Exhibit 4.4.
PURCHASE AGREEMENT
among
PCA LLC,
THE GUARANTORS named herein
and
GS MEZZANINE PARTNERS II, L.P., and
GS MEZZANINE PARTNERS II OFFSHORE, L.P.
Dated as of June 27, 2002
Relating to:
13 3/4% Senior Subordinated Notes Due 2010,
TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS AND ACCOUNTING TERMS ................................................ 2
1.1. Definitions ..................................................................... 2
1.2. Computation of Time Periods ..................................................... 35
1.3. Terms Generally ................................................................. 35
1.4. Accounting Terms ................................................................ 35
SECTION 2. AUTHORIZATION AND ISSUANCE OF NOTES ............................................. 35
2.1. Authorization of Issue .......................................................... 35
2.2. Sale and Purchase of the Notes .................................................. 35
2.3. Closing ......................................................................... 35
SECTION 3. CONDITIONS TO CLOSING ........................................................... 36
3.1. Representations and Warranties .................................................. 36
3.2. Performance; No Default Under Other Agreements .................................. 36
3.3. Compliance Certificates ......................................................... 36
3.4. Opinions of Counsel ............................................................. 37
3.5. Refinancing ..................................................................... 37
3.6. Credit Agreement; Issuance and Sale of Senior Notes; Sale of Holdco
Notes; Structure of the Company and its Subsidiaries; Satisfaction
of Conditions under the Transaction Documents ................................... 37
3.7. Existing Financing .............................................................. 38
3.8. Financial Information ........................................................... 38
3.9. Material Adverse Effect ......................................................... 39
3.10. Proceedings and Documents ....................................................... 39
3.11. Transaction Documents in Force and Effect; Information. ......................... 39
3.12. No Violation; No Legal Constraints; Consents, Authorizations and Filings, Etc.... 39
3.13. Closing Payments; Payment of Expenses ........................................... 40
3.14. No Changes to Offering Circular ................................................. 40
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................................... 40
4.1. Due Incorporation; Power and Authority .......................................... 40
4.2. Capitalization .................................................................. 41
4.3. Subsidiaries .................................................................... 43
4.4. Due Authorization, Execution, and Delivery. ..................................... 43
4.5. Non-Contravention; Authorizations and Approvals ................................. 44
4.6. Financial Statements; Offering Circular ......................................... 44
4.7. Absence of Undisclosed Liabilities or Events .................................... 45
4.8. No Actions or Proceedings ....................................................... 46
4.9. Title to Properties ............................................................. 46
4.10. Intellectual Property Rights .................................................... 46
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4.11. Tax Returns and Payments ........................................................ 46
4.12. Employee Benefit Plans .......................................................... 47
4.13. Private Offering; No Integration or General Solicitation; Rule 144A
Eligibility ..................................................................... 48
4.14. Environmental Matters ........................................................... 49
4.15. Status under Certain Statutes ................................................... 49
4.16. Insurance ....................................................................... 49
4.17. Use of Proceeds; Margin Regulations ............................................. 50
4.18. Compliance with Laws; Permits ................................................... 50
4.19. Solvency ........................................................................ 50
4.20. Affiliate Transactions .......................................................... 50
4.21. Material Contracts .............................................................. 50
4.22. No Changes to Applicable Law .................................................... 50
4.23. Indebtedness .................................................................... 51
4.24. Fees ............................................................................ 51
4.25. Labor and Employment Matters .................................................... 51
4.26. Brokerage Fees .................................................................. 51
4.27. Absence of Breach of Representations and Warranties ............................. 51
SECTION 5. REPRESENTATIONS OF THE PURCHASERS ............................................... 51
5.1. Purchase for Investment ......................................................... 52
SECTION 6. COVENANTS TO PROVIDE INFORMATION ................................................ 53
6.1. Future Reports to the Company ................................................... 53
SECTION 7. OTHER AFFIRMATIVE COVENANTS ..................................................... 54
7.1. Payment of Notes ................................................................ 54
7.2. Maintenance of Office or Agency ................................................. 54
7.3. Legal Existence ................................................................. 55
7.4. Maintenance of Properties; Insurance; Compliance with Law ....................... 55
7.5. Waiver of Stay, Extension or Usury Laws ......................................... 55
7.6. Taxes ........................................................................... 56
7.7. Books, Records and Access ....................................................... 55
7.8. Repurchase at the Option of Holders upon Change of Control ...................... 57
7.9. Board Representation ............................................................ 59
7.10. Additional Guarantees ........................................................... 60
SECTION 8. NEGATIVE COVENANTS OF THE COMPANY ............................................... 60
8.1. Limitation on Incurrence of Additional Indebtedness ............................. 60
8.2. Limitation on Restricted Payments ............................................... 61
8.3. Limitation on Liens ............................................................. 65
8.4. Limitation on Asset Sales ....................................................... 65
8.5. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries .... 69
8.6. Limitation on Transactions with Affiliates ...................................... 70
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8.7. Limitation on Sale and Leaseback Transactions .................. 72
8.8. Limitation on Designations of Unrestricted Subsidiaries ........ 72
8.9. Conduct of Business ............................................ 73
8.10. Limitation on Repurchases of Notes ............................. 73
SECTION 9. Successor Corporation .......................................... 73
9.1. Merger, Consolidation and Sale of Assets ....................... 73
9.2. Merger or Consolidation of any Guarantor ....................... 74
9.3. Successor Person Substituted ................................... 74
SECTION 10. PROVISIONS RELATING TO RESALES OF NOTES ........................ 74
10.1. Private Offerings .............................................. 74
10.2. Procedures and Management Cooperation in Private Offerings ..... 75
SECTION 11. THE NOTES ...................................................... 78
11.1. Form and Execution ............................................. 78
11.2. Terms of the Notes ............................................. 78
11.3. Denominations .................................................. 78
11.4. Form of Legend for the Notes ................................... 78
11.5. Payments and Computations....................................... 79
11.6. Register, Registration of Transfer and Exchange ................ 80
11.7. Transfer Restrictions .......................................... 81
11.8. Mutilated, Destroyed, Lost and Stolen Notes .................... 83
11.9. Persons Deemed Owners .......................................... 83
11.10. Cancellation ................................................... 83
11.11. Home Office Payment ............................................ 83
SECTION 12. EVENTS OF DEFAULT; REMEDIES .................................... 84
12.1. Events of Default. ............................................. 84
12.2. Remedies ....................................................... 86
12.3. Waiver of Past Defaults ........................................ 86
SECTION 13. REDEMPTION ............................................... 87
13.1. Right of Redemption ............................................ 87
13.2. Partial Redemptions ............................................ 87
13.3. Notice of Redemption ........................................... 87
13.4. Deposit of Redemption Price .................................... 88
13.5. Notes Payable on Redemption Date ............................... 88
13.6. Notes Redeemed in Part ......................................... 88
SECTION 14. SUBORDINATION OF NOTES ................................... 88
14.1. Notes Subordinate to Senior Indebtedness ....................... 88
14.2. Payment over of Proceeds upon Dissolution, Etc ................. 89
14.3. No Payment When Senior Indebtedness in Default ................. 90
14.4. Payment Permitted If No Default ................................ 91
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14.5. Subrogation to Rights of Holders of Senior Indebtedness ................. 91
14.6. Provisions Solely to Define Relative Rights ............................. 92
14.7. No Waiver of Subordination Provisions ................................... 92
14.8. Reliance on Judicial Order or Certificate of Liquidating Agent .......... 93
14.9. Reliance by Holders of Senior Indebtedness on Subordination Provisions .. 93
14.10. Third Party Beneficiary; No Amendment ................................... 93
14.11. Acceleration of Notes ................................................... 93
SECTION 15. NOTE GUARANTEES ......................................................... 94
15.1. Note Guarantees ......................................................... 94
15.2. Execution and Delivery of Note Guarantees ............................... 94
15.3. Guarantors May Consolidate, Etc. on Certain Terms ....................... 95
15.4. Releases of Note Guarantees ............................................. 96
15.5. Subordination of Note Guarantees ........................................ 96
15.6. Limitation on Guarantor Liability ....................................... 96
15.7. Endorsement of Note Guarantees .......................................... 97
SECTION 16. EXPENSES AND CONFIDENTIALITY ............................................ 97
16.1. Expenses ................................................................ 97
16.2. Indemnification ......................................................... 97
16.3. Notification ............................................................ 98
16.4. Confidentiality. ........................................................ 99
SECTION 17. MISCELLANEOUS ........................................................... 100
17.1. Notices ................................................................. 100
17.2. Benefit of Agreement; Assignments and Participations .................... 100
17.3. No Waiver; Remedies Cumulative .......................................... 101
17.4. Amendments, Waivers and Consents ........................................ 101
17.5. Counterparts ............................................................ 101
17.6. Reproduction ............................................................ 101
17.7. Headings ................................................................ 102
17.8. Survival of Covenants and Indemnities ................................... 102
17.9. Governing Law; Submission to Jurisdiction; Venue ........................ 102
17.10. Severability ............................................................ 103
17.11. Entirety ................................................................ 103
17.12. Survival of Representations and Warranties .............................. 103
17.13. Construction ............................................................ 103
17.14. Incorporation ........................................................... 104
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EXHIBITS:
Exhibit A Form of Note
Exhibit B Form of Supplemental Agreement
Exhibit C Form of Notation of Note Guarantee
Exhibit 3.3(a) Form of Officer's Certificate
Exhibit 3.3(b) Form of Secretary's Certificate
Exhibit 3.4-A Form of Opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit 3.4-B Form of Opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., North
Carolina Counsel
Exhibit 3.4-C Form of Opinion of J. ▇▇▇▇▇▇ ▇▇▇▇, General Counsel
Exhibit 3.4-D Form of Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, Texas Counsel
SCHEDULES:
Schedule A Primary and fully diluted ownership of Capital Stock
Schedule B Purchasers, Etc.
Schedule C Existing Financing
Schedule 4.2 Voting Trusts and Other Agreements
Schedule 4.3 Subsidiaries
Schedule 4.20 Affiliate Transactions
Schedule 4.21 Material Contracts
Schedule 4.26 Brokerage Fees
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of June 27, 2002, among PCA LLC, a
Delaware limited liability company and a newly formed subsidiary of PCA
International, Inc., (the "Company"), the Guarantors (as hereinafter defined)
listed on the signature pages hereof as Guarantors, GS Mezzanine Partners II,
L.P., a limited partnership organized under the laws of Delaware ("GS
Mezzanine") and GS Mezzanine Partners II Offshore, L.P., an exempted limited
partnership organized under the laws of the Cayman Islands ("GS Offshore" and,
together with GS Mezzanine, the "Purchasers").
RECITALS
WHEREAS, PCA International, Inc., a North Carolina corporation
("Holdco"), intends to repay its Existing Senior Credit Facility (as hereinafter
defined) and Outstanding Senior Subordinated Term Loans (as hereinafter defined)
(the "Senior Credit Facility and Subordinated Term Loan Refinancing");
WHEREAS, in connection with the Senior Credit Facility and
Subordinated Term Loan Refinancing, (a) Holdco has formed the Company as a newly
formed wholly-owned subsidiary of Holdco, (b) Holdco, at or prior to the Closing
hereunder, will transfer all of its assets and liabilities to the Company (the
"Asset Dropdown"), other than (i) the membership interests in the Company, (ii)
any assets, properties or rights that are not capable of being sold, assigned,
transferred or conveyed to the Company without the consent of any other person,
or if such assignment or attempted assignment would constitute a breach thereof,
or a violation of any applicable federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree, injunction, award,
administrative order or decree, administrative or judicial decision, or any
other executive or legislative proclamation (the "Withheld Contracts"), (iii)
agreements relating to the issuance, sale, purchase, repurchase or registration
of securities of Holdco, (iv) minute books and other corporate books and records
of Holdco, and (v) agreements entered into between the Company and Holdco (the
assets referred to in clauses (a) through (e) above, "Permitted Holdco Assets"),
(c) the Company will: (i) borrow approximately $26,000,000 pursuant to the
Credit Agreement (as hereinafter defined); (ii) co-issue and sell with PCA
Finance Corp., a wholly-owned subsidiary of the Company, an aggregate of
$165,000,000 of 11.875% Senior Notes due 2009 (the "Senior Notes") to certain
qualified institutional buyers (the "Initial Purchasers") in reliance of Rule
144A under the Securities Act (as hereinafter defined); and (iii) upon the terms
and subject to the conditions set forth in this Agreement, sell to the
Purchasers $10,000,000 in original principal amount of its 13 3/4% senior
subordinated notes due 2010 in the form of Exhibit A hereto (together with all
notes issued in exchange or replacement therefor, the "Notes"); and (d) and upon
the terms and subject to the conditions set forth in the Purchase Agreement
between Holdco and the Purchasers (the "Holdco Purchase Agreement"), Holdco will
sell to the Purchasers $30,000,000 in original principal amount of its 16.5%
senior subordinated discount Notes due 2010 (the "Holdco Notes");
WHEREAS, Holdco will guarantee (i) the Company's and PCA Finance
Corp.'s Obligations (as hereinafter defined) under the Senior Notes and (ii) the
Company's Obligations under the Credit Agreement and the Notes;
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WHEREAS, the Subsidiary Guarantors will guarantee (i) the Company's
and PCA Finance Corp.'s Obligations (as hereinafter defined) under the Senior
Notes and (ii) the Company's Obligations under the Credit Agreement and the
Notes (collectively, the "Subsidiary Guarantees"); and
WHEREAS, the Company has duly authorized the creation and issuance
of the Notes to be purchased by the Purchasers on the date hereof and the
execution and delivery of this Agreement; and the Company has duly authorized
the creation and issuance of the Notes to be purchased by the Purchasers on the
date hereof and the execution and delivery of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1.
DEFINITIONS AND ACCOUNTING TERMS
1.1. Definitions. As used herein, the following terms shall have
the meanings specified herein unless the context otherwise requires:
"Accredited Investor" means any Person that is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with the Company or any of
its Restricted Subsidiaries or assumed in connection with the acquisition of
assets from such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such acquisition, merger or
consolidation.
"Alternate Offer" has the meaning set forth in Section 7.8(f).
"Affiliate" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"Affiliate Transaction" has the meaning set forth under Section
8.6(a).
"Agreement" is defined in Section 17.4.
"amend" means amend, modify, supplement, restate or amend and
restate, including successively; and "amending" and "amended" have correlative
meanings.
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"Applicable Law" means all laws, statutes, treaties, rules, codes
(including building codes), ordinances, regulations, certificates, orders, and
licenses of, and interpretations by, any Governmental Authority and judgments,
decrees, injunctions, writs, permits, orders, or like governmental action of any
Governmental Authority (including Environmental Laws and those pertaining to
health or safety) applicable to the Company or any of its Subsidiaries or any of
their property, assets, or operations.
"asset" means any asset or property, whether real, personal or other,
tangible or intangible.
"Asset Acquisition" means (a) an Investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary of the Company or shall be merged with or
into the Company or any of its Restricted Subsidiaries, or (b) the acquisition,
other than in the ordinary course of business, by the Company or any of its
Restricted Subsidiaries of the assets of any Person (other than a Restricted
Subsidiary of the Company) which constitute all or substantially all of the
assets of such Person or comprise any division or line of business of such
Person or any other assets of such Person.
"Asset Dropdown" is defined in the second recital.
"Asset Sale" means any Transfer by the Company or any of its
Restricted Subsidiaries to any Person other than the Company or any Restricted
Subsidiary of (x) any Capital Stock of any Subsidiary of the Company; or (y) any
other assets of the Company or any of its Restricted Subsidiaries other than in
the ordinary course of business; provided, however, that Asset Sales shall not
include:
(1) a transaction or series of related transactions for which the Company
and its Restricted Subsidiaries receive aggregate consideration of less
than $1.0 million;
(2) sales or grants of licenses to use the patents, trade secrets, know-how
and other intellectual property of the Company or any of its Restricted
Subsidiaries to the extent that such license does not prohibit the
Company or any of its Restricted Subsidiaries from using the
technologies licensed and does not require the Company or any of its
Restricted Subsidiaries to pay any fees for any such use;
(3) the Transfer (a) of all or substantially all of the assets of the
Company as permitted under Section 9, (b) pursuant to any foreclosure
of assets or other remedy provided by applicable law by a creditor of
the Company or any of its Restricted Subsidiaries with a Lien on such
assets, which Lien is permitted under this Agreement, (c) involving
only cash or Cash Equivalents or involving any asset of the Company or
any of its Restricted Subsidiaries that in the reasonable judgment of
the Company, has become damaged, obsolete or worn-out and is sold in a
manner that is consistent with past practices of the Company and its
Restricted Subsidiaries or (d) including only the lease or sublease of
any real or personal property in the ordinary course of business;
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(4) the making of any Permitted Investment or any Restricted Payment
permitted by the terms of this Agreement;
(5) the surrender or waiver of contract rights or the settlement, release
or surrender of contract, tort or other claims of any kind; and
(6) the granting of Liens not prohibited by this Agreement.
"Attributable Indebtedness" when used with respect to any Sale and
Leaseback Transaction, means, as at the time of determination, the present value
(discounted at a rate equivalent to the Company's then-current weighted average
cost of funds for borrowed money as at the time of determination, compounded on
a semi-annual basis) of the total obligations of the lessee for net rental
payments during the remaining term of the lease included in any such Sale and
Leaseback Transaction.
"Audit Date" means February 3, 2002.
"Bankruptcy Law" means Title 11 of the United States Code or any
similar federal or state bankruptcy, insolvency, reorganization or other law for
the relief of debtors.
"Basket" has the meaning set forth in Section 8.2(a).
"Beneficial Owner" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act. For the purposes of this
definition, the term "Beneficially Own" shall have a correlative meaning.
"Board of Directors" means (1) as to any Person that is a
corporation, the board of directors of such Person or any duly authorized
committee thereof and (2) as to any other Person, the functionally comparable
body of such Person or any duly authorized committee thereof.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (b) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease (or other agreement conveying the right
to use an asset) that are required to be classified and accounted for as capital
lease obligations under GAAP and, for purposes of this definition, the amount of
such obligations at any date shall be the capitalized amount of such obligations
at such date, determined in accordance with GAAP.
"Cash Equivalents" means:
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(1) a marketable obligation, maturing within one year after issuance
thereof, issued or guaranteed by the United States of America or an
instrumentality or agency thereof;
(2) a certificate of deposit or banker's acceptance, maturing within one
year after issuance thereof, issued by any lender under the Credit
Agreement, or a U.S. national or state bank or trust company or a
European, Canadian or Japanese bank, in each case having capital,
surplus and undivided profits of at least $500.0 million and whose
long-term unsecured debt has a rating of "A" or better by S&P or A2 or
better by ▇▇▇▇▇'▇ or the equivalent rating by any other nationally
recognized rating agency (provided that the aggregate face amount of
all Investments in certificates of deposit or bankers' acceptances
issued by the principal offices of or branches of such European or
Japanese banks located outside the United States shall not at any time
exceed 33 1/3% of all Investments described in this definition);
(3) open market commercial paper, maturing within 270 days after issuance
thereof, which has a rating of A-2 or better by S&P or P-2 or better by
▇▇▇▇▇'▇ or the equivalent rating by any other nationally recognized
rating agency;
(4) repurchase agreements and reverse repurchase agreements with a term not
in excess of one year with any financial institution which has been
elected primary government securities dealers by the Federal Reserve
Board or whose securities are rated AA- or better by S&P or Aa3 or
better by ▇▇▇▇▇'▇ or the equivalent rating by any other nationally
recognized rating agency relating to marketable direct obligations
issued or unconditionally guaranteed by the United States of America or
any agency or instrumentality thereof and backed by the full faith and
credit of the United States of America; and
(5) shares of any money market mutual fund rated at least AAA or the
equivalent thereof by S&P or at least Aaa or the equivalent thereof by
▇▇▇▇▇'▇ or any other mutual fund holding assets consisting (except for
de minimis amounts) of the type specified in clauses (1) through (4)
above.
"Change of Control" means the occurrence of the following:
(1) prior to the Initial Public Offering, the Permitted Holders, in the
aggregate, do not beneficially own Capital Stock of Holdco representing
more than 50% of all (i) voting power of the Voting Stock of Holdco and
(ii) economic value of the Capital Stock of Holdco; or
(2) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" or
"group" (as defined in Sections 13(d) and 14(d) of the Exchange Act),
other than the Permitted Holders, becomes the Beneficial Owner,
directly or indirectly, of Capital Stock of the Company representing
more than 35% of all (i) voting power of the Voting Stock of Holdco or
(ii) economic value of the Capital Stock of Holdco, and the Permitted
Holders, in the aggregate, Beneficially Own Capital Stock of Holdco
representing a
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lesser percentage of such voting power or economic value, as
applicable, than the Capital Stock Beneficially Owned, directly or
indirectly, by such "person" or "group"; or
(3) Holdco consolidates with, or merges with or into, any Person (other
than a Permitted Holder) or Transfers all or substantially all of the
assets of Holdco and its Restricted Subsidiaries taken as a whole to
any Person (other than a Permitted Holder), or any Person (other than a
Permitted Holder) consolidates with, or merges with or into, Holdco,
other than any such transaction where the Capital Stock of Holdco
outstanding immediately prior to such transaction constitutes, or is
converted into or exchanged for Capital Stock (other than Disqualified
Capital Stock), of the surviving or Transferee Person constituting a
majority of the outstanding (i) voting power of the Voting Stock of
Holdco or such surviving or Transferee Person and (ii) economic value
of the Capital Stock of Holdco or such surviving Person or Transferee
Person immediately after giving effect to such issuance; or
(4) the first day on which a majority of the members of the board of
directors of Holdco are not Continuing Directors; or
(5) the adoption of a plan relating to the liquidation or dissolution of
Holdco or the Company; or
(6) Holdco ceases to own, of record or beneficially, all of the Equity
Interests of the Company.
"Change of Control Offer" is defined in Section 7.8(a).
"Change of Control Payment" is defined in Section 7.8(a).
"Change of Control Payment Date" is defined in Section 7.8(a).
"Closing" is defined in Section 2.3(a).
"Closing Date" is defined in Section 2.3(a).
"Closing Payment" means, with respect to each Purchaser, an amount
equal to 3% of the Purchase Price paid by such Purchaser as of the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from time to
time.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this Agreement such Commission is not existing and
performing the duties now assigned to it under the Exchange Act, the body
performing such duties at such time.
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"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued thereafter, and includes, without limitation, all series
and classes of such common stock.
"Company" is defined in the preamble to this Agreement.
"Consolidated" or "consolidated" (including the correlative term
"consolidating") or on a "consolidated basis", when used with reference to any
financial term in this Agreement (but not when used with respect to any Tax
Return or Tax liability), means the aggregate for two or more Persons of the
amounts signified by such term for all such Persons, with inter-company items
eliminated and, with respect to net income or earnings, after eliminating the
portion of net income or earnings properly attributable to minority interests,
if any, in the Capital Stock of any such Person or attributable to shares of
preferred stock of any such Person not owned by any other such Person, in
accordance with GAAP.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of
(1) Consolidated Net Income, and
(2) to the extent Consolidated Net Income has been reduced thereby, (a) all
income Taxes of such Person and its Restricted Subsidiaries paid or
accrued in accordance with GAAP for such period (other than income
Taxes attributable to extraordinary gains or losses or income Taxes
attributable to Asset Sales and other sales or dispositions outside the
ordinary course of business to the extent that gains or losses from
such transactions have been excluded from the computation of
Consolidated Net Income) and Tax Distributions made in respect of such
period made pursuant to Section 8.2(b)(7), (b) Consolidated Interest
Expense, (c) Consolidated Non-cash Charges less any non-cash items
increasing Consolidated Net Income for such period (except to the
extent such non-cash item increasing Consolidated Net Income relates to
a cash benefit for any future period), and (d) the net costs and
expenses totaling $1,590,000 for the fifty-three weeks ended May 5,
2002 that are described in the Offering Circular as adjustments to
"EBITDA" to derive "Adjusted EBITDA,"
all as determined on a consolidated basis for such Person and its Restricted
Subsidiaries in accordance with GAAP. Consolidated EBITDA shall be calculated
after giving effect on a pro forma basis in accordance with Regulation S-X under
the Exchange Act to any Asset Sales and other asset sales or divestitures
outside the ordinary course of business or Asset Acquisitions (including any
Asset Acquisition giving rise to the need to make such calculation) occurring
during the Four-Quarter Period or at any time subsequent to the last day of the
Four-Quarter Period and on or prior to the Transaction Date, as if such asset
sale or Asset Acquisition occurred on the first day of the Four-Quarter Period.
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"Consolidated Fixed Charge Coverage Ratio" means, with respect to
any Person, the ratio of (x) Consolidated EBITDA of such Person during the
Four-Quarter Period to (y) Consolidated Fixed Charges of such Person for the
Four-Quarter Period.
"Consolidated Fixed Charges" means, with respect to any Person
for any period, the sum, without duplication, of
(1) Consolidated Interest Expense, plus
(2) the product of (x) the amount of all dividend payments required to be
made on any series of Preferred Stock of such Person and its Restricted
Subsidiaries (other than dividends paid in Qualified Capital Stock and
other than dividends paid to such Person or to a Restricted Subsidiary
of such Person) paid, accrued or scheduled to be paid or accrued during
such period times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person,
expressed as a decimal; provided that, if the cash dividend or
distribution on the Preferred Stock is deductible for federal tax
purposes, then the fraction shall be equal to one,
provided that Consolidated Fixed Charges shall not include gain or loss from the
extinguishment of debt, including, without limitation, write-off of debt
issuance costs, commissions, fees and expenses.
Consolidated Fixed Charges shall be calculated after giving
effect on a pro forma basis in accordance with Regulation S-X under the Exchange
Act to the incurrence, repayment or redemption of any Indebtedness or Preferred
Stock of such Person or any of its Restricted Subsidiaries giving rise to the
need to make such calculation and any incurrence, repayment or redemption of
other Indebtedness or Preferred Stock (other than the incurrence, repayment or
redemption of Indebtedness or Preferred Stock in the ordinary course of business
for working capital purposes pursuant to working capital facilities) occurring
during the Four-Quarter Period or at any time subsequent to the last day of the
Four-Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be, occurred on the first day of the
Four-Quarter Period. In calculating Consolidated Fixed Charges for purposes of
determining the denominator (but not the numerator) of the "Consolidated Fixed
Charge Coverage Ratio,"
(1) interest on outstanding Indebtedness determined on a fluctuating basis
(after giving effect to any Interest Swap Obligations) as of the
Transaction Date and which will continue to be so determined thereafter
shall be deemed to have accrued at a fixed rate per annum equal to the
weighted average rate of interest during the Four-Quarter Period;
(2) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rates, then the interest rate in
8
effect on the Transaction Date will be deemed to have been in effect
during the Four-Quarter Period; and
(3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall
be deemed to accrue at the rate per annum during the Four-Quarter
Period resulting after giving effect to the operation of such
agreements.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the sum of, without duplication:
(1) the aggregate of the interest expense of such Person and its
Restricted Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP, including without limitation, (a) any
amortization of debt discount and amortization or write-off of
deferred financing costs, excluding (x) the write-off of deferred
financing costs as a result of the prepayments of Indebtedness
occurring on the Issue Date with the proceeds from the issuance and
sale of the Notes and (y) the amortization of deferred financing
costs recorded as of the Issue Date in connection with the Notes and
the Credit Agreement, (b) the net costs under Interest Swap
Obligations, (c) all capitalized interest and (d) the interest
portion of any deferred payment obligation;
(2) the interest component of Capitalized Lease Obligations and
Attributable Indebtedness paid, accrued and/or scheduled to be paid
or accrued by such Person and its Restricted Subsidiaries during
such period as determined on a consolidated basis in accordance with
GAAP; and
(3) all interest on any Indebtedness of the type described in clause
(10) or (11) of the definition of "Indebtedness."
"Consolidated Net Income" means, with respect to any Person, for
any period, the net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded from such net income (loss), to
the extent otherwise included therein, without duplication:
(1) after-tax gains on Asset Sales or other losses on asset sales
outside the ordinary course of business or abandonments or reserves
relating thereto;
(2) after-tax extraordinary gains or extraordinary losses determined in
accordance with GAAP;
(3) the net income (but not loss) of any Restricted Subsidiary of the
Person to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income is
restricted;
(4) the net income or loss of any Person that is not a Restricted
Subsidiary of that Person except to the extent of cash dividends or
distributions paid to such Person or to a wholly owned Restricted
Subsidiary of that Person;
9
(5) any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of Consolidated
Net Income accrued at any time following the Issue Date;
(6) the net income of any Person earned prior to the date it becomes a
Restricted Subsidiary of the Person or is merged or consolidated with
the Person or any Restricted Subsidiary of the Person;
(7) in the case of a successor to the Person by consolidation or merger or
as a Transferee of the referent Person's assets, any earnings of the
successor corporation prior to such consolidation, merger or Transfer
of assets;
(8) gains or losses from the cumulative effect of any change in accounting
principles prior to the Issue Date;
(9) the write-off of deferred financing costs as a result of the
prepayments of Indebtedness occurring on the Issue Date with the
proceeds from the issuance and sale of the Notes; and
(10) the amount of dividends and distributions made pursuant to Section
8.2(b)(6) or Section 8.2(b)(7).
"Consolidated Non-cash Charges" means, with respect to any
Person, for any period, the sum of
(1) depreciation, amortization and other non-cash expenses or charges of
such Person and its Restricted Subsidiaries for such period;
(2) unrealized gains and losses from hedging and foreign currency
translations and transactions of such Person and its Restricted
Subsidiaries for such period; and
(3) unrealized gains and losses of such Person and its Restricted
Subsidiaries recognized in such period pursuant to Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," or any successor thereto, solely
in respect of Qualified Capital Stock,
all determined on a consolidated basis in accordance with GAAP, excluding (x) in
the case of clause (1) or (2), any such item constituting an extraordinary item
or extraordinary loss or any such item that requires an accrual of or a reserve
for cash charges for any future period and (y) in the case of clause (3), any
such item that requires an accrual of or a reserve for cash charges for any
future period ending on or prior to the final maturity of the Notes.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of Holdco who (a) was a member of such
Board of Directors on the Issue Date or (b) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election.
10
"Contract" is defined in Section 4.5.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Coverage Ratio Exception" is defined in Section 8.1(a).
"Credit Agreement" means the Credit Agreement dated on or about the
Issue Date, by and among the Company, as borrower, Holdco and certain of the
Company's Subsidiaries, as guarantors, Bank of America, N.A., as administrative
agent, and the lenders named therein, including any notes, guarantees,
collateral and security documents, instruments and agreements executed in
connection therewith, and in each case as amended or Refinanced from time to
time, including any agreement or agreements extending the maturity of,
Refinancing, replacing or otherwise restructuring (including increasing the
amount of borrowings or other Indebtedness outstanding or available to be
borrowed thereunder) all or any portion of the Indebtedness under such
agreement, and any successor or replacement agreement or agreements with the
same or any other agents, creditor, lender or group of creditors or lenders.
"Credit Documents" means the Credit Agreement and all certificates,
instruments, and other documents and written agreements made and delivered
pursuant thereto.
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in currency values.
"Custodian" is defined in Section 12.1.
"Default" means any event, act, or condition that is, or with the
giving of notice, lapse of time, or both would constitute, an Event of Default.
"Default Amount" is defined in Section 12.2.
"Designation" is defined in Section 8.8(a).
"Director" means a member of a Board of Directors.
"Disinterested Member" means, with respect to any transaction or
series of related transactions, a member of the Board of Directors of the
Company who (1) does not have any material direct or indirect financial interest
in or with respect to such transaction or series of related transactions and (2)
is not an Affiliate, officer, director or an employee of any person (other than
the Company or any Restricted Subsidiary) who has any direct or indirect
financial interest in or with respect to such transaction or series of related
transactions.
"Disqualified Capital Stock" means any class or series of Capital
Stock of any Person that by its terms or otherwise is:
11
(1) required to be redeemed or is redeemable at the option of the
holder of such class or series of Capital Stock at any time on or
prior to the date that is 91 days after the Stated Maturity of the
principal of the Notes; or
(2) convertible into or exchangeable at the option of the holder
thereof for Capital Stock referred to in clause (1) above or
Indebtedness having a scheduled maturity on or prior to the date
that is 91 days after the Stated Maturity of the principal of the
Notes.
Notwithstanding the preceding sentence, any Capital Stock that
would constitute Disqualified Capital Stock solely because the holders of the
Capital Stock have the right to require the issuer thereof to repurchase such
Capital Stock upon the occurrence of a "change of control" or "asset sale" will
not constitute Disqualified Capital Stock if such requirement only becomes
operative after compliance with such terms applicable to the Notes, including
the purchase of any Notes tendered pursuant thereto.
"Domestic Subsidiary" means any Restricted Subsidiary of the
Company that is not a Foreign Subsidiary.
"Enforceability Exceptions" means, with respect to any specified
obligation, any limitations on the enforceability of such obligation due to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and
other similar laws of general applicability relating to or affecting creditors'
rights generally and to general principles of equity (whether considered at a
proceeding in equity or at law).
"Environmental Laws" means all applicable foreign, federal, state
or local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters; including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal
Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal
Resource Conservation and Recovery Act, the Toxic Substances Control Act, and
the Emergency Planning and Community Right-to-Know Act.
"Environmental Matter" means any matter relating to pollution,
contamination, protection of the environment, human health or safety as related
to the environment, and health or safety of employees as related to the
environment, and any matter relating to emissions, discharges, releases or
threatened releases, of Hazardous Substances into the air (indoor and outdoor),
surface water, groundwater, soil, land surface or subsurface, buildings,
facilities, real or personal property or fixtures or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
"Environmental Permits" is defined in Section 4.14(a).
12
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Investee" is defined in Section 4.3(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b), 414(c) or 414(m) of the Code.
"Event of Default" is defined in Section 12.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Financing" shall mean the financing of the Company and its
Subsidiaries as described on Schedule C.
"Existing Senior Credit Facility" means the Credit Agreement dated as
of August 25, 1998 among the Company, as borrower, the guarantors party thereto,
the lenders party thereto and Bank of America, N.A. (formerly NationsBank,
N.A.), as agent, as amended.
"fair market value" means, with respect to any asset, the price which
could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value
shall, except as otherwise specifically provided herein, be determined by the
Board of Directors of the Company acting reasonably and in good faith.
"Financial Statements" is defined in Section 4.6(a).
"Financing Documents" means collectively, this Agreement, the Notes,
the Senior Notes, the Holdco Notes, the Guarantees, the respective purchase
agreements for the Senior Notes and the Holdco Notes and all certificates and
instruments made and delivered in connection herewith and therewith, but
specifically excluding the Credit Documents.
"Fiscal Month" means a monthly fiscal period of the Company and its
Subsidiaries.
"Fiscal Quarter" means a quarterly fiscal period of the Company and
its Subsidiaries.
"Fiscal Year" shall mean the fiscal year of the Company and its
Subsidiaries ending on the Sunday closest to January 31 of each calendar year.
13
"Foreign Subsidiary" means any Restricted Subsidiary of the Company
organized under the laws of, and conducting a majority portion of its business
in, any jurisdiction other than the United States of America, any state thereof
or the District of Columbia.
"Four-Quarter Period" means the four full fiscal quarters for which
internal financial statements are available ending on or prior to the
Transaction Date.
"▇▇▇▇▇ ▇▇▇▇▇" means Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special
counsel to the Purchasers.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity and may be approved by a significant segment of
the accounting profession of the United States, consistently applied, as in
effect on the Issue Date.
"Governmental Authority" means (i) the government of the United
States of America or any state or other political subdivision thereof, or the
District of Columbia, (ii) any government or political subdivision of any other
jurisdiction in which the Company or any of its Subsidiaries conducts all or any
part of its business, or which asserts jurisdiction over any properties of the
Company or any of its Subsidiaries or (iii) any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to, any such government.
"GS Mezzanine" is defined in the preamble to this Agreement.
"GS Offshore" is defined in the preamble to this Agreement.
"Guarantee" means a guarantee of the Notes by a Guarantor.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any Person and
any obligation, direct or indirect, contingent or otherwise, of such Person (1)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation of such Person (whether arising by virtue
of partnership arrangements, or by agreements to keep well, to purchase assets,
goods, securities or services, to take or pay or to maintain financial statement
conditions or otherwise) or (2) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a corresponding meaning.
"Guarantor" means (i) Holdco and (ii) the Subsidiary Guarantors.
"Guarantor Senior Indebtedness" means, with respect to any Guarantor,
the Obligations of such Guarantor, whether outstanding on the Closing Date or
thereafter incurred
14
(unless, in the case of any particular Obligations, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Obligations or any portion of the Indebtedness evidencing
such Obligations shall not be senior in right of payment to the Guarantee of
such Guarantor) in respect of: all monetary obligations of every nature of such
Guarantor under, or with respect to, (i) the Credit Documents, including,
without limitation, obligations to pay the principal of, premium, if any, and
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under Applicable Law),
reimbursement obligations under letters of credit, fees, expenses and
indemnities (including Guarantees thereof); (ii) the Senior Notes, including,
without limitation, the guarantee of the obligations to pay the principal of,
premium, if any, and interest (including the guarantee of any interest accruing
on the Indebtedness guaranteed thereunder subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under Applicable Law),
fees, expenses and indemnitees; and (iii) all Refinancings of the foregoing (to
the extent permitted by this Agreement), in each case whether outstanding on the
Closing Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor
Senior Indebtedness" shall not include: (i) Obligations to, or guaranteed on
behalf of, any shareholder or Affiliate of a shareholder (other than any
guarantee provided on behalf of the Company or any Subsidiary of the Company),
director, officer, or employee of such Guarantor (including, without limitation,
amounts owed for compensation); (ii) that portion of any Indebtedness Incurred
in violation of Section 8.1; and (iii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of such
Guarantor.
"Hazardous Substances" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, polychlorinated biphenyls and radon gas; (ii) any chemicals,
materials or substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely hazardous
substances," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar meaning and
effect, under any applicable Environmental Law; and (iii) any other chemical,
material or substance, the Release of which is prohibited, limited or regulated
by any Environmental Law.
"Holdco" is defined in the first recital.
"Holdco Notes" is defined in the second recital.
"Holdco Purchase Agreement" is defined in the second recital.
"Holder" means a Person in whose name a Note is registered on the
Security Register.
"incur" means to create, incur, assume, guarantee or otherwise become
liable, contingently or otherwise, with respect to payment. Accrual of interest
and accretion or amortization or original issue discount will not be deemed to
be an incurrence of Indebtedness for purposes of this definition.
15
"Indebtedness" means with respect to any Person, without duplication,
(1) all obligations of such Person for borrowed money;
(2) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade accounts
payable and other accrued liabilities arising in the ordinary course of
business);
(5) all obligations for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction;
(6) all obligations under Currency Agreements and Interest Swap
Obligations of such Person;
(7) all Attributable Indebtedness;
(8) all Disqualified Capital Stock issued by such Person with
the amount of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price;
(9) all Preferred Stock of any Subsidiary of such Person not
held by such Person or any Restricted Subsidiary of such Person with the amount
of Indebtedness represented by such Preferred Stock being equal to the
liquidation value thereof;
(10) guarantees in respect of Indebtedness of any other Person of
the type referred to in clauses (1) through (9) above; and
(11) all obligations of any other Person of the type referred to
in clauses (1) through (10) above which are secured by any Lien on any asset of
such Person, the amount of such obligation being deemed to be the lesser of the
fair market value of such asset or the amount of the obligation so secured.
For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Agreement, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock. Except with respect to Indebtedness referred to in clauses (8), (9) and
(11) above, the amount of any Indebtedness outstanding as of any date shall be
(1) the accreted value thereof, in the case of any
16
Indebtedness issued with original issue discount, and (2) the principal amount
thereof, together with any interest thereon that is more than 30 days past due,
in the case of any other Indebtedness.
"Indemnified Person" is defined in Section 16.2.
"Independent Financial Advisor" means a firm (a) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect material financial interest in Holdco or any of its Subsidiaries and
(b) which, in the judgment of the Board of Directors of the Company, is
otherwise independent and qualified to perform the task for which it is to be
engaged.
"Initial Purchasers" is defined in the second recital.
"Initial Public Offering" means one or more underwritten public
offerings registered under the Securities Act resulting in gross proceeds to the
Company or its Subsidiaries of at least $25,000,000.
"Institutional Accredited Investors" is defined in Section 10.1(a).
"Institutional Investor" means (i) any original purchaser of a Note
and any transferee that is an Affiliate of any original purchaser and (ii) any
Holder of a Note holding more than the lower of (x) 20% of the aggregate
principal amount of the Notes then Outstanding and (y) $5,000,000 aggregate
principal amount of the Notes.
"Intellectual Property" means (i) all inventions and discoveries
(whether patentable or unpatentable and irrespective of whether reduced to
practice), all improvements thereto and all patents, patent applications and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (ii)
all franchises, permits, trademarks, service marks, trade dress, logos, trade
names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, (iii) all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, (iv) all broadcast rights,
(v) all mask works and all applications, registrations and renewals in
connection therewith, (vi) all know-how, trade secrets and confidential business
information, whether patentable or unpatentable and whether or not reduced to
practice (including ideas, research and development, know-how, formulas,
compositions and manufacturing and production process and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information and business and marketing plans and proposals), (vii) all
computer software (including data and related documentation), (viii) all other
proprietary rights, (ix) all copies and tangible embodiments thereof (in
whatever form or medium) and (x) all licenses and agreements in connection
therewith.
"Interest Payment Date" is defined in Exhibit A hereto.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to
17
receive from time to time periodic payments calculated by applying either a
floating or a fixed rate of interest on a stated notional amount in exchange for
payments made by such other Person calculated by applying a fixed or a floating
rate of interest on the same notional amount and shall include, without
limitation, interest rate swaps, caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any Transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" excludes (1) extensions of trade credit by the
Company and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be, and (2) any purchase, redemption or other
acquisition or retirement for value of any Capital Stock of the Company or any
warrants, options or other rights to purchase or acquire any such Capital Stock.
If the Company or any of its Restricted Subsidiaries sells or otherwise disposes
of any Capital Stock of any direct or indirect Restricted Subsidiary of the
Company such that, after giving effect to any such sale or disposition, such
Person ceases to be a Restricted Subsidiary of the Company, the Company will be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Capital Stock of such Restricted
Subsidiary not sold or disposed of.
"Issue Date" means June 27, 2002 the date of initial issuance of the
Notes.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized by
law, regulation, or executive order to remain closed.
"Liabilities" is defined in Section 16.2.
"Liens" means any mortgage, pledge, security interest, encumbrance,
lien, charge or adverse claim affecting title or resulting in any encumbrance
against real or personal property or a security interest of any kind, including,
without limitation, any conditional sale or other title retention agreement or
lease in the nature thereof or any filing or agreement to file a financing
statement as debtor under the Uniform Commercial Code or any similar statute
other than to reflect ownership by a third party of property leased to the
Company or any of its Subsidiaries under a lease that is not in the nature of a
conditional sale or title retention agreement.
"LLC Agreement" means the limited liability company agreement of the
Company.
"Material Adverse Effect" means (a) a material adverse effect upon,
the operations, business, properties, condition (financial or otherwise), or
prospects of the Company or its Subsidiaries, taken as a whole; (b) a material
impairment of the ability of the Company, and its Subsidiaries, taken as a
whole, to perform in any material respect its obligations under any Transaction
Document; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability of any Transaction Document.
18
"Material Contracts" means, with respect to the Company, any
agreements, contracts or arrangements between the Company or its Subsidiaries,
on the one hand, and any third parties on the other, for which breach,
nonperformance or cancellation could reasonably be expected to have a Material
Adverse Effect.
"Maturity," when used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise (including in connection with any offer to purchase
that this Agreement requires the Company to make).
"Membership Units" means the membership interests representing a
fractional part of the ownership of the Company, and having rights and
obligations specified with respect to membership interests in the LLC Agreement.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor
thereto.
"Multiemployer Plan" means a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA) and to which the Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or has within the
preceding six (6) plan years made or accrued an obligation to make
contributions.
"Narrative Report" means, with respect to the financial statements for
which such narrative report is required, a narrative report describing the
operations of the Company and its Subsidiaries in the form prepared for
presentation to senior management thereof for the period from the beginning of
the then current Fiscal Year to the end of such period to which such financial
statements relate.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations (except to the extent that such obligations are
financed or sold with recourse to the Company or any of its Restricted
Subsidiaries) when received in the form of cash or Cash Equivalents (other than
the portion of any such deferred payment constituting interest or dividends)
received by the Company or any of its Restricted Subsidiaries from such Asset
Sale, net of (a) all out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions), (b) taxes paid or payable after taking into account any
reduction in consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements, (c) appropriate amounts provided by
the Company or any of its Restricted Subsidiaries, as a reserve, in accordance
with GAAP, against any liabilities associated with such Asset Sale and retained
by the Company or any of its Restricted Subsidiaries, after such Asset Sale,
including pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, and amounts required to be paid to
any Person (other than the Company or any of its Restricted Subsidiaries) owning
a beneficial interest in the assets that are subject to the Asset Sale (by way
of holding Capital Stock of the Person owning such assets or otherwise).
"Net Proceeds Offer" is defined in Section 8.4(c).
19
"Net Proceeds Offer Amount" is defined in Section 8.4(c).
"Net Proceeds Offer Payment Date" is defined in Section 8.4(e)(2).
"Net Proceeds Offer Trigger Date" is defined in Section 8.4(c).
"Non-U.S. Person" means a Person who is not a U.S. person, as defined
in Regulation S.
"Non-Voting Observer" is defined in Section 7.9(a).
"Notation of Note Guarantee" is defined in Section 15.7.
"Note Guarantee" means any Guarantee of the Notes by any Guarantor
pursuant to Section 15 or a Supplemental Agreement, as the case may be.
"Notes" is defined in the second recital.
"Notes Payment" is defined in Section 14.2.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnification, reimbursements, damages, and other liabilities
payable under the documentation governing any Indebtedness.
"Offering Circular" is defined in Section 4.6(b).
"Offering Memorandum" is defined in Section 10.2(a).
"Officer", with respect to any Person, means the Chairman of the Board
of Directors, Chief Executive Officer, the President, any Vice President or
Assistant Vice President and the Chief Financial Officer, the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary of such Person,
or any other officer of such Person designated by the Board of Directors of such
Person and set forth in an Officer's Certificate delivered to the Trustee.
"Officer's Certificate" of any Person means a certificate signed by
the chairman of the Board of Directors, the chief executive officer, the
president, the chief operating officer, or any vice president, or by the chief
financial officer, treasurer, the secretary, or an assistant secretary (or any
such other officer that performs similar duties) in such officer's capacity as
an officer of such Person and delivered to the Holders. References herein, or in
any Note, to any officer of a Person that is a partnership or limited liability
company means such officer of the partnership or limited liability company, as
the case may be, or, if none, of a general partner or managing member of the
partnership or limited liability company authorized thereby to act.
"Ordinary Course of Business" means, with respect to the Company or
any Subsidiary of the Company, and in respect of any transaction involving the
Company or any Subsidiary of the Company, the ordinary course of such Person's
business, as conducted by any such Person in accordance with past practice and
undertaken by such Person in good faith and
20
not for purposes of evading any covenant or restriction in this Agreement, the
Notes, and the related documents on its behalf.
"Other Indebtedness" is defined in Section 8.4(c)(2).
"Outstanding," when used with respect to the Notes, means, as of the
date of determination, all Notes theretofore executed and delivered under this
Agreement, except:
(i) Notes theretofore canceled by the Company or delivered to the
Company for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore set aside by the Company with a third party in
trust for the Holders of such Notes; provided that if such Notes are to be
redeemed, notice of such redemption has been duly given as provided in this
Agreement; and
(iii) Notes which have been paid pursuant to Section 11.8 or in
exchange for or in lieu of which other Notes have been executed and
delivered pursuant to this Agreement;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Subsidiary or Affiliate
of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Required Holders the pledgee's right so to act with respect to such Notes and
that the pledgee is not the Company or any other obligor upon the Notes or any
Affiliate of the Company or of such other obligor.
"Outstanding Senior Subordinated Term Loan" means the loans
outstanding under the Bridge Loan Agreement dated as of August 25, 1998 among
the Company, as borrower, the guarantors listed on the signature pages thereto,
the lenders named therein and Bank of America Bridge, LLC (formerly
NationsBridge, L.L.C.), as administrative agent, as amended.
"Payment Blockage Period" is defined in Section 14.3.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" is defined in Section 4.12.
"Permits" means all licenses, permits, certificates of need,
approvals, and authorizations from all Governmental Authorities required to
lawfully conduct a business as presently conducted.
"Permitted Business" is defined in Section 8.9.
21
"Permitted Holdco Assets" is defined in the second recital.
"Permitted Holders" means the Sponsor and its Affiliates.
"Permitted Indebtedness" means, without duplication, each of the
following:
(1) the Senior Notes issued on the Issue Date, the exchange
notes issued in exchange therefore and any guarantees relating thereto;
(2) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on, and not Refinanced as of, the Issue Date;
(3) Indebtedness incurred pursuant to the Credit Agreement in
an aggregate amount not exceeding $50 million at any time outstanding, less any
repayments required to be made, and actually made, thereunder with the Net Cash
Proceeds of Asset Sales in accordance with Section 8.4;
(4) Capitalized Lease Obligations and Purchase Money
Indebtedness, and Refinancing Indebtedness thereof, in an aggregate amount not
to exceed $5.0 million at any time outstanding;
(5) Indebtedness owed by the Company or any of its Restricted
Subsidiaries to the Company or any of its Restricted Subsidiaries; provided that
(a) any such Indebtedness owed by the Company shall be expressly subordinated to
the prior payment in full in cash of all obligations with respect to the Notes,
and any such Indebtedness owed by any Guarantor shall be expressly subordinated
to the prior payment in full in cash of all obligations with respect to the
Guarantee of such Guarantor; and (b) if such Indebtedness is held by a Person
other than the Company or any of its Restricted Subsidiaries, the obligor of
such Indebtedness shall be deemed to have incurred Indebtedness not permitted by
this clause (5);
(6) (x) the guarantee by the Company or any Guarantor of
Indebtedness of the Company or a Guarantor and (y) the guarantee by any
Restricted Subsidiary that is not a Guarantor of Indebtedness of any other
Restricted Subsidiary that is not a Guarantor; provided that, in each case, the
Indebtedness being guaranteed is permitted to be incurred by another provision
of this Agreement;
(7) (x) Interest Swap Obligations of the Company relating to (a)
Indebtedness of the Company or any of its Restricted Subsidiaries or (b)
Indebtedness that the Company or any of its Restricted Subsidiaries reasonably
intends to incur within six months; and (y) Interest Swap Obligations of any
Restricted Subsidiary of the Company relating to (a) Indebtedness of such
Restricted Subsidiary or (b) Indebtedness that such Restricted Subsidiary
reasonably intends to incur within six months; provided that any such Interest
Swap Obligations will constitute "Permitted Indebtedness" only to the extent the
notional principal amount of such Interest Swap Obligations, when incurred, does
not exceed the principal amount of the Indebtedness to which such Interest Swap
Obligations relate;
22
(8) Indebtedness by the Company or any of its Restricted
Subsidiaries under Currency Agreements; provided that (x) such agreements are
entered into to protect the Company and its Restricted Subsidiaries from
fluctuations in currency exchange rates (and not for speculative purposes) and
(y) in the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of the Company and its
Restricted Subsidiaries outstanding other than as a result of fluctuations in
foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(9) Indebtedness of the Company or any of its Restricted
Subsidiaries arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary course of
business; provided, however, that such Indebtedness is extinguished within five
Business Days of incurrence;
(10) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the Company or
any Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business, and
other Indebtedness with respect to workers' compensation claims, self-insurance
obligations, performance, surety and similar bonds and completion guarantees
provided by the Company or any of its Restricted Subsidiaries in the ordinary
course of business;
(11) indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business or assets of the Company or any of its Restricted
Subsidiaries or Capital Stock of a Restricted Subsidiary; provided that the
maximum aggregate liability in respect of all such obligations of the Company
outstanding under this clause (11) shall at no time exceed the gross proceeds
including non-cash proceeds (the fair market value of such non-cash proceeds
being measured at the time received and without giving effect to any subsequent
changes in value) actually received by the Company and its Restricted
Subsidiaries in connection with such dispositions;
(12) obligations of the Company or any of its Restricted
Subsidiaries in respect of performance bonds and completion, guarantee, surety
and similar bonds in the ordinary course of business;
(13) Refinancing Indebtedness incurred to Refinance Indebtedness
(x) incurred pursuant to the Coverage Ratio Exception or pursuant to clause (1)
above or this clause (13) or (y) referred to in clause (2) above or clause (16)
below;
(14) Indebtedness of Foreign Subsidiaries in an aggregate amount
not to exceed $5.0 million at any time outstanding;
(15) trade and standby letters of credit issued for the account
of the Company or any of its Restricted Subsidiaries in the ordinary course of
its business;
(16) the Notes issued on the Issue Date, and the Note Guarantees;
and
23
(17) additional Indebtedness in an aggregate amount not to exceed
$10.0 million at any time outstanding.
"Permitted Investments" means:
(1) any Investment by the Company or any of its Restricted
Subsidiaries in a Person, if as a result of such Investment: (a) such Person
becomes a Guarantor or (b) such Person is merged or consolidated with or into,
or Transfers all or substantially all of its assets to, or is liquidated into,
the Company or a Guarantor;
(2) any Investment by any Restricted Subsidiary of the Company
that is not a Guarantor in: (a) any other Restricted Subsidiary of the Company;
or (b) any Person, if as a result of such Investment (x) such Person becomes a
Restricted Subsidiary of the Company, or (y) such Person is merged or
consolidated with or into, or Transfers all or substantially all of its assets
to, or is liquidated into, the Company or any of its Restricted Subsidiaries;
(3) (x) Investments in any Guarantor or (y) Investments in the
form of loans or advances to, or purchases of Indebtedness of, Opco by any
Restricted Subsidiary of Opco;
(4) Investments in cash or Cash Equivalents;
(5) loans and advances to directors, officers and employees of
the Company and its Restricted Subsidiaries (x) in the ordinary course of
business in an aggregate amount not to exceed $2.0 million at any time
outstanding or (y) for the purpose of paying any taxes in respect of the
exercise of stock options or warrants;
(6) Investments in securities received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of any
debtors of the Company or its Restricted Subsidiaries or in good faith
settlement of delinquent obligations of such debtors;
(7) Investments received as consideration from an Asset Sale
made in compliance with Section 8.4;
(8) Investments existing on the Issue Date;
(9) Investments in Interest Swap Obligations and Currency
Agreements of the type described in clauses (7) and (8) of the definition of
"Permitted Indebtedness";
(10) Investments of a Person or any of its Subsidiaries existing
at the time such Person becomes a Restricted Subsidiary or at the time such
Person merges or consolidates with the Company or any of its Restricted
Subsidiaries, in either case, in compliance with this Agreement; provided that
such Investments were not made by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
or such merger or consolidation;
24
(11) Investments in purchase price adjustments, contingent
purchase price payments or other earn-out obligations received in connection
with Investments otherwise permitted under this Agreement;
(12) any Investment acquired in exchange for the issuance of, or
acquired with the net cash proceeds of any substantially concurrent issuance and
sale of Qualified Capital Stock; provided that no such issuance or sale shall
increase the Basket;
(13) any purchase or Refinancing of the Notes;
(14) guarantees of Indebtedness otherwise permitted under this
Agreement; and
(15) additional Investments in a Permitted Business in an
aggregate amount not to exceed $7.5 million at any time outstanding. The amount
of Investments outstanding at any time pursuant to clause (15) above shall be
deemed to be reduced, without duplication:
(a) upon the disposition or repayment of or return on any Investment
made pursuant to clause (15) above, by an amount equal to the return of capital
with respect to such Investment to the Company or any of its Restricted
Subsidiaries (to the extent not included in the computation of Consolidated Net
Income), less the cost of the disposition of such Investment and net of taxes;
(b) upon a redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary, by an amount equal to the lesser of (x) the fair market
value of the Company's proportionate interest in such Subsidiary immediately
following such redesignation, and (y) the aggregate amount of Investments in
such Subsidiary that increased (and did not previously decrease) the amount of
Investments outstanding pursuant to clause (15) above; and
(c) upon the making of an Investment in a Person that was not a
Restricted Subsidiary of the Company immediately prior to the making of such
Investment but that subsequently becomes a Restricted Subsidiary of the Company,
by an amount equal to the lesser of (x) the fair market value of the Company's
proportionate interest in such Subsidiary immediately following such
redesignation, and (y) the aggregate amount of Investments in such Subsidiary
that increased (and did not previously decrease) the amount of Investments
outstanding pursuant to clause (15) above.
"Permitted Liens" means, with respect to any Person:
(1) Liens existing on the date of this Agreement, other than the
Liens, if any, securing all Indebtedness being repaid as of the Issue Date,
including the Existing Senior Credit Facility and the Outstanding Senior
Subordinated Term Loans;
(2) Liens in favor of the Company or any Restricted Subsidiary;
25
(3) Liens securing the Credit Agreement or any Refinancing
thereof, and additional Liens securing additional Indebtedness of up to
$25,000,000 thereunder, provided, that, such additional Indebtedness is incurred
in compliance with the Coverage Ratio Exception;
(4) Liens securing any Indebtedness of any Foreign Subsidiary;
provided that such Liens do not extend to or cover any assets other than assets,
or the Capital Stock, of Foreign Subsidiaries;
(5) Liens on assets of a Person existing at the time such Person
is acquired by or merged or consolidated with or into the Company or any of its
Restricted Subsidiaries; provided that such Liens were not created in connection
with, or in anticipation or contemplation of, such acquisition, merger or
consolidation and do not extend to or cover any assets other than those of the
Person acquired by or merged or consolidated with or into the Company or such
Restricted Subsidiary;
(6) Liens on any assets of any Person existing at the time of
acquisition of such assets by the Company or any Restricted Subsidiary of the
Company; provided that such Liens were not created in connection with, or in
anticipation or contemplation of, such acquisition and do not extend to or cover
any assets other than the assets so acquired;
(7) Liens securing Purchase Money Indebtedness and Capitalized
Lease Obligations permitted to be incurred under this Agreement;
(8) Liens securing Refinancing Indebtedness which is incurred to
refinance any Indebtedness outstanding on the Issue Date (other than under the
Credit Agreement) or Indebtedness incurred under clause (7) above; provided that
such Liens (a) taken as a whole, in the good faith judgment of the Board of
Directors of the Company, are not materially less favorable to the Holders and
are not materially more favorable to the lienholders with respect to such Liens
than the Liens in respect of the Indebtedness being Refinanced and (b) do not
extend to or cover any assets of the Company or any of its Restricted
Subsidiaries not securing the Indebtedness so Refinanced;
(9) Liens to secure the performance of statutory obligations,
including Liens made in connection with workmen's compensation, unemployment
insurance, old-age pensions, social security and public liability and similar
legislation, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business;
(10) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(11) Liens securing reimbursement obligations with respect to
letters of credit which encumber documents and other assets relating to such
letters of credit and products and proceeds thereof;
26
(12) Liens securing the payment of taxes, assessments and
governmental charges or levies, either (a) not delinquent or (b) being contested
in good faith by appropriate proceedings;
(13) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's, supplier's or other similar Liens that are not
delinquent or that are being contested in good faith and by appropriate
proceedings;
(14) Liens securing (a) the non-delinquent performance of bids,
trade contracts (other than for borrowed money), leases and statutory
obligations and (b) other non-delinquent obligations of a like nature, incurred
in the ordinary course of business;
(15) Liens consisting of judgment or judicial attachment Liens
and Liens securing contingent obligations on appeal bonds and other bonds posted
in connection with court proceedings or judgments, only for so long as the
existence of the related judgment does not otherwise give rise to an Event of
Default;
(16) interests of lessors or sublessors, easements,
rights-of-way, zoning restrictions and other similar encumbrances or other title
defects which, in the aggregate, do not materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
of the Company and its Subsidiaries taken as a whole;
(17) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for sale of goods;
(18) Liens arising solely by virtue of any statutory, regulatory,
contractual, warranty or common law provision relating to banker's liens, rights
of setoff or similar rights and remedies as to deposit accounts or other funds
maintained with a creditor depository institution;
(19) licenses of intellectual property granted in the ordinary
course of business;
(20) Liens securing Interest Swap Obligations, which Interest
Swap Obligations are permitted under this Agreement;
(21) Liens securing Indebtedness under Currency Agreements, which
Indebtedness is permitted under this Agreement;
(22) Liens in favor of customs or revenue authorities in
connection with customs duties; and
(23) other Liens securing obligations in an aggregate amount not
to exceed $10.0 million at any time outstanding.
27
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, or government or agency or political subdivision
thereof.
"Plan" is defined in Section 4.12(a).
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"principal amount" means, (i) when used with respect to any particular
Note, the then outstanding principal amount of such Note and (ii) when used with
respect to any other Indebtedness, the then outstanding principal amount or
accreted value of such Indebtedness.
"Private Offering" means any offering by any of the Purchasers of some
or all of the Notes without registration under the Securities Act.
"Proceeding" is defined in Section 14.2.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
of its Restricted Subsidiaries incurred for the purpose of financing all or any
part of the purchase price, or the cost of construction or improvement, of any
assets to be used in the ordinary course of business by the Company or any of
its Restricted Subsidiaries; provided, however, that (1) the aggregate principal
amount of such Indebtedness shall not exceed such purchase price or cost, (2)
such Indebtedness shall be incurred no later than 180 days after the acquisition
of such assets or completion of such construction or improvement and (3) such
Indebtedness shall not be secured by any assets of the Company or any of its
Restricted Subsidiaries other than the assets so acquired or constructed and
improvements thereon.
"Purchase Price" is defined in Section 2.2.
"Purchasers" is defined in the preamble to this Agreement.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A promulgated under the Securities Act.
"Redemption Date" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to the terms of the Notes.
"Redemption Price" means, with respect to any Note to be redeemed, the
price at which it is to be redeemed pursuant to this Agreement.
28
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means, with respect to any Indebtedness,
Indebtedness incurred to Refinance such Indebtedness that does not
(1) result in an increase in the aggregate amount or liquidation
preference, if applicable, of Indebtedness being Refinanced as of the date of
such proposed Refinancing (plus the amount of (i) accrued interest or dividends
on the Indebtedness so Refinanced, (ii) any penalties, interest or premium
required to be paid under the terms of the instrument governing such
Indebtedness and (iii) reasonable fees, discounts, commissions and other
expenses incurred by the Company or any of its Restricted Subsidiaries in
connection with such Refinancing) or
(2) create Indebtedness with (a) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (b) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if the
Indebtedness being Refinanced is subordinate or junior to the Notes, then such
Refinancing Indebtedness shall be subordinate to the Notes at least to the same
extent and in the same manner as the Indebtedness being Refinanced, (y) the
obligor(s) on the Refinancing Indebtedness thereof shall include only the
obligor(s) on the Indebtedness Refinanced, the Company and/or one or more
Guarantors and (z) Capital Stock shall be Refinanced only with Capital Stock.
"Regular Record Date" is defined in Exhibit A hereto.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
regulation to all or a portion thereof.
"Release" means the disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring or
migrating, into or upon any land or water or air, or otherwise entering into the
environment.
"Replacement Assets" is defined in Section 8.4(b)(3).
"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Senior Indebtedness; provided that if, and
only for so long as, any Senior Indebtedness lacks such a representative, then
the Representative for such Senior Indebtedness shall at all times constitute
the holders of a majority in outstanding principal amount of such Senior
Indebtedness in respect of any Senior Indebtedness.
29
"Required Holders" means Holders holding not less than a
majority in aggregate principal amount of the Notes at the time Outstanding.
"Restricted Payment" means to
(1) declare or pay any dividend or make any
distribution, other than dividends or distributions payable in Qualified Capital
Stock of the Company, on or in respect of Capital Stock of the Company or any of
its Restricted Subsidiaries to holders of such Capital Stock (other than the
Company or any of its Restricted Subsidiaries);
(2) purchase, redeem or otherwise acquire or retire
for value any Capital Stock of the Company or any of its Subsidiaries or any
warrants, options or other rights to purchase or acquire any such Capital Stock;
(3) make any principal payment on, purchase, defease,
redeem, prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company or Guarantor that is subordinate or junior in
right of payment to the Notes or the Guarantee of such Guarantor, other than the
prepayment, purchase, repurchase or other acquisition or retirement of
Indebtedness in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
prepayment, purchase, repurchase or other acquisition or retirement; or
(4) make any Investment other than Permitted
Investments.
"Restricted Subsidiary" of any Person means any Subsidiary of
such Person which at the time of determination is not an Unrestricted
Subsidiary.
"Revocation" is defined in Section 8.8(c).
"Rule 144" means Rule 144 under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
"sale" is defined in Section 11.7(a).
"Sale and Leaseback Transaction" means an arrangement
relating to property now owned or hereafter acquired whereby the Company or a
Restricted Subsidiary Transfers such property to a Person and the Company or a
Restricted Subsidiary leases it from such Person.
"Securities" means the Notes purchased by the Purchasers
pursuant to this Agreement.
30
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"security document" means all instruments and agreements now
or at any time hereafter securing the whole or part of any Obligations.
"Security Register" is defined in Section 11.6(a).
"Senior Credit Facility and Subordinated Term Loan
Refinancing" is defined in the first recital.
"Senior Indebtedness" means the Obligations of the Company,
whether outstanding on the Closing Date or thereafter incurred (unless, in the
case of any particular Obligations, the instrument creating or evidencing the
same or pursuant to which the same is outstanding expressly provides that such
Obligations or any portion of the Indebtedness evidencing such Obligations shall
not be senior in right of payment to the Notes) in respect of all monetary
obligations of every nature of the Company under, or with respect to, (i) the
Credit Documents, including, without limitation, Obligations to pay the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under Applicable Law), reimbursement obligations under letters of
credit, fees, expenses and indemnities; (ii) the Senior Notes, including,
without limitation, Obligations to pay the principal of, premium, if any, and
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under Applicable Law),
fees, expenses and indemnities; and (iii) all Refinancings of the foregoing (to
the extent permitted by this Agreement), in each case whether outstanding on the
Closing Date or thereafter incurred. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include: (i) Obligations to, or guaranteed on behalf of,
any shareholder, or Affiliate of a shareholder who holds securities representing
in excess of 15% of the voting power of the Company or, director, officer or
employee of the Company or any Subsidiary of the Company (including, without
limitation, amounts owed for compensation); (ii) that portion of any
Indebtedness incurred in violation of the provisions set forth in Section 8.1;
and (iii) any Indebtedness which is, by its express terms, subordinated in right
of payment to any other indebtedness of the Company.
"Senior Nonmonetary Default" is defined in Section 14.3.
"Senior Notes" is defined in the second recital.
"Senior Notes Indenture" means the Indenture, dated as of June
27, 2002, by and among PCA LLC, PCA Finance Corp., the guarantors named therein
and The Bank of New York, as trustee.
"Senior Payment Default" is defined in Section 14.3.
"Series A Convertible Preferred Stock" is defined in Section
4.2(a).
31
"Significant Subsidiary" means (1) any Restricted Subsidiary
that is a "significant subsidiary" of the Company on a consolidated basis within
the meaning of Regulation S-X promulgated by the Commission or (2) any
Restricted Subsidiary that, when aggregated with all other Restricted
Subsidiaries that are not otherwise Significant Subsidiaries and as to which any
event described in clause (h) or (i) under Section 12.1 has occurred and is
continuing, would constitute a Significant Subsidiary under clause (1) of this
definition.
"Solvent" means, with respect to any Person as of the date of
any determination, that on such date (i) such Person is able to pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (ii) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in the normal
course of business, and (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person's property would constitute unreasonably small capital after
giving due consideration to current and anticipated future capital requirements
and current and anticipated future business conduct and the prevailing practice
in the industry in which such Person is engaged. In computing the amount of
contingent liabilities at any time, such liabilities shall be computed as the
amount that, in light of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Sponsor" means Jupiter Partners II, L.P.
"Stated Maturity" when used with respect to any security or
any installment of interest thereon, means the date specified in such security
as the fixed date on which the principal of such security or such installment of
interest is due and payable.
"Subordinated Obligations" " is defined in Section 14.1.
"Subsequent Purchaser" means a subsequent purchaser of any
Note who acquired such Note in a Private Offering in accordance with Section
10.1.
"Subordinated Indebtedness" means Indebtedness of the Company
or any of its Subsidiaries expressly subordinated in right of payment to the
Notes to the same extent and in the same manner as the Notes are subordinated to
Senior Indebtedness, which does not permit any principal payments to be made
thereunder prior to 91 days after the Stated Maturity of the Notes and which
does not contain covenants, defaults, remedies, subordination provisions and
other terms more favorable to the holders of such Indebtedness than those set
forth in the Notes or this Agreement.
"Subordinated Obligations" is defined in Section 14.1.
"Subsidiary" of any Person means (1) any Person of which more
than 50% of the total voting power of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the Restricted Subsidiaries of that
Person or a combination thereof, and (2) any partnership, joint venture or other
Person in which such Person or one or more of the Restricted Subsidiaries
32
of that Person or a combination thereof has the power, directly or indirectly,
to control by contract or otherwise the board of directors or equivalent
governing body or otherwise controls such entity.
"Subsidiary Guarantors" means (1) each of the following:
American Studios, Inc.; PCA National LLC; PCA National of Texas LP; PCA Photo
Corporation of Canada, Inc.; and Photo Corporation of America; and (2) any other
Restricted Subsidiary of the Company that issues a Guarantee, in each case,
until such Person is released from its Guarantee in accordance with this
Agreement.
"Supplemental Agreement" is defined in Section 15.2.
"Surviving Person" is defined in Section 9.1(a).
"Tax Distribution" means any distribution made pursuant to the
Tax Sharing Agreement between Holdco and the Company and certain of the
Company's Subsidiaries, as in effect on the Issue Date.
"Tax Returns" means all reports and returns (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to Taxes.
"Taxes" means all federal, state, local or foreign income,
gross receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, estimated, employment, withholding or other taxes,
duties or assessments of any kind whatsoever imposed on any Person, together
with any interest, additions or penalties with respect thereto and any interest
in respect of such additions or penalties and includes any liability for Taxes
of another Person by contract, as a transferee or successor, under Treasury
Regulation Section 1.1502-6 or analogous state, local or foreign law provision
or otherwise.
"Transaction Date" means the date of the transaction giving
rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio.
"Transaction Documents" means, collectively, the Financing
Documents and the Credit Documents.
"Transactions" means the transactions provided for in, or
contemplated by, the Transaction Documents.
"Transfer" means to, directly or indirectly, sell, assign,
transfer, lease (other than pursuant to an operating lease entered into in the
ordinary course of business), convey or otherwise dispose of, including by Sale
and Leaseback Transaction, consolidation, merger or otherwise, in one
transaction or a series of transactions. "Transferred," "Transferor" and
"Transferee" shall have correlative meanings.
"Transfer Taxes" is defined in Section 7.6(e).
33
"Unfunded Pension Liabilities" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used by the
Plan's actuaries for funding the Plan pursuant to Section 412 of the Code for
the applicable plan year.
"United States" shall have the meaning, for purposes of
Sections 10.1 and 11.7, assigned to such term in Regulation S.
"Unrestricted Subsidiary" of any Person means: (a) any
Subsidiary of such Person that at the time of determination has been designated
an Unrestricted Subsidiary, and has not been redesignated a Restricted
Subsidiary, in accordance with Section 8.8; and (b) any Subsidiary of such an
Unrestricted Subsidiary.
"U.S. Government Obligations" shall mean securities that are
(1) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (2) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as full faith and
credit obligation by the United States of America, that, in either case, are not
callable or redeemable at the option of the issuer thereof and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligations or a specific payment of
interest on or principal of any such U.S. Government Obligations held by such
custodian for the account of the holder of a depository receipt; provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt for
any amount received by the custodian in respect of the U.S. Government
Obligations or the specific payment of interest on or principal of the U.S.
Government Obligations evidenced by such depository receipt.
"Voting Stock" means, with respect to any Person, Capital
Stock of such Person entitling the holders thereof, under ordinary
circumstances, to vote in the election of the Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the then outstanding aggregate principal amount
of such Indebtedness into
(2) the sum of the total of the products obtained by
multiplying (x) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including payment at
final maturity, in respect thereof, by (y) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary
of such Person of which all outstanding voting securities (other than in the
case of a foreign Subsidiary,
34
directors' qualifying shares or an immaterial number of shares required to be
owned by other Persons pursuant to Applicable Law) or equity interests in the
case of a partnership or a limited liability company are owned by such Person or
one or more Wholly Owned Subsidiaries of such Person.
"Withheld Contracts" is defined in the second recital.
1.2. Computation of Time Periods. For purposes of computation
of periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
1.3. Terms Generally. Unless the context otherwise requires,
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein) and (b) any reference herein to any Person shall be construed
to include such Person's successors and assigns.
1.4. Accounting Terms. Accounting terms used but not otherwise
defined herein shall have the meanings provided by, and be construed in
accordance with, GAAP.
SECTION 2.
AUTHORIZATION AND ISSUANCE OF NOTES
2.1. Authorization of Issue. On or before the execution and
delivery of this Agreement, the Company will authorize the issuance and sale of
the Notes. The Notes shall be in the form specified in this Agreement.
2.2. Sale and Purchase of the Notes. Subject to the terms and
conditions of this Agreement, at the Closing, the Company will issue and sell to
the Purchasers, and the Purchasers will purchase from the Company, the Notes for
an aggregate cash purchase price equal to the aggregate amount set forth
opposite the Purchasers' names on Schedule B hereto (the "Purchase Price"). Each
Purchaser shall, in exchange for the payment by such Purchaser of the portion of
the Purchase Price set forth opposite such Purchaser's name on Schedule B
hereto, receive the aggregate principal amount of Notes set forth opposite such
Purchaser's name on Schedule B hereto. The obligations of the Purchasers
hereunder are several and not joint and no Purchaser shall have any liability to
any Person for the performance or non-performance by any other Purchaser
hereunder.
2.3. Closing.
(a) The sale and purchase of the Notes shall occur at the
offices of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at
10:00 a.m. local time, at a closing (the "Closing") on June 27, 2002, or on such
other Business Day thereafter as may be agreed upon by the Company and the
Purchasers (in either case, the date of the Closing is
35
referred to herein as the "Closing Date"). At the Closing, the Company will
deliver to each Purchaser the Notes to be purchased by such Purchaser on the
Closing Date, in each case in such denominations as such Purchaser may request,
dated the Closing Date and registered in such Purchaser's name, against payment
by such Purchaser to the Company or to its order of immediately available funds
in the amount of the Purchase Price (as provided in Section 2.2) by wire
transfer of immediately available funds to such bank account or accounts as the
Company may request in writing at least one Business Day prior to the Closing
Date.
(b) If at the Closing the Company shall fail to deliver to the
Purchasers the Notes as provided in Section 2.3(a), or any of the conditions
specified in Section 3 shall not have been fulfilled to the Purchasers'
satisfaction, then each Purchaser shall, at its election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights
such Purchaser may have by reason of such failure or such nonfulfillment.
SECTION 3.
CONDITIONS TO CLOSING
Each Purchaser's obligation to purchase and pay for the
Securities to be purchased by it at the Closing is subject to the satisfaction
or waiver by it prior to or at the Closing of each of the conditions specified
below in this Section 3:
3.1. Representations and Warranties. Each of the
representations and warranties of the Company in this Agreement and in each of
the other Transaction Documents shall be true and correct in all material
respects when made and on or as of the Closing Date as if made on and as of the
Closing Date (unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct as of such earlier
date).
3.2. Performance; No Default Under Other Agreements. The
Company and its respective Subsidiaries, to the extent parties hereto or
thereto, shall have performed and complied with all agreements and conditions
contained in this Agreement and each of the other Transaction Documents required
to be performed or complied with by it prior to or at the Closing (or such
compliance shall have been waived in accordance with the terms hereof or
thereof, as applicable) and, after giving effect to the issuance and sale of the
Securities and the other Transactions (and the application of the proceeds
thereof as contemplated by Section 4.17 and the other Transaction Documents), no
Default or Event of Default shall have occurred and be continuing and no default
or event of default shall have occurred and be continuing under any of the other
Financing Documents or under the Credit Documents.
3.3. Compliance Certificates
(a) Officer's Certificate. The Company shall have delivered
to each Purchaser an Officer's Certificate, dated the Closing Date, in the form
of Exhibit 3.3(a) hereto, certifying that the conditions specified in Sections
3.1, 3.2, 3.5, 3.6, 3.7, 3.9, 3.11(b) and 3.12 have been fulfilled.
36
(b) Secretary's Certificate. The Company and Holdco shall have
delivered to each Purchaser a certificate in the form of Exhibit 3.3(b) hereto
certifying as to the Company's or Holdco's, as the case may be, organizational
documents and resolutions attached thereto, the incumbency and signatures of
certain officers of the Company or Holdco, as the case may be, and other
corporate proceedings of the Company or Holdco, as the case may be, relating to
the authorization, execution and delivery of the Securities, this Agreement and
the other Transaction Documents to which the Company or Holdco, as the case may
be, is a party.
3.4. Opinions of Counsel. At the Closing:
(1) ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for the Company, shall have furnished to the
Purchasers its written opinion, dated the Closing, in the form
attached hereto as Exhibit 3.4-A;
(2) ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
P.A., special North Carolina counsel for the Company, shall
have furnished to the Purchasers its written opinion, dated
the Closing, in the form attached hereto as Exhibit 3.4-B;
(3) J. ▇▇▇▇▇▇ ▇▇▇▇, legal counsel of
the Company, shall have furnished to the Purchasers his
written opinion, dated the Closing, in the form attached
hereto as Exhibit 3.4-C;
(4) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special
Texas counsel for the Company, shall have furnished to the
Purchasers its written opinion, dated the Closing, in the form
attached hereto as Exhibit 3.4-D; and
(5) The Purchasers shall have
received a copy of each legal opinion delivered by counsel to
the Company or any of its Subsidiaries in connection with the
issuance of the Senior Notes, the Holdco Notes and the Credit
Agreement, and letters entitling the Purchasers to rely on
each such opinion as if such opinion were addressed to the
Purchasers.
3.5. Refinancing. All Indebtedness, other than Indebtedness
permitted under Section 8.1, but including the Existing Senior Credit Facility
and Outstanding Senior Subordinated Term Loans, of the Company and each of its
Subsidiaries outstanding immediately before the consummation of the Transactions
shall have been repaid in full and each Purchaser shall have received evidence
of each repayment reasonably satisfactory to such Purchaser and ▇▇▇▇▇ ▇▇▇▇▇.
3.6. Credit Agreement; Issuance and Sale of Senior Notes; Sale
of Holdco Notes; Structure of the Company and its Subsidiaries; Satisfaction of
Conditions under the Transaction Documents. Prior to or simultaneously with the
Closing of the sale and purchase of the Securities:
(a) Credit Agreement. The Credit Agreement shall be in full
force and effect; at the Closing the Company shall receive not less than an
aggregate amount of $26,000,000 in
37
gross cash proceeds from loans under the Credit Agreement, and after giving
effect to such loans and giving effect to the approximately $10,100,000 letters
of credit outstanding thereunder, approximately $13,900,000 in revolving
commitments shall be available to the Company under the Credit Agreement.
(b) Issuance and Sale of Senior Notes. The Company shall issue
and sell the Senior Notes at the Closing and shall have received payment
therefor in accordance with the purchase agreement for the Senior Notes in the
form delivered to the Purchasers prior to the date hereof.
(c) Senior Note Rate Does Not Exceed 12.75% per annum. The
interest rate and effective yield of the Senior Notes, taking into account any
original issue discount at which the Senior Notes are issued, shall not exceed
12.75% per annum.
(d) Sale of Holdco Notes. Holdco shall sell to the Purchasers
the Holdco Notes at the Closing and shall have received payment therefor.
(e) Structure of Holdco and its Subsidiaries. The Capital
Stock and structure of Holdco and its Subsidiaries shall be as described in the
Offering Circular under the caption "Offering Circular Summary--The
Transactions."
(f) Satisfaction of Conditions under the Transaction
Documents. As of the Closing, all conditions precedent relating to the issuance
and sale of the Senior Notes and the Holdco Notes and to the initial borrowing
of funds under the Credit Agreement shall be satisfied and the consummation
thereof shall have occurred prior to, or shall occur substantially
simultaneously with, the issuance of the Notes. As of the Closing, the Company
and its Subsidiaries shall have consummated the transactions described in the
Offering Circular under the caption "Offering Circular Summary - The
Transactions" on the terms set forth therein.
3.7. Existing Financing. At the time of the Closing, and,
after giving effect to the issuance and sale of the Securities and the other
Transactions (and the application of the proceeds thereof as contemplated by
Section 4.17 and the other Transaction Documents) no default or event of default
shall have occurred and be continuing under any of the documents relating to the
Transactions.
3.8. Financial Information. Each Purchaser shall have received
a pro forma consolidated balance sheet for Holdco and its Subsidiaries as of May
5, 2002, after giving effect to the Transactions, including the issuance of the
Securities, the Senior Notes and the Holdco Notes and the borrowings by the
Company under the Credit Agreement and the use of the proceeds thereof,
consistent in all material respects with the sources and uses of cash as
previously described to the Purchasers and the forecasts previously described to
the Purchasers; and the total consolidated net funded debt of the Company and
Holdco as of the Closing (as determined on a pro forma basis after giving effect
to the Transactions, including the issuance of the Securities) shall not exceed
5.15 times Holdco's pro forma Consolidated EBITDA for the twelve month period
ending on May 5, 2002.
38
3.9. Material Adverse Effect. No event or events shall have
occurred since the date of the latest audited financial statements for Holdco
included in the Offering Circular that, individually or in the aggregate, have
had or would reasonably be expected to have a Material Adverse Effect.
3.10. Proceedings and Documents. All limited liability
company, partnership, corporate and other proceedings in connection with the
transactions contemplated by this Agreement and the other Transaction Documents,
and all documents and instruments incident to such transactions and the terms
thereof, shall be reasonably satisfactory to each Purchaser, and each Purchaser
and ▇▇▇▇▇ ▇▇▇▇▇ shall have received all such counterpart originals or certified
or other copies of such documents as it or they may reasonably request.
3.11. Transaction Documents in Force and Effect; Information.
(a) Transaction Documents. The Purchasers shall have
received true and correct copies of all Transaction Documents and such documents
(i) shall have been duly executed and delivered by the parties thereto, (ii)
shall be in form and substance reasonably satisfactory to the Purchasers and
▇▇▇▇▇ ▇▇▇▇▇ and (iii) shall be valid and binding obligations of the parties
thereto, enforceable against each of them in accordance with their respective
terms, subject to the Enforceability Exceptions.
(b) Accuracy of Information. All information (other than the
pro forma projections, budgets or other estimated data and information which has
been updated) furnished by the Company and its representatives to the Purchasers
with respect to the business and financial condition of the Company and its
Subsidiaries, when taken as a whole, shall not contain any untrue statement of a
material fact or omit any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
All projections provided by the Company to the Purchasers in connection with the
Transactions have been prepared in good faith based on assumptions believed by
management of the Company to be reasonable at the time made based on the
circumstances then in existence (it being understood by the Purchasers, however,
that projections as to future events are not to be viewed as facts and that the
actual results during the period or periods covered by any projections may
differ from projected results and that the differences may be material).
(c) Reports. The Purchasers shall be listed as addressees of
any solvency or other consultants' reports delivered pursuant to the Credit
Documents and the Senior Notes.
3.12. No Violation; No Legal Constraints; Consents,
Authorizations and Filings, Etc.
(a) The consummation by the Company and its Subsidiaries of
the Transactions shall not contravene, violate or conflict with any Applicable
Law, except for violations which, individually or in the aggregate, do not, and
would not reasonably be expected to, have a Material Adverse Effect.
39
(b) All consents, authorizations and filings, if any,
required in connection with the execution, delivery and performance by each of
the Company and its Subsidiaries, of the Transaction Documents to which it is a
party shall have been obtained or made and shall be in full force and effect,
except for such consents, authorizations and filings the failure of which to
obtain or make, individually or in the aggregate, do not, and would not
reasonably be expected to, have a Material Adverse Effect.
(c) There shall be no inquiry, injunction, restraining
order, action, suit or proceeding pending or entered or any statute or rule
proposed, enacted or promulgated by any Governmental Authority or any other
Person which, in the reasonable opinion of the Purchasers, (i) individually or
in the aggregate, has or would reasonably be expected to have a Material Adverse
Effect or which seeks to enjoin or seek damages against the Company or any of
its Subsidiaries or any of the Purchasers as a result of the Transactions,
including the issuance of the Notes, (ii) relates to any of the Transactions and
has or will have a material adverse effect on any Purchaser, (iii) alleges
liability on the part of any Purchaser in connection with this Agreement, any
other Transaction Documents or the transactions contemplated hereby or thereby
or (iv) would bar the issuance of the Securities or the use of the proceeds
thereof in accordance with the terms of this Agreement.
3.13. Closing Payments; Payment of Expenses. At the Closing,
each Purchaser shall have received from the Company, as a pro rata reduction in
the Purchase Price paid by such Purchaser, its allocable portion of the Closing
Payment and such Purchaser and ▇▇▇▇▇ ▇▇▇▇▇ shall have received from the Company
all other fees required to be paid and, in accordance with Section 16, all costs
and expenses for which invoices have been presented.
3.14. No Changes to Offering Circular. Since the date hereof,
the Company shall not have made any amendment or supplement to the Offering
Circular other than any such amendment or supplement which has been provided to
the Purchasers and to which the Purchasers have not objected.
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers (after
giving pro forma effect to the consummation on the Closing Date of the
transactions contemplated by this Agreement, the Credit Agreement and the other
Transaction Documents and the issuance of the Securities and, in each case, the
application of the proceeds thereof) that as of the date hereof and as of the
Closing Date (and, to the extent any representation or warranty is stated to
relate to a specific earlier date, as of such earlier date):
4.1. Due Incorporation; Power and Authority. Each of the
Company and its Subsidiaries (a) is either a limited liability company, limited
partnership or a corporation duly organized or incorporated, as the case may be,
validly existing and in good standing under the laws of its jurisdiction of
organization or incorporation, (b) is duly qualified as a foreign
40
organization to transact business and is in good standing in each jurisdiction
in which such qualification is required, other than any failures to so qualify
or to be in good standing which, individually or in the aggregate, would not be
reasonably expected to have a Material Adverse Effect, (c) has full limited
liability company, limited partnership or corporate, as the case may be, power
and authority to own, lease and operate its properties and to conduct its
businesses as they are currently conducted and (d) has full limited liability
company, limited partnership or corporate, as the case may be, power and
authority to enter into and perform its obligations under each of the
Transaction Documents to which it is a party.
4.2. Capitalization
(a) Immediately after consummation of the issuance of the
Notes and the Warrants (as defined in the Holdco Purchase Agreement), (a) the
authorized Capital Stock of Holdco will consist of 20,000,000 shares of Common
Stock, (b) 15,000 shares of Series A Convertible Preferred Stock, par value $10
per share (the "Series A Convertible Preferred Stock"), will be issued and
outstanding, (c) 2,293,152 shares of Common Stock will be issued and outstanding
(with an additional up to 805,597 reserved for issuance upon exercise of
Management Options (as defined in the Holdco Purchase Agreement) 15,000 shares
of Jupiter Preferred Shares (as defined in the Holdco Purchase Agreement) which
are convertible into 1,875,000 shares of Common Stock at a conversion price of
$8.00 per share, the 254,150 Existing Warrants (as defined in the Holdco
Purchase Agreement) which are exercisable for 254,150 shares of Common Stock and
the Warrants (including the shares of Common Stock issuable upon conversion of
the shares of Series A Convertible Preferred Stock issuable upon exercise of the
Warrants)), (d) the Warrants will be issued and outstanding, (e) the 805,597
shares of Common Stock that are issuable upon the exercise of Management Options
will be issued and outstanding upon such exercise, (f) no shares of any class of
Capital Stock of Holdco will be held by Holdco in its treasury or by its
Subsidiaries and (g) the ownership of Capital Stock on a primary and fully
diluted basis shall be as set forth on Schedule A. All the outstanding shares of
Capital Stock of Holdco will be duly and validly authorized and issued, fully
paid and non-assessable and the Capital Stock of Holdco will conform in all
material respects with the description thereof contained in the Certificate of
Incorporation (as defined in the Holdco Purchase Agreement) of Holdco. When the
Securities (as defined in the Holdco Purchase Agreement) are delivered and paid
for pursuant to the Holdco Purchase Agreement on the Closing Date, (i) the
Common Warrants (as defined in the Holdco Purchase Agreement) will be
exercisable for shares of Common Stock in accordance with their terms and the
Common Warrant Shares (as defined in the Holdco Purchase Agreement) initially
issuable upon exercise of such Common Warrants have been duly and validly
authorized and reserved for issuance upon such exercise and, when issued and
paid for in accordance with the terms of the Warrant Agreement (as defined in
the Holdco Purchase Agreement) and the Common Warrants, will be validly issued,
fully paid and non-assessable and (ii) the Preferred Warrants (as defined in the
Holdco Purchase Agreement) will be exercisable for shares of Series A
Convertible Preferred Stock, par value $10 per share, of Holdco in accordance
with their terms and the Preferred Warrant Shares (as defined in the Holdco
Purchase Agreement) initially issuable upon exercise of such Preferred Warrants
have been duly and validly authorized and, upon the filing of an amendment to
Holdco's articles of incorporation with the North Carolina Secretary of State,
will be duly and validly reserved for issuance upon such exercise and, when
issued and paid for after
41
the filing of such amendment in accordance with the terms of the Warrant
Agreement (as defined in the Holdco Purchase Agreement) and the Preferred
Warrants, will be validly issued, fully paid and non-assessable. Other than the
Management Options, the Jupiter Preferred Shares, the Existing Warrants, the
Warrants, there are no securities of Holdco or any of its Subsidiaries that are
convertible into or exchangeable for shares of any Capital Stock of Holdco or
any of its Subsidiaries, and no options, warrants, calls, subscriptions,
convertible securities or other rights, agreements or commitments which obligate
Holdco or any of its Subsidiaries to issue, transfer or sell any shares of
Capital Stock of, or other interests in, Holdco or any of its Subsidiaries.
Other than the Jupiter Preferred Shares, there are no outstanding obligations of
Holdco or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of Capital Stock of Holdco or any of its Subsidiaries and, except for,
the Jupiter Preferred Shares, the Existing Warrants, the Management Options and
the Warrants, neither Holdco nor any of its Subsidiaries has any awards or
options outstanding under any stock option plans or agreements or any other
outstanding stock-related awards. After the Closing Date, neither Holdco nor any
of its Subsidiaries will have any obligation to issue, transfer, or sell any
shares of Capital Stock of Holdco or its Subsidiaries, other than pursuant to
the Jupiter Preferred Shares, the Existing Warrants, the Management Options and
the Warrants. Except as set forth on Schedule 4.2, there are no voting trusts or
other agreements or understandings to which Holdco or any of its Subsidiaries is
a party with respect to the holding, voting or disposing of Capital Stock of
Holdco or any of its Subsidiaries. As of the date hereof, neither Holdco nor any
of its Subsidiaries has any outstanding bonds, debentures, notes or other
obligations or other securities (other than the Jupiter Preferred Shares, the
Existing Warrants, the Management Options and the Warrants) that entitle the
holders thereof to vote with the members of Holdco or any of its Subsidiaries on
any matter or which are convertible into or exercisable for securities having
such a right to vote.
(b) Immediately after consummation of the issuance of the
Notes, all of the Capital Stock of the Company will be owned beneficially and of
record by Holdco. All the outstanding Capital Stock of the Company will be duly
and validly authorized and issued, fully paid and non-assessable and are free of
preemptive rights except as set forth in the LLC Agreement. There are no
securities of the Company that are convertible into or exchangeable for any
Capital Stock of the Company, and no options, warrants, calls, subscriptions,
convertible securities or other rights, agreements or commitments which obligate
the Company to issue, transfer or sell any Capital Stock of, or other interests
in, the Company. There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any Capital Stock of the Company and
neither the Company nor any of its Subsidiaries has any awards or options
outstanding under any stock option plans or agreements or any other outstanding
stock-related awards. After the Closing Date, the Company will not have any
obligation to issue, transfer, or sell any Capital Stock of the Company. Other
than the LLC Agreement, there are no voting trusts or other agreements or
understandings to which the Company is a party with respect to the holding,
voting or disposing of Capital Stock of the Company. As of the date hereof, the
Company does not have any outstanding bonds, debentures, notes or other
obligations or other securities that entitle the holders thereof to vote with
the members of the Company on any matter or which are convertible into or
exercisable for securities having such a right to vote.
42
4.3. Subsidiaries.
(a) Schedule 4.3 correctly states (i) the name of each of
Holdco's Subsidiaries and any other Person whose equity interests are owned,
directly or indirectly, by Holdco (each, an "Equity Investee"), (ii) the name of
each holder of each class of outstanding Capital Stock or other securities of
Holdco or any of its Subsidiaries or any Equity Investee and the nature and
number of such securities held by such holder and (iii) the number of
authorized, issued and treasury shares or units of each Subsidiary of the
Company and each Equity Investee. Neither Holdco nor any of its Subsidiaries
owns or controls, directly or indirectly, any Capital Stock or other equity
interest in any Person other than the Capital Stock of its Subsidiaries and
Equity Investees listed on Schedule 4.3.
(b) Each issued and outstanding unit of Capital Stock of each
Subsidiary of Holdco (i) has been duly authorized and validly issued and, if a
corporation, is fully paid and nonassessable and free of preemptive rights and
(ii) is owned by Holdco, directly or through Subsidiaries, free and clear of any
Lien other than the liens established under the Credit Documents and other
Permitted Liens, except for one share of each of PCA of Mexico, S.A. de C.V. and
American Studios de Mexico, S.A. de C.V., which, in each case, is owned by third
parties due to requirements of Mexican law.
4.4. Due Authorization, Execution, and Delivery.
(a) Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and the Guarantors party hereto and
constitutes a valid and legally binding obligation of the Company and such
Guarantors, enforceable against each of them in accordance with its terms,
subject to the Enforceability Exceptions.
(b) Notes. The Notes are in the form contemplated by this
Agreement, have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered by the Company on the Closing Date as
provided herein, will have been duly executed, issued and delivered by the
Company, and will constitute valid and legally binding obligations of the
Company enforceable against it in accordance with their terms, subject to the
Enforceability Exceptions.
(c) LLC Agreement. The LLC Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its term subject to the Enforceability Exceptions.
(d) Other Transaction Documents. Each Transaction Document to
which the Company or any of its Subsidiaries is a party (i) has been duly
authorized, executed and delivered by such party thereto and (ii) constitutes a
valid and legally binding obligation of such party, enforceable against such
party in accordance with its terms, subject to the Enforceability Exceptions.
43
(e) Stabilization. Prior to the date hereof, neither the
Company nor any of its Affiliates has taken any action which is designed to or
which has constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company or
Holdco in connection with the offering of the Securities.
4.5. Non-Contravention; Authorizations and Approvals. Neither
the Company nor any of its Subsidiaries is in violation of its articles of
incorporation or bylaws, certificate of formation, limited liability company
agreement (or comparable constituent or governing documents) or is in default
(or, with the giving of notice, lapse of time or both, would be in default)
under any note, bond, mortgage, indenture, deed of trust, loan or credit
agreement, license, franchise, permit, lease, contract or other agreement,
instrument, commitment or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of their respective properties or assets is bound (including, without
limitation, the Credit Agreement) (each, a "Contract"), except for any such
defaults that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect. None of (a) the
execution and delivery by the Company, or any of its Subsidiaries of any of the
Transaction Documents to which they are a party, (b) the performance by any of
them of their respective obligations thereunder, (c) the consummation of the
transactions contemplated thereby or (d) the issuance and delivery of the
Securities, the Holdco Notes or the Senior Notes or the borrowings at the
Closing under the Credit Agreement hereunder will: (i) violate, conflict with or
result in a breach of any provisions of the articles of incorporation or bylaws,
certificate of formation or limited liability company agreement (or comparable
constituent or governing documents) of the Company or any of its Subsidiaries;
(ii) violate, conflict with, result in a breach of any provision of, constitute
a default (or an event which, with notice, lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the triggering of any payment or other obligations (including
any repurchase or repayment obligations) pursuant to, result in the creation of
any Lien (other than the Liens established under the Credit Documents) upon any
of the properties of the Company or any of its Subsidiaries under, or result in
there being declared void, voidable, subject to withdrawal, or without further
binding effect, any of the terms, conditions or provisions of any Contract,
except for any such violations, conflicts, breaches, defaults, accelerations,
terminations or other matters which, individually or in the aggregate, have not
had and would not reasonably be expected to have a Material Adverse Effect;
(iii) require any consent, approval or authorization of, or declaration, filing
or registration with, any Governmental Authority, except for those consents,
approvals, authorizations, declarations, filings or registrations which have
been obtained or made, or the failure of which to obtain or make, individually
or in the aggregate, have not had and would not be reasonably expected to have a
Material Adverse Effect; or (iv) violate any Applicable Laws, except for
violations which, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect.
4.6. Financial Statements; Offering Circular.
(a) The Company has delivered to the Purchasers each of (i)
the audited consolidated balance sheet of Holdco and its Subsidiaries dated
February 3, 2002, and the related audited statements of income or operations,
shareholders' equity and cash flows for the fiscal
44
year ended on that date and (ii) the unaudited interim consolidated balance
sheet of Holdco and its Subsidiaries for the period from February 4, 2002
through May 5, 2002 (the "Financial Statements"). Each of the consolidated
balance sheets contained in the Financial Statements fairly present in all
material respects the financial position, on a consolidated basis, of the
Company and its Subsidiaries as of its date and each of the consolidated
statements of income and cash flows included in the Financial Statements fairly
presents in all material respects the consolidated results of income or cash
flows, as the case may be, of the Company and its Subsidiaries for the periods
to which they relate (subject, in the case of any unaudited interim financial
statements, to charges resulting from audit and normal year-end adjustments and
the absence of footnote disclosures), in each case in accordance with GAAP
applied on a consistent basis during the periods involved, except as noted
therein. All projections provided by the Company to the Purchasers in connection
with the Transactions have been prepared in good faith based on assumptions
believed by management of the Company to be reasonable at the time made based on
the circumstances then in existence (it being understood by the Purchasers,
however, that projections as to future events are not to be viewed as facts and
that the actual results during the period or periods covered by any projections
may differ from projected results and that the differences may be material).
(b) The Offering Circular, dated June 20, 2002, relating to
the offering and sale of the Senior Notes and any amendments or supplements
thereto (the "Offering Circular") did not and will not, as of their respective
dates or as of the Closing, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions relating to a purchaser of Senior Notes made in reliance
upon and in conformity with information furnished in writing to the Company by
such purchaser expressly for use therein. The statements set forth in the
Offering Circular under the caption "Description of Notes," insofar as they
purport to constitute a summary of the terms of the Senior Notes and the
Exchange and Registration Rights Agreement, and under the captions "Description
of Certain Indebtedness," "Business -- Governmental Regulations," "Business --
Licenses, Trademarks and Patents," "Management -- Employment and Severance
Arrangements," "Management -- Management Stock Option Plan," "Certain
Relationships and Related Party Transactions," "Certain U.S. Federal Income Tax
Considerations" and "Underwriting," insofar as they purport to describe the
provisions of the laws, documents and legal matters referred to therein, are
accurate, complete and fair.
4.7. Absence of Undisclosed Liabilities or Events.
(a) Except for the liabilities and obligations arising under
the Transaction Documents, neither the Company nor any of its Subsidiaries has
any liabilities or obligations, whether accrued, contingent or otherwise, except
(i) for liabilities and obligations in the respective amounts reflected or
reserved against in the consolidated balance sheet as of May 5, 2002 included in
the Financial Statements, (ii) borrowings under each of the Company's and its
Subsidiaries' respective revolving credit facilities in the ordinary course of
business, (iii) other liabilities and obligations incurred in the ordinary
course of business which, individually or in the
45
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect or (iv) liabilities or obligations under Contracts.
(b) Since the Audit Date, there has been no change in the
business, operations, property, assets, liabilities, financial condition or
prospects of the Company and its Subsidiaries except for changes that,
individually or in the aggregate, have not had or would not reasonably be
expected to have a Material Adverse Effect. There are no facts known to the
Company or its Subsidiaries that, individually or in the aggregate, have had or
would reasonably be expected to have a Material Adverse Effect that have not
been set forth herein or in the Offering Circular.
4.8. No Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the knowledge of the
Company or its Subsidiaries, threatened against or affecting the Company or any
of its Subsidiaries, any of their Directors or Officers (in their capacities as
such) or any of their property or assets which, individually or in the
aggregate, have had or would reasonably be expected to have a Material Adverse
Effect or to prohibit, delay or materially restrict the consummation of any of
the transactions contemplated by the Transaction Documents. No Governmental
Authority has notified the Company or any of its Subsidiaries of an intention to
conduct any audit, investigation or other review with respect to the Company or
any of its Subsidiaries, except for those investigations or reviews which,
individually or in the aggregate, have not had or would not be reasonably
expected to have a Material Adverse Effect.
4.9. Title to Properties. Each of the Company and its
Subsidiaries has (a) good and marketable title to and fee simple ownership of,
or a valid and subsisting leasehold interest in, all of its real property and
(b) good title to, or a valid and subsisting leasehold interest in, all of its
equipment and other personal property, in each case free and clear of all Liens,
except Liens permitted by Section 8.3. The Company and its Subsidiaries have
paid or discharged, or reserved for, all lawful claims which, if unpaid, might
become a Lien (other than a Lien permitted by Section 8.3) against any property
or assets of the Company and its Subsidiaries unless such claim is contested in
good faith and such contest, individually or in the aggregate, has not had or
would not be reasonably expected to have a Material Adverse Effect.
4.10. Intellectual Property Rights. The Company and its
Subsidiaries own or possess all Intellectual Property reasonably necessary to
conduct their businesses as now conducted, except where the expiration or loss
of any of such Intellectual Property, individually or in the aggregate, has not
had and would not reasonably be expected to have a Material Adverse Effect. To
the knowledge of the Company, and its Subsidiaries, (a) there is no infringement
of such Intellectual Property by any third party and (b) the conduct of their
businesses as currently conducted does not infringe any Intellectual Property of
any third party other than any such infringements which, individually or in the
aggregate, has not had or would not reasonably be expected to have a Material
Adverse Effect.
4.11. Tax Returns and Payments.
(a) The Company and its Subsidiaries have filed all federal
and other material Tax Returns required to be filed, and have paid all federal
and other material Taxes shown to be
46
due on such Tax Returns, or which are levied or imposed upon them or their
property, income or assets, or which are otherwise due and payable, except those
which are being contested in good faith by appropriate proceedings diligently
prosecuted and for which adequate reserves have been provided and with respect
to which no notice of Lien has been filed or recorded. There is no proposed tax
assessment against either the Company or any of its respective Subsidiaries
which, if the assessment were made, would reasonably be expected to have a
Material Adverse Effect;
(b) No tax authority in a jurisdiction where the Company or
any of its Subsidiaries does not file Tax Returns has notified the Company or
any of its Subsidiaries of any claim, assertion or threat that the Company or
any of its Subsidiaries is or may be subject to Tax in such jurisdiction; and
(c) The Company is not, nor has it ever been, a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code.
4.12. Employee Benefit Plans.
(a) There has been no failure by any employee benefit plan,
within the meaning of Section 3(3) of ERISA, which is maintained by the Company
or any of its Subsidiaries or to which the Company or any of its Subsidiaries
contributes (each, a "Plan") to comply with the applicable requirements of ERISA
and the Code other than any such failures that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect. There is no pending or, to the knowledge of the Company,
threatened litigation relating to the Plans. Neither the Company nor any of its
Subsidiaries has engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject the Company or any of its Subsidiaries to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA other than those
that, individually or in the aggregate, have not had and would not reasonably be
excepted to have a Material Adverse Effect. The Company is not aware, after due
inquiry, of any item of non-compliance which could reasonably be expected to
result in the loss of Plan qualification or tax-exempt status.
(b) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company or any of its Subsidiaries under Section 4001 of ERISA
or Section 414 of the Code. Neither the Company nor any of its Subsidiaries nor
an ERISA Affiliate has contributed to a Multiemployer Plan at any time during
the preceding six plan years. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") or by any ERISA Affiliate within the 12-month period ending on
the date hereof.
47
(c) Neither any Pension Plan nor any single-employer plan of
an ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of ERISA
and no ERISA Affiliate has an outstanding funding waiver. Neither the Company
nor any of its Subsidiaries has provided, or is required to provide, security to
any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code.
(d) Under each Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year ended prior to the date hereof,
the actuarially determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Plan's most recent actuarial valuation),
did not exceed the then current value of the assets of such Plan and there has
been no change in the financial condition of such Plan since the last day of the
most recent plan year.
(e) Except as described in the Company's financial
statements included in the Offering Circular, neither the Company nor any of its
Subsidiaries has any obligations for retiree health and life benefits under any
Plan, except as required by Applicable Law. The Company or its Subsidiaries may
amend or terminate any such Plan upon 30 days' prior notice without incurring
any liability thereunder.
4.13. Private Offering; No Integration or General
Solicitation; Rule 144A Eligibility.
(a) Subject to compliance by the Purchasers with the
representations and warranties set forth in Section 5 and with the procedures
set forth in Section 10, it is not necessary in connection with the offer, sale
and delivery of the Securities to the Purchasers purchasing such Securities in
the manner contemplated by this Agreement to register the Securities under the
Securities Act.
(b) The Company has not, directly or indirectly, offered,
sold or solicited any offer to buy nor will it, directly or indirectly, offer,
sell or solicit any offer to buy, any security of a type or in a manner which
would be integrated with the sale of the Securities and require the Securities
to be registered under the Securities Act. None of the Company, its Affiliates
or any Person acting on any of their behalf (other than the Purchasers, as to
whom the Company makes no representation or warranty) has engaged or will engage
in any form of general solicitation or general advertising (within the meaning
of Rule 502(c) under the Securities Act) in connection with the offering of the
Securities. With respect to the Securities, if any, sold in reliance upon the
exemption afforded by Regulation S: (i) none of the Company, its Affiliates or
any Person acting on any of their behalf (other than the Purchasers, as to whom
the Company makes no representation or warranty) has engaged or will engage in
any directed selling efforts within the meaning of Regulation S and (ii) each of
the Company and its Affiliates and any Person acting on any of their behalf
(other than the Purchasers, as to whom the Company makes no representation or
warranty) has complied and will comply with the offering restrictions set forth
in Regulation S.
48
(c) The Securities are eligible for resale pursuant to Rule
144A and will not, at the Closing Date, be of the same class as securities
listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted on a U.S. automated interdealer quotation system.
4.14. Environmental Matters. Except, with regard to each of
the following, any matters which, individually or in the aggregate, do not and
would not reasonably be expected to have a Material Adverse Effect:
(a) The Company and each of its Subsidiaries is currently in
compliance with, all Environmental Laