes that reflect the amendment or waiver.
Section 9.06 Trustee Protected
The Trustee need not sign any supplemental indenture that adversely affects
its rights.
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Article 10
[Omitted]
Article 11
[Omitted]
Article 12
Miscellaneous
Section 12.01 Notices
Any notice by one party to the other shall be in writing and sent to the
other's address stated in Section 12.09. The notice is duly given if it is
delivered in Person or sent by a national courier service which provides next
Business Day delivery or by first-class mail.
A party by notice to the other party may designate additional or different
addresses for subsequent notices.
Any notice sent to a Noteholder shall be mailed by first-class letter
mailed to its address shown on the register kept by the Registrar. Failure to
mail a notice to a Noteholder or any defect in a notice mailed to a Noteholder
shall not affect the sufficiency of the notice mailed to other Noteholders.
If a notice is delivered or mailed in the manner provided above within the
time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice to Noteholders, it shall deliver or mail a
copy to the Trustee, the Shareholder Representative and each Agent at the same
time.
A "notice" includes any communication required by this Indenture.
Section 12.02 Communication by Holders with Other Holders
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, and Registrar and anyone else shall have the protection of
TIA Section 312(c).
Section 12.03 Certificate and Opinion as to Conditions Precedent
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
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counsel, all such conditions precedent have been complied with.
Section 12.04 Statements Required in Certificate or Opinion
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, the Person has
made such examination or investigation as is necessary to enable such
person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
Section 12.05 Rules by Trustee and Agents
The Trustee may make reasonable rules for action by or a meeting of
Noteholders. Any Agent may make reasonable rules and set reasonable requirements
for its functions.
Section 12.06 Legal Holidays
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open. If a payment date is a Legal Holiday
at a place of payment, payment may be made at that place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 12.07 No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation.
Section 12.08 Duplicate Originals
The parties may sign any number of copies, and may execute such in
counterparts, of this Indenture. One signed copy is enough to prove this
Indenture.
Section 12.09 Variable Provisions
"Officer" means the Chief Executive Officer, President, any Executive Vice
President, any Vice President, the Treasurer, the Secretary, any Assistant
Treasurer or any Assistant Secretary of the Company.
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The Company initially appoints the Trustee as Registrar and Paying Agent.
The first certificate pursuant to Section 4.03 shall be for the fiscal year
ending on December 31, 2007 .
The reporting date for Section 7.06 is December 31 of each year. The first
reporting date is December 31, 2007.
The Trustee shall always have a combined capital and surplus of at least $1
billion as set forth in its most recent published annual report of condition.
The Trustee will be deemed to be in compliance with the capital and surplus
requirement set forth in the preceding sentence if its obligations are
guaranteed by a Person which could otherwise act as Trustee hereunder and which
meets such capital and surplus requirement and the Trustee has at least the
minimum capital and surplus required by TIA Section 310(a)(2).
In determining whether the Trustee has a conflicting interest as defined in
TIA Section 310(b)(1), the following is excluded: the Other Indenture.
The Notes are on a par with, and are neither senior nor subordinate in
right of payment to, the 3.5% Notes.
The Company's address is:
Stericycle, Inc.
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇.▇. ten Brink
Executive Vice President
and Chief Financial Officer
The Trustee's address is:
LaSalle Bank National Association
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Facsimile No.: ________________
Attention: ____________________
The Shareholder Representative's address is:
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▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
A-23
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 12.10 Governing Law
The laws of the State of Illinois shall govern this Indenture and the
Notes.
A-24
Dated: ____________, 2007 Stericycle, Inc.
By
----------------------------------------
Name:
--------------------------------
Title:
--------------------------------
Attest:
Name:
--------------------------------
Title:
--------------------------------
Dated: ____________, ▇▇▇▇ ▇▇▇▇▇▇▇ Bank National Association, as Trustee
By
------------------------------------------
Name:
--------------------------------
Title:
--------------------------------
Attest:
Name:
--------------------------------
Title:
--------------------------------
A-25
Exhibit A
(face of note)
No. _______ $ _______
Stericycle, Inc.
4.5% Promissory Note Due _______, 2014
Interest Payment Dates: _______, 2008, 2009, 2010, 2011, 2012, 2013 and 2014
Record Dates: _______, 2008, 2009, 2010, 2011, 2012, 2013 and 2014
Stericycle, Inc. promises to pay to _______________________, or registered
assigns, the sum of_____________________ Dollars ($_______.__) on _______, 2014.
See the reverse side and the Indenture referenced for additional provisions
of this Note.
Dated: ____________, 2007.
Stericycle, Inc.
By
------------------------------------------------
Name:
----------------------------------------
Title:
-----------------------------------
By
------------------------------------------------
Name:
----------------------------------------
Title:
-----------------------------------
Authenticated:
LaSalle Bank National Association, as Trustee
By
------------------------------------------------
Name:
----------------------------------------
Title:
-----------------------------------
A-1
(back of note)
Stericycle, Inc.
4.5% Promissory Note Due _______, 2014
1. Interest
Stericycle, Inc., a Delaware corporation (the "Company"), promises to pay
interest on the principal amount of this Note at the rate per annum shown above.
The Company will pay interest annually on _______ of each year. Interest on this
Note will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance of this Note.
2. Method of Payment
The Company will pay interest on the Notes to the Persons who are
registered holders of Notes at the close of business on the record date for the
interest payment, except as otherwise provided herein or in the Indenture, even
though Notes are cancelled after the record date and on or before the interest
payment date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal and interest by wire
transfer or check payable in such money. It may mail an interest check to a
record date holder's registered address.
3. Agents
Initially, LaSalle Bank National Association (the "Trustee"), ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ will act as Registrar and Paying Agent.
The Company may change any such Agent without notice. The Company or an
Affiliate may act in any such capacity. Subject to certain conditions, the
Company may change the Trustee.
4. Indenture
The Company issued the Notes under an Indenture dated as of _______, 2007
(the "Indenture") between the Company and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
the Trust Indenture Act of 1939 (15 U.S.C. ▇▇.▇▇. 77aaa-77bbbb) (the "Act"). The
Notes are subject to all such terms, and Noteholders are referred to the
Indenture and the Act for a statement of such terms. The Notes are unsecured
general obligations of the Company limited to $________ in aggregate principal
amount.
5. Reduction in Principal and Reduction in Payments
The principal of the Notes is subject to a reduction in principal, in one
case retroactive to the date of issuance, as provided in Section 2.14 of the
Indenture.
A-2
Payments under the Notes are subject to reduction, in respect of the
payments otherwise next becoming due, as provided in Section 2.15 of the
Indenture.
6. Payment at Maturity
The Company shall pay the entire unpaid principal of the Notes, together
with all accrued interest, on _______, 2014 (the "Maturity Date").
7. Prepayment
Except as limited in the Indenture, the Company may prepay all or any
portion of the unpaid principal of the Notes without penalty at any time prior
to the Maturity Date (the "Prepayment Date") provided that the Company also
concurrently pays all accrued interest on the principal prepaid.
8. Notice of Payment
Notice of payment will be mailed at least 30 days but not more than 60 days
before the Prepayment Date or the Maturity Date, as the case may be, to each
holder of Notes to be paid on such date at his or her registered address.
9. Transfer
The Notes are in registered form without coupons. The transfer of Notes may
be registered and Notes may be exchanged as provided in the Indenture. The
Registrar may require a holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes required by law.
10. Persons Deemed Owners
Subject to Section 6.11 of the Indenture, the registered holder of a Note
may be treated as its owner for all purposes.
11. Amendments and Waivers
Subject to certain exceptions provided in the Indenture, the Indenture or
the Notes may be amended, and any Default may be waived, with the consent of the
Shareholder Representative. Without the consent of any Noteholder, the Indenture
or the Notes may be amended to cure any ambiguity, defect or inconsistency, to
provide for assumption of Company obligations to Noteholders or to make any
change that does not adversely affect the rights of any Noteholder.
12. Successors
When successors assume all the obligations of the Company under the Notes
and the Indenture, the Company will be released from those obligations, except
as provided in the Indenture.
A-3
13. Defaults and Remedies
Subject to the Indenture, if an Event of Default, as defined in the
Indenture, occurs and is continuing, the Trustee or the Shareholder
Representative may declare all the Notes to be due and payable immediately.
Noteholders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, the
Shareholder Representative may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Noteholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee.
14. Trustee Dealings with Company
LaSalle Bank National Association, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee, subject to the
Indenture and the Act.
15. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Noteholder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
16. Authentication
This Note shall not be valid until authenticated by a manual signature of
the Trustee.
17. Abbreviations
Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Noteholder upon written request and without
charge a copy of the Indenture. Requests may be made to: Secretary, Stericycle,
Inc., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
A-4
EXHIBIT B
Form of 3.5% Indenture
================================================================================
Indenture
Stericycle, Inc.
and
LaSalle Bank National Association,
as Trustee
Dated as of _______, 2007
$_______ 3.5% Promissory Notes (Letter of Credit Supported) Due _______, 2014
================================================================================
B-ii
Table of Contents
?Article 1 -- Definitions and Rules of Construction; Applicability
of the Trust Indenture Act.......................................1
Section 1.01 Definitions..............................................1
Section 1.02 Other Definitions........................................3
Section 1.03 Rules of Construction....................................3
Section 1.04 Trust Indenture Act......................................4
Article 2 -- The Notes.........................................................4
Section 2.01 Form and Dating..........................................4
Section 2.02 Execution and Authentication.............................4
Section 2.03 Agents...................................................4
Section 2.04 Paying Agent To Hold Money in Trust......................5
Section 2.05 Noteholder Lists.........................................5
Section 2.06 Transfer and Exchange....................................5
Section 2.07 Replacement Notes........................................6
Section 2.08 Outstanding Notes........................................6
Section 2.09 Treasury Notes Disregarded for Certain Purposes..........6
Section 2.10 Temporary Notes..........................................6
Section 2.11 [Omitted]................................................7
Section 2.12 Cancellation.............................................7
Section 2.13 [Omitted]................................................7
Section 2.14 Principal Reduction......................................7
Section 2.15 Payment Reduction........................................7
Article 3 -- Payments..........................................................8
Section 3.01 Notice to Trustee........................................8
Section 3.02 Pro Rata Prepayment......................................8
Section 3.03 Notice of Payment........................................8
Section 3.04 Effect of Notice of Payment..............................9
Section 3.05 Deposit of Payment Amount................................9
Section 3.06 Notes Prepaid in Part....................................9
Section 3.07 Repayment to Company.....................................9
Article 4 -- Covenants.........................................................9
Section 4.01 Payment of Notes.........................................9
Section 4.02 SEC Reports.............................................10
Section 4.03 Compliance Certificate..................................10
Section 4.04 Notice of Certain Events................................10
Section 4.05 Letter of Credit........................................10
Article 5 -- Successors.......................................................11
Section 5.01 When Company May Merge, etc.............................11
Section 5.02 Successor Corporation Substituted.......................11
Article 6 -- Defaults and Remedies............................................11
Section 6.01 Events of Default.......................................11
Section 6.02 Acceleration............................................13
Section 6.03 Other Remedies..........................................13
Section 6.04 Waiver of Past Defaults.................................13
Section 6.05 Control by Shareholder Representative...................13
Section 6.06 Limitation on Suits.....................................14
Section 6.07 Rights of Holders To Receive Payment....................14
Section 6.08 Priorities..............................................14
Section 6.09 Undertaking for Costs...................................15
Section 6.10 Proof of Claim..........................................15
Section 6.11 Actions of a Holder.....................................15
Article 7 -- Trustee..........................................................15
Section 7.01 Duties of Trustee.......................................15
Section 7.02 Rights of Trustee.......................................16
Section 7.03 Individual Rights of Trustee; Disqualification..........17
Section 7.04 Trustee's Disclaimer....................................17
Section 7.05 Notice of Defaults......................................17
Section 7.06 Reports by Trustee to Holders...........................17
Section 7.07 Compensation and Indemnity..............................17
Section 7.08 Replacement of Trustee..................................18
Section 7.09 Successor Trustee by Merger, etc........................19
Section 7.10 Eligibility.............................................19
Section 7.11 Preferential Collection of Claims Against Company.......19
Article 8 [Omitted]...........................................................19
Article 9 -- Amendments.......................................................19
Section 9.01 Without Consent of Holders..............................19
Section 9.02 With Consent of Shareholder Representative or Holders...20
Section 9.03 Compliance with Trust Indenture Act and Section 12.03...20
Section 9.04 Revocation and Effect of Consents and Waivers...........20
Section 9.05 Notice of Amendment; Notation on or Exchange of Notes...21
Section 9.06 Trustee Protected.......................................21
Article 10 [Omitted]..........................................................21
Article 11 [Omitted]..........................................................21
Article 12 -- Miscellaneous...................................................21
Section 12.01 Notices...............................................21
Section 12.02 Communication by Holders with Other Holders...........22
Section 12.03 Certificate and Opinion as to Conditions Precedent....22
Section 12.04 Statements Required in Certificate or Opinion.........22
Section 12.05 Rules by Trustee and Agents...........................22
Section 12.06 Legal Holidays........................................23
Section 12.07 No Recourse Against Others............................23
Section 12.08 Duplicate Originals...................................23
Section 12.09 Variable Provisions...................................23
Section 12.10 Governing Law.........................................24
Exhibit A (Form of Note).....................................................A-1
B-iii
Cross Reference Table
TIA Section Indenture Section
310 (a)(1)..................................................................7.10
(a)(2).............................................................. 7.10
(a)(3)................................................................N/A
(a)(4)................................................................N/A
(a)(5)................................................................N/A
(b)............................................................7.08; 7.10
(c).................................................................. N/A
311 (a)..................................................................7.11
(b)..................................................................7.11
(c).................................................................. N/A
312 (a)..................................................................2.05
(b).................................................................12.02
(c).................................................................12.02
313 (a)..................................................................7.06
(b)(1)................................................................N/A
(b)(2)...............................................................7.06
(c)..................................................................7.06
(d)..................................................................7.06
314 (a)(1)...............................................................4.02
(a)(2)........................................................4.02; 12.01
(a)(3)...............................................................4.02
(a)(4)...............................................................4.03
(b)...................................................................N/A
(c)..................................2.02; 7.02(b); 8.01(3); 12.03; 12.04
(d)...................................................................N/A
(e).................................................................12.04
(f)..................................................................4.03
315 (a)(1).........................................................7.01(b)(1)
(a)(2).........................................................7.01(b)(2)
(b).......................................................... 7.05; 12.01
(c)...............................................................7.01(a)
(d)(1).........................................................7.01(c)(1)
(d)(2).........................................................7.01(c)(2)
(d)(3)...................................................6.05; 7.01(c)(3)
(e)..................................................................6.09
316 (a)(last sentence)...................................................2.09
(a)(1)(A)............................................................6.05
(a)(1)(B)............................................................6.04
(a)(2)................................................................N/A
(b)..................................................................6.07
(c)..................................................................9.04
317 (a)(1)...............................................................6.03
(a)(2)...............................................................6.10
(b)..................................................................2.04
318 (a)..................................................................1.04
N/A means not applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
B-iv
Indenture
This Indenture dated as of _______, 2007 between Stericycle, Inc., a
Delaware corporation ("Company"), and LaSalle Bank National Association (the
"Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's $_______ 3.5%
Promissory Notes due (Letter of Credit Supported) _______, 2014 (the "Notes"):
Article 1
Definitions and Rules of Construction;
Applicability of the Trust Indenture Act
Section 1.01 Definitions
4.5% Notes means the Company's $_______ 4.5% Promissory Notes due _______,
2014 issued under the Other Indenture.
Affiliate means any Person controlling or controlled by or under common
control with the referenced Person. "Control" for this definition means the
power to direct the management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract, or otherwise.
The terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Agent means any Registrar or Paying Agent.
Board means the Board of Directors of the Person or any officer or
committee thereof authorized to act for such Board.
Business Day means a day that is not a Legal Holiday.
Company means the party named as such above until a successor which duly
assumes the obligations upon the Notes and under the Indenture replaces it and
thereafter means the successor.
Default means any event which is, or after notice or passage of time would
be, an Event of Default.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Holder or Noteholder means a Person in whose name a Note is registered.
Indenture means this Indenture as amended from time to time, including the
terms of the Notes and any amendments thereto.
Indemnification Claim Payment Reduction means a reduction in the aggregate
amounts next becoming due under the Notes and the 3.5% Notes pursuant to Section
8.4 of the Merger Agreement.
Letter of Credit means Irrevocable Lettter of Credit No. _____ in the
amount of $______ issued by __________ to the Trustee as beneficiary to secure
payment of the Notes.
Litigation Payment Principal Reduction means a reduction in the aggregate
principal of the Notes and the 4.5% Notes pursuant to Section 7.7(b) of the
Merger Agreement.
Maturity Date means _______, 2014.
Merger Agreement means the Merger Agreement dated _______, 2007 entered
into by the Company, ____________, a Texas corporation, and MedSolutions, Inc.,
a Texas corporation.
Merger Consideration Principal Reduction means a reduction in the aggregate
principal of the Notes and the 3.5% Notes pursuant to Section 7.6(b)(2) or
Section 7.6(c) of the Merger Agreement.
Notes means the Notes described above issued under this Indenture.
Officers' Certificate means a certificate signed by two Officers, one of
whom must be the President and Chief Executive Officer, the Chief Financial
Officer, or an Executive Vice President or other Vice President of the Company.
See Sections 12.03 and 12.04.
Opinion of Counsel means a written opinion from legal counsel who is
acceptable to the Trustee. See Sections 12.03 and 12.04.
Other Indenture means the Indenture dated as of _______, 2007 between the
Company and LaSalle Bank National Association, as Trustee for the 4.5% Notes.
Person means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
Proceeding means a liquidation, dissolution, bankruptcy, insolvency,
reorganization, receivership or similar proceeding under Bankruptcy Law, an
assignment for the benefit of creditors, any marshalling of assets or
liabilities, or winding up or dissolution, but shall not include any transaction
permitted by and made in compliance with Article 5.
SEC means the U.S. Securities and Exchange Commission.
Shareholder Representative means the Person or Persons from time to time
serving as the "Shareholder Representative" pursuant to Section 7.3 of the
Merger Agreement. The persons initially serving as the Shareholder
Representative are ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
B-2
TIA means the Trust Indenture Act of 1939 (15 U.S.C. ▇▇.▇▇. 77aaa-77bbbb),
as amended, as in effect on the date of this Indenture, except as provided in
Sections 1.04 and 9.03.
Trust Officer means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters or to whom a
matter concerning the Indenture may be referred.
Trustee means the party named as such above until a successor replaces it
and thereafter means the successor.
Section 1.02 Other Definitions
Term Defined in Section
Bankruptcy Law............................................................. 6.01
Credit Agreement........................................................... 4.05
Custodian.................................................................. 6.01
Event of Default........................................................... 6.01
Legal Holiday..............................................................12.06
Notice.....................................................................12.01
Officer....................................................................12.09
Paying Agent............................................................... 2.03
Prepayment Date............................................................ 3.01
Proceeding................................................................. 1.01
Registrar.................................................................. 2.03
Section 1.03 Rules of Construction
Unless the context otherwise requires:
(1) a term defined in Section 1.01 or 1.02 has the meaning assigned to
it therein, and terms defined in the TIA have the meanings assigned to them
in the TIA;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles in the
United States;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(7) "including" means including without limitation.
B-3
Section 1.04 Trust Indenture Act
The provisions of TIA Sections 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture
upon and so long as the Indenture and Notes are subject to the TIA. If any
provision of this Indenture limits, qualifies or conflicts with such duties, the
imposed duties shall control. If a provision of the TIA requires or permits a
provision of this Indenture and the TIA provision is amended, then the Indenture
provision shall be automatically amended to like effect.
Article 2
The Notes
Section 2.01 Form and Dating
The Notes and the certificate of authentication shall be substantially in
the form of Exhibit A, which is hereby incorporated in and expressly made a part
of this Indenture. The Notes may have notations, legends or endorsements
required by law, stock exchange rule, automated quotation system, agreements to
which the Company is subject, or usage. Each Note shall be dated the date of its
authentication.
Section 2.02 Execution and Authentication
Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time the Note is authenticated, the Note is still valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate Notes for original issue up to the amount
stated in paragraph 4 of Exhibit A in accordance with an Officers' Certificate
of the Company. The aggregate principal amount of Notes outstanding at any time
may not exceed that amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate.
Section 2.03 Agents
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and where Notes may
B-4
be presented for payment ("Paying Agent"). Whenever the Company must issue or
deliver Notes pursuant to this Indenture, the Trustee shall authenticate the
Notes at the Company's request. The Registrar shall keep a register of the Notes
and of their transfer and exchange.
The Company may appoint more than one Registrar or Paying Agent. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. If the Company does not appoint another Registrar or
Paying Agent, the Trustee shall act as such.
Section 2.04 Paying Agent To Hold Money in Trust
On or prior to each due date of the principal and interest on any Note, the
Company shall deposit with the Paying Agent a sum sufficient to pay such
principal and interest when so becoming due. The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying Agent
will hold in trust for the benefit of Noteholders or the Trustee all money held
by the Paying Agent for the payment of the principal of or interest on the
Notes, and will notify the Trustee of any Default by the Company in making any
such payment. While any such Default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee. If the Company or any Affiliate acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund.
Section 2.05 Noteholder Lists
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. If the Trustee is not the Registrar, the Company shall furnish to
the Trustee, in writing at least 10 Business Days before each interest payment
date and again no more than six months later, and at such other times as the
Trustee may request, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Noteholders.
Section 2.06 Transfer and Exchange
The Notes shall be issued in registered form and shall be transferable only
upon surrender of a Note for registration of transfer. When a Note is presented
to the Registrar with a request to register a transfer or to exchange the Note
for an equal principal amount of Notes of other denominations, the Registrar
shall register the transfer or make the exchange if its requirements for such
transactions are met and to the extent that the Note has not been prepaid. The
Company may charge a reasonable fee for any registration of transfer or exchange
but not for any exchange pursuant to Section 2.10, 3.06 or 9.05.
All Notes issued upon any transfer or exchange pursuant to the terms of
this Indenture will evidence the same debt and will be entitled to the same
benefits under this Indenture as the Notes surrendered upon such transfer or
exchange.
B-5
Section 2.07 Replacement Notes
If the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken, then, in the absence of notice to the Company that the Note
has been acquired by a protected purchaser, the Company shall issue a
replacement Note. If required by the Trustee or the Company, an indemnity bond
must be provided which is sufficient in the judgment of both to protect the
Company, the Trustee and the Agents from any loss which any of them may suffer
if a Note is replaced. The Company or the Trustee may charge the Holder for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company.
Section 2.08 Outstanding Notes
Notes outstanding at any time are all Notes authenticated by the Trustee
except for those canceled by the Registrar, those delivered to it for
cancellation and those described in this Section as not outstanding. A Note does
not cease to be outstanding because the Company or an Affiliate holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding
unless the Company receives proof satisfactory to it that the replaced Note is
held by a protected purchaser.
If Notes are considered paid under Section 4.01, they cease to be
outstanding and interest on them ceases to accrue.
Section 2.09 Treasury Notes Disregarded for Certain Purposes
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate shall be disregarded and deemed not to be outstanding,
except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Notes which
the Trustee knows are so owned shall be so disregarded. Notes so owned which
have been pledged in good faith shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right to deliver
any such direction, waiver or consent with respect to the Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
Section 2.10 Temporary Notes
Until definitive Notes are ready for delivery, the Company may use
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company considers appropriate
for temporary Notes. Without unreasonable delay, the Company shall deliver
definitive Notes in exchange for temporary Notes.
B-6
Section 2.11 [Omitted]
Section 2.12 Cancellation
The Company at any time may deliver Notes to the Trustee for cancellation.
The Paying Agent, if not the Trustee, shall forward to the Trustee any Notes
surrendered to it for payment. The Trustee shall cancel all Notes surrendered
for registration of transfer, exchange, payment or cancellation and shall
dispose of canceled Notes according to its standard procedures or as the Company
otherwise directs. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
Section 2.13 [Omitted]
Section 2.14 Principal Reduction
The principal of the Notes is subject to reduction, retroactive to the date
of issuance of the Notes, by reason of a Merger Consideration Principal
Reduction.
The principal of the Notes is also subject to reduction, effective as of
the date of payment, by reason of a Litigation Payment Principal Reduction.
In the event of a Merger Consideration Principal Reduction or a Litigation
Payment Principal Reduction, the aggregate principal of all outstanding Notes
and all outstanding 4.5% Notes shall be reduced on a pro rata basis.
The Company shall promptly give notice to the Trustee of any Merger
Consideration Principal Reduction or Litigation Payment Principal Reduction (and
concurrently send a copy of its notice to the Shareholder Representative).
Section 2.15 Payment Reduction
Payments under the Notes are subject to reduction, in respect of the
payments otherwise next becoming due under the Notes, by reason of an
Indemnification Claim Payment Reduction. This reduction is in the nature of a
dollar-for-dollar offset.
In the event of an Indemnification Claim Payment Reduction, payments
otherwise next becoming due under all outstanding Notes and all outstanding 3.5%
Notes shall be reduced on a pro rata basis.
The Company shall promptly give notice to the Trustee of any
Indemnification Claim Payment Reduction (and concurrently send a copy of its
notice to the Shareholder Representative).
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Article 3
Payments
Section 3.01 Notice to Trustee
If Notes are to be prepaid pursuant to paragraph 7 of the Notes, the
Company shall notify the Trustee of the prepayment date (the "Prepayment Date")
and the principal amount of Notes to be prepaid. The Company may not prepay any
portion of the principal of the Notes unless it also concurrently prepays an
equivalent fractional portion of the principal of the 3.5% Notes.
The Company shall give the notice provided for in this Section at least 50
days before the Prepayment Date unless a shorter period is satisfactory to the
Trustee. The record date relating to such prepayment shall be selected by the
Company and given to the Trustee, which record date shall be not less than 15
days prior to the Prepayment Date.
Section 3.02 Pro Rata Prepayment
If Notes are to be prepaid in part, the prepayment shall be made in respect
of all outstanding Notes on a pro rata basis determined by their respective
principal amounts.
Section 3.03 Notice of Payment
At least 30 days but not more than 60 days before any Prepayment Date, and
at least 30 days but not more than 60 days before the Maturity Date, the Company
shall mail a notice of payment to each Holder whose Notes are to be paid.
The notice shall state that it is a notice of payment and shall state:
(1) the payment date;
(2) in the case of a prepayment, the principal amount (or
percentage of the principal amount) of the Holder's Note to
be prepaid;
(3) the name and address of the Paying Agent;
(4) that Notes must be surrendered to the Paying Agent to
collect the amount to be paid; and
(5) that, unless the Company defaults in making such payment or
the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on the
Notes, or in the case of a prepayment, interest on the
prepaid principal amount of the Notes, shall cease to accrue
on and after the Maturity Date or the Prepayment Date, as
the case may be.
At the Company's request, the Trustee shall give the notice of payment in
the Company's name and at its expense.
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Section 3.04 Effect of Notice of Payment
In the case of a prepayment, once notice of payment is mailed, Notes become
due and payable on the Prepayment Date for the prepayment amount. Upon surrender
to the Paying Agent, Notes shall be paid as stated in the notice, plus accrued
interest to the Prepayment Date. Failure to give notice or any defect in the
notice to any Holder shall not affect the validity of the notice to any other
Holder.
Section 3.05 Deposit of Payment Amount
On or before the Prepayment Date or the Maturity Date, as the case may be,
the Company shall deposit with the Paying Agent money sufficient to pay the
principal amount to be prepaid, in the case of a prepayment, or the entire
principal amount, in the case of a payment at maturity, together with accrued
interest through the Prepayment Date or the Maturity Date, as the case may be,
on all Notes to be paid on that date other than Notes or portions of Notes
called for payment which have been delivered by the Company to the Registrar for
cancellation.
Unless the Company shall default in the payment of Notes (and accrued
interest) called for payment, interest on Notes, or in the case of a prepayment,
interest on the prepaid principal amount of Notes, shall cease to accrue on
after the Maturity Date or the Prepayment Date, as the case may be.
Section 3.06 Notes Prepaid in Part
Upon surrender of a Note that is prepaid in part, the Company shall deliver
to the Holder (at the Company's expense) a new Note equal in principal amount to
the portion of the Note surrendered that was not prepaid.
Section 3.07 Repayment to Company
The Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for payment of principal or interest that remains unclaimed
for one year after the right to such money has matured. After payment to the
Company, Noteholders entitled to the money shall look to the Company for payment
as unsecured general creditors unless an abandoned property law designates
another Person.
Article 4
Covenants
Section 4.01 Payment of Notes
The Company shall pay the principal of and interest on the Notes on the
dates and in the manner provided in the Notes and this Indenture. Principal and
interest shall be considered paid on the date due if the Paying Agent holds in
accordance with this Indenture on that date money sufficient to pay all
principal and interest then due and the Paying Agent is not prohibited from
paying such money to the Holders on such date pursuant to the terms of this
Indenture.
The Company shall pay interest on overdue principal at the rate borne by
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the Notes; it shall pay interest on overdue interest at the same rate to the
extent lawful.
Section 4.02 SEC Reports
The Company shall file with the Trustee within 15 days after it files them
with the SEC copies of the annual reports and of the information, documents and
other reports which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. The Company will also comply with the
other provisions of TIA Section 314(a). Delivery of such reports, information
and documents to the Trustee is for informational purposes only and the
Trustee's receipt of such shall not constitute notice or constructive notice of
any information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
Section 4.03 Compliance Certificate
The Company shall deliver to the Trustee, within 105 days after the end of
each fiscal year of the Company, a brief certificate signed by the principal
executive officer, principal financial officer or principal accounting officer
of the Company, as to the signer's knowledge of the Company's compliance with
all conditions and covenants contained in this Indenture (determined without
regard to any period of grace or requirement of notice provided herein).
Section 4.04 Notice of Certain Events
The Company shall give prompt written notice to the Trustee and any Paying
Agent of (i) any Proceeding, (ii) any Default or Event of Default, and (iii) any
cure or waiver of any Default or Event of Default.
Section 4.05 Letter of Credit
If the issuer of the current Letter of Credit gives the Trustee, the
Company and the Shareholder Representative at least 30 days' prior notice of the
issuer's intent not to renew the Letter of Credit upon its expiry, the Company
shall deliver a new Letter of Credit to the Trustee no later than 15 days prior
to the expiry of the current Letter of Credit.
The Company may at any time substitute for the current Letter of Credit a
new Letter of Credit, and concurrently with the Company's delivery of the new
Letter of Credit to the Trustee, the Trustee shall deliver the replaced Letter
of Credit to the Company.
Any new Letter of Credit shall be issued by Bank of America, N.A., any
other lender party to the Company's Credit Agreement, or any other bank or
financial institution approved by the Shareholder Representative (whose approval
shall not be unreasonably withheld), and shall conform in substance to the
current Letter of Credit that it replaces.
The Company's "Credit Agreement" means the Credit Agreement dated as of
July 31, 2006, among the the Company, the Company's subsidiaries and the lenders
from time to time party to the agreement, and Bank of America, N.A., as
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administrative agent, as such agreement may have been and may be amended,
restated, supplemented or otherwise modified.
Article 5
Successors
Section 5.01 When Company May Merge, etc.
The Company shall not consolidate or merge with or into, or transfer all or
substantially all of its assets to, any Person unless:
(1) either the Company shall be the resulting or surviving
entity or such Person is a corporation organized and
existing under the laws of the United States, a State
thereof or the District of Columbia;
(2) if the Company is not the resulting or surviving entity,
such Person assumes by supplemental indenture all the
obligations of the Company under the Notes and this
Indenture; and
(3) immediately before and immediately after the transaction no
Default exists.
The Company shall deliver to the Trustee prior to the proposed transaction
an Officers' Certificate and an Opinion of Counsel, each of which shall state
that such consolidation, merger or transfer and such supplemental indenture
comply with this Article 5 and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 5.02 Successor Corporation Substituted
Upon any consolidation or merger, or any transfer of all or substantially
all of the assets of the Company in accordance with Section 5.01, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture and the
Notes with the same effect as if such successor corporation had been named as
the Company herein and in the Notes. Thereafter the obligations of the Company
under the Notes and Indenture shall terminate except for, in the case of a
transfer, the obligation to pay the principal of and interest on the Notes.
Article 6
Defaults and Remedies
Section 6.01 Events of Default
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Note when the same
becomes due and payable and such failure continues for a period of 10 days;
(2) the Company fails to pay the principal of any Note when the same
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becomes due and payable at maturity;
(3) the Company fails to comply with any of its other agreements in
the Notes or this Indenture (other than its agreement in Section 4.05 to
deliver a new Letter of Credit in the circumstances described) and such
failure continues for the period and after the notice specified below;
(4) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
(5) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case,
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 60 days;
(6) an Event of Default has occurred under the 4.5% Notes or the Other
Indenture (as "Event of Default" is defined in the Other Indenture); or
(7) the Company fails to comply with its agreement in Section 4.05 to
deliver a new Letter of Credit in the circumstances described.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default, whether it is voluntary or involuntary, or is effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
The term "Bankruptcy Law" means title 11 of the U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clause (3) is not an Event of Default until the Trustee
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notifies the Company, or the Shareholder Representative notifies the Company and
the Trustee, of the Default and the Company does not cure the Default, or it is
not waived, within 30 days after receipt of the notice. The notice must specify
the Default, demand that it be remedied to the extent consistent with law, and
state that the notice is a "Notice of Default."
Section 6.02 Acceleration
If an Event of Default occurs and is continuing, the Trustee by notice to
the Company, or the Shareholder Representative by notice to the Company and the
Trustee, may declare the principal of and accrued and unpaid interest on all the
Notes to be due and payable. The Trustee shall declare the principal of and
accrued and interest on all the Notes to be due and payable if the principal of
and accrued interest on all the 4.5% Notes have been declared to be due and
payable. Upon any such declaration the principal and interest shall be due and
payable immediately.
The Shareholder Representative by notice to the Company and the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of the acceleration.
Section 6.03 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal or interest on the Notes,
including drawing on the Letter of Credit, or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Noteholder or the Shareholder Representative in exercising
any right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
Section 6.04 Waiver of Past Defaults
The Shareholder Representative by notice to the Trustee may waive an
existing Default and its consequences except:
(1) a Default in the payment of the principal of or interest on any
Note; or
(2) a Default with respect to a provision that under Section 9.02
cannot be amended without the consent of each Noteholder affected.
Section 6.05 Control by Shareholder Representative
The Shareholder Representative may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee (including drawing on the letter of
Credit). However, the Trustee may refuse to follow any direction that conflicts
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with law or this Indenture, is unduly prejudicial to the rights of Noteholders,
or would involve the Trustee in personal liability or expense for which the
Trustee has not received a satisfactory indemnity.
Section 6.06 Limitation on Suits
A Noteholder may pursue a remedy with respect to this Indenture or the
Notes only if:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default;
(2) the Holders of a majority in principal amount of the Notes make a
request to the Trustee to pursue the remedy; and
(3) the Trustee either (i) gives to such Holders notice it will not
comply with the request, or (ii) does not comply with the request within 30
days after receipt of the request.
A Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
Section 6.07 Rights of Holders To Receive Payment
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
Nothing in this Indenture limits or defers the right or ability of Holders
to petition for commencement of a case under applicable Bankruptcy Law to the
extent consistent with such Bankruptcy Law.
Section 6.08 Priorities
After an Event of Default any money or other property distributable in
respect of the Company's obligations under this Indenture shall be paid in the
following order:
First: to the Trustee (including any predecessor Trustee) for amounts due
under Section 7.07;
Second: to Noteholders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Noteholders.
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Section 6.09 Undertaking for Costs
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
or a suit by Holders of more than 10% in principal amount of the Notes.
Section 6.10 Proof of Claim
In the event of any Proceeding, the Trustee may file a claim for the unpaid
balance of the Notes in the form required in the Proceeding and cause the claim
to be approved or allowed. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment, or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any Proceeding.
Section 6.11 Actions of a Holder
For the purpose of providing any consent, waiver or instruction to the
Company or the Trustee, a "Holder" or "Noteholder" shall include a Person who
provides to the Company or the Trustee, as the case may be, an affidavit of
beneficial ownership of a Note together with a satisfactory indemnity against
any loss, liability or expense to such party to the extent that it acts upon
such affidavit of beneficial ownership (including any consent, waiver or
instructions given by a Person providing such affidavit and indemnity).
Article 7
Trustee
Section 7.01 Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are specifically
set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
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the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(4) The Trustee may refuse to perform any duty or exercise any right
or power which would require it to expend its own funds or risk any
liability if it shall reasonably believe that repayment of such funds or
adequate indemnity against such risk is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required by
law.
Section 7.02 Rights of Trustee
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or an Opinion of Counsel. The Trustee may also consult
with counsel on any matter relating to the Indenture or the Notes and the
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the advice of counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
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(e) Except in connection with compliance with TIA Section 310 or 311, the
Trustee shall only be charged with knowledge of Trust Officers.
Section 7.03 Individual Rights of Trustee; Disqualification
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or an Affiliate with
the same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee is subject to TIA Sections 310(b) and
311.
Section 7.04 Trustee's Disclaimer
The Trustee shall have no responsibility for the validity or adequacy of
this Indenture or the Notes, and it shall not be responsible for any statement
in the Notes other than its authentication.
Section 7.05 Notice of Defaults
If a continuing Default is known to the Trustee, the Trustee shall mail to
the Shareholder Representative and Noteholders a notice of the Default within 90
days after it occurs. Except in the case of a Default in payment on any Note,
the Trustee may withhold the notice from Noteholders if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Noteholders. The Trustee shall mail to Noteholders
any notice it receives from Noteholder(s) under Section 6.06, and of any notice
the Trustee provides pursuant to Section 6.06(3)(i).
Section 7.06 Reports by Trustee to Holders
If required pursuant to TIA Section 313(a), within 60 days after the
reporting date stated in Section 12.09, the Trustee shall mail to Noteholders a
brief report dated as of such reporting date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b)(2).
A copy of each report at the time of its mailing to Noteholders shall be
filed with the SEC.
Section 7.07 Compensation and Indemnity
The Company shall pay to the Trustee from time to time reasonable
compensation for its services, including for any Agent capacity in which it
acts. The Trustee's compensation shall not be limited by any law on compensation
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of a trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred by it. Such expenses
shall include the reasonable compensation and out-of-pocket expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss, liability or
expense incurred by it including in any Agent capacity in which it acts. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not unreasonably be
withheld.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through its own gross negligence, willful
misconduct or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes.
Without prejudice to its rights hereunder, when the Trustee incurs expenses
or renders services after an Event of Default specified in Section 6.01(4) or
(5) occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
Section 7.08 Replacement of Trustee
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Company and the
Shareholder Representative may remove the Trustee by so notifying the Trustee.
The Company by itself may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
If a successor Trustee is not appointed and does not take office within 30
days after the retiring Trustee resigns, the retiring Trustee may appoint a
successor Trustee at any time prior to the date on which a successor Trustee
takes office. If a successor Trustee does not take office within 45 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company
or, subject to Section 6.09, any Noteholder may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
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If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee. Within one year after a successor
Trustee appointed by the Company or a court pursuant to this Section 7.08 takes
office, the Holders of a majority in principal amount of the Notes may appoint a
successor Trustee to replace such successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Noteholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.
Section 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee, if
such successor corporation is eligible and qualified under Section 7.10.
Section 7.10 Eligibility
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Sections 310(a)(1) and 310(a)(2). The Trustee shall always have a
combined capital and surplus as stated in Section 12.09.
Section 7.11 Preferential Collection of Claims Against Company
Upon and so long as the Indenture is qualified under the TIA, the Trustee
is subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b). A Trustee who has resigned or been removed is subject to TIA
Section 311(a) to the extent indicated.
Article 8
[Omitted]
Article 9
Amendments
Section 9.01 Without Consent of Holders
The Company and the Trustee may amend this Indenture or the Notes without
the consent of any Noteholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.01; or
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(3) to make any change that does not adversely affect the rights of
any Noteholder.
Section 9.02 With Consent of Shareholder Representative or Holders
The Company and the Trustee may amend this Indenture or the Notes with the
written consent of the Shareholder Representative. However, without the consent
of each Noteholder affected, an amendment under this Section may not:
(1) reduce the interest on (other than pursuant to an Indemnification
Claim Payment Reduction) or change the time for payment of interest on any
Note;
(2) reduce the principal of (other than pursuant to a Merger
Consideration Principal Reduction, a Litigation Payment Principal
Reduction, or an Indemnification Claim Payment Reduction) or change the
fixed maturity of any Note;
(3) change the Maturity Date;
(4) make any Note payable in money other than that stated in the Note;
or
(5) make any change in Section 6.04, 6.07 or 9.02 (second sentence).
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
Section 9.03 Compliance with Trust Indenture Act and Section 12.03
Every amendment to this Indenture or the Notes shall comply with the TIA as
then in effect, so long as the Indenture and Notes are subject to the TIA. The
Trustee is entitled to, and the Company shall provide, an Opinion of Counsel and
Officers' Certificate that the Trustee's execution of any amendment or
supplemental indenture is permitted under this Article 9.
Section 9.04 Revocation and Effect of Consents and Waivers
A consent to an amendment of this Indenture requiring the consent of each
Noteholder affected or a waiver by a Holder of a Note shall bind the Holder and
every subsequent Holder of that Note or portion of the Note that evidences the
same debt as the consenting Holder's Note, even if notation of the consent or
waiver is not made on the Note. However, any such Holder or subsequent Holder
may revoke the consent or waiver as to such Holder's Note or portion of the Note
if the Trustee receives the notice of revocation before the date the amendment
or waiver becomes effective. After an amendment of this Indenture requiring the
consent of each Noteholder affected becomes effective, it shall bind every
Noteholder, and after a waiver by a Holder of a Note becomes effective, it shall
bind the Holder and every subsequent Holder of that Note or portion of the Note
that evidences the same debt as the waiving Holder's Note, even if notation of
the waiver is not made on the Note.
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The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Noteholders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Noteholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or take
any such action, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 120 days
after such record date.
Section 9.05 Notice of Amendment; Notation on or Exchange of Notes
After any amendment under this Article becomes effective, the Company shall
mail to Noteholders a notice briefly describing such amendment. The failure to
give such notice to all Noteholders, or any defect therein, shall not impair or
affect the validity of an amendment under this Article.
The Company or the Trustee may place an appropriate notation about an
amendment or waiver on any Note thereafter authenticated. The Company may issue
in exchange for affected Notes new Notes that reflect the amendment or waiver.
Section 9.06 Trustee Protected
The Trustee need not sign any supplemental indenture that adversely
affects its rights.
Article 10
[Omitted]
Article 11
[Omitted]
Article 12
Miscellaneous
Section 12.01 Notices
Any notice by one party to the other shall be in writing and sent to the
other's address stated in Section 12.09. The notice is duly given if it is
delivered in Person or sent by a national courier service which provides next
Business Day delivery or by first-class mail.
A party by notice to the other party may designate additional or different
addresses for subsequent notices.
Any notice sent to a Noteholder shall be mailed by first-class letter
mailed to its address shown on the register kept by the Registrar. Failure to
mail a notice to a Noteholder or any defect in a notice mailed to a Noteholder
shall not affect the sufficiency of the notice mailed to other Noteholders.
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If a notice is delivered or mailed in the manner provided above within the
time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice to Noteholders, it shall deliver or mail a
copy to the Trustee, the Shareholder Representative and each Agent at the same
time.
A "notice" includes any communication required by this Indenture.
Section 12.02 Communication by Holders with Other Holders
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, and Registrar and anyone else shall have the protection of
TIA Section 312(c).
Section 12.03 Certificate and Opinion as to Conditions Precedent
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 12.04 Statements Required in Certificate or Opinion
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, the Person
has made such examination or investigation as is necessary to enable
such person to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
Section 12.05 Rules by Trustee and Agents
The Trustee may make reasonable rules for action by or a meeting of
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Noteholders. Any Agent may make reasonable rules and set reasonable requirements
for its functions.
Section 12.06 Legal Holidays
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open. If a payment date is a Legal Holiday
at a place of payment, payment may be made at that place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 12.07 No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation.
Section 12.08 Duplicate Originals
The parties may sign any number of copies, and may execute such in
counterparts, of this Indenture. One signed copy is enough to prove this
Indenture.
Section 12.09 Variable Provisions
"Officer" means the Chief Executive Officer, President, any Executive Vice
President, any Vice President, the Treasurer, the Secretary, any Assistant
Treasurer or any Assistant Secretary of the Company.
The Company initially appoints the Trustee as Registrar and Paying Agent.
The first certificate pursuant to Section 4.03 shall be for the fiscal year
ending on December 31, 2007 .
The reporting date for Section 7.06 is December 31 of each year. The first
reporting date is December 31, 2007.
The Trustee shall always have a combined capital and surplus of at least $1
billion as set forth in its most recent published annual report of condition.
The Trustee will be deemed to be in compliance with the capital and surplus
requirement set forth in the preceding sentence if its obligations are
guaranteed by a Person which could otherwise act as Trustee hereunder and which
meets such capital and surplus requirement and the Trustee has at least the
minimum capital and surplus required by TIA Section 310(a)(2).
In determining whether the Trustee has a conflicting interest as defined in
TIA Section 310(b)(1), the following is excluded: the Other Indenture.
The Notes are on a par with, and are neither senior nor subordinate in
right of payment to, the 3.5%
Notes.
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The Company's address is:
Stericycle, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇.▇. ten Brink
Executive Vice President
and Chief Financial Officer
The Trustee's address is:
LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ____
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: __________
Attention: ____________________
The Shareholder Representative's address is:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Facsimile No.:
(▇▇▇) ▇▇▇-▇▇▇▇
Section 12.10 Governing Law
The laws of the State of Illinois shall govern this Indenture and the
Notes.
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Dated: ____________, 2007 Stericycle, Inc.
By
-----------------------------------
Name:
------------------------------
Title:
------------------------------
Attest:
---------------------------------
Name:
------------------------------
Title:
------------------------------
Dated: ____________, ▇▇▇▇ ▇▇▇▇▇▇▇ Bank National Association, as Trustee
By
-----------------------------------
Name:
------------------------------
Title:
------------------------------
Attest:
---------------------------------
Name:
------------------------------
Title:
B-25
Exhibit A
(face of note)
No. _______ $ _______
Stericycle, Inc.
3.5% Promissory Note (Letter of Credit Supported) Due _______, 2014
Interest Payment Dates: _______, 2008, 2009, 2010, 2011, 2012, 2013 and 2014
Record Dates: _______, 2008, 2009, 2010, 2011, 2012, 2013 and 2014
Stericycle, Inc. promises to pay to _______________________, or registered
assigns, the sum of ________________________ Dollars ($_______.__) on _______,
2014.
See the reverse side and the Indenture referenced for additional provisions
of this Note.
Dated: ____________, 2007.
Stericycle, Inc.
By
-----------------------------------
Name:
------------------------------
Title:
------------------------------
By
---------------------------------
Name:
------------------------------
Title:
------------------------------
Authenticated:
LaSalle Bank National Association, as Trustee
By
-----------------------------------
Name:
------------------------------
Title:
------------------------------
(back of note)
Stericycle, Inc.
3.5% Promissory Note (Letter of Credit Supported) Due _______, 2014
1. Interest
Stericycle, Inc., a Delaware corporation (the "Company"), promises to pay
interest on the principal amount of this Note at the rate per annum shown above.
The Company will pay interest annually on _______ of each year. Interest on this
Note will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance of this Note.
2. Method of Payment
The Company will pay interest on the Notes to the Persons who are
registered holders of Notes at the close of business on the record date for the
interest payment, except as otherwise provided herein or in the Indenture, even
though Notes are cancelled after the record date and on or before the interest
payment date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal and interest by wire
transfer or check payable in such money. It may mail an interest check to a
record date holder's registered address.
3. Agents
Initially, LaSalle Bank National Association (the "Trustee"), ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ will act as Registrar and Paying Agent.
The Company may change any such Agent without notice. The Company or an
Affiliate may act in any such capacity. Subject to certain conditions, the
Company may change the Trustee.
4. Indenture
The Company issued the Notes under an Indenture dated as of _______, 2007
(the "Indenture") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by the Trust Indenture Act of
1939 (15 U.S.C. ▇▇.▇▇. 77aaa-77bbbb) (the "Act"). The Notes are subject to all
such terms, and Noteholders are referred to the Indenture and the Act for a
statement of such terms. The Notes are unsecured general obligations of the
Company limited to $________ in aggregate principal amount.
5. Reduction in Principal and Reduction in Payments
The principal of the Notes is subject to a reduction in principal, in one
case retroactive to the date of issuance, as provided in Section 2.14 of the
Indenture.
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Payments under the Notes are subject to reduction, in respect of the
payments otherwise next becoming due, as provided in Section 2.15 of the
Indenture.
6. Payment at Maturity
The Company shall pay the entire unpaid principal of the Notes, together
with all accrued interest, on _______, 2014 (the "Maturity Date").
7. Prepayment
Except as limited in the Indenture, the Company may prepay all or any
portion of the unpaid principal of the Notes without penalty at any time prior
to the Maturity Date (the "Prepayment Date") provided that the Company also
concurrently pays all accrued interest on the principal prepaid.
8. Notice of Payment
Notice of payment will be mailed at least 30 days but not more than 60 days
before the Prepayment Date or the Maturity Date, as the case may be, to each
holder of Notes to be paid on such date at his or her registered address.
9. Transfer
The Notes are in registered form without coupons. The transfer of Notes may
be registered and Notes may be exchanged as provided in the Indenture. The
Registrar may require a holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes required by law.
10. Persons Deemed Owners
Subject to Section 6.11 of the Indenture, the registered holder of a Note
may be treated as its owner for all purposes.
11. Amendments and Waivers
Subject to certain exceptions provided in the Indenture, the Indenture or
the Notes may be amended, and any Default may be waived, with the consent of the
Shareholder Representative. Without the consent of any Noteholder, the Indenture
or the Notes may be amended to cure any ambiguity, defect or inconsistency, to
provide for assumption of Company obligations to Noteholders or to make any
change that does not adversely affect the rights of any Noteholder.
12. Successors
When successors assume all the obligations of the Company under the Notes
and the Indenture, the Company will be released from those obligations, except
as provided in the Indenture.
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13. Defaults and Remedies
Subject to the Indenture, if an Event of Default, as defined in the
Indenture, occurs and is continuing, the Trustee or the Shareholder
Representative may declare all the Notes to be due and payable immediately.
Noteholders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, the
Shareholder Representative may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Noteholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee.
14. Trustee Dealings with Company
LaSalle Bank National Association, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee, subject to the
Indenture and the Act.
15. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Noteholder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
16. Authentication
This Note shall not be valid until authenticated by a manual signature of
the Trustee.
17. Abbreviations
Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Noteholder upon written request and without
charge a copy of the Indenture. Requests may be made to: Secretary, Stericycle,
Inc., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
A-4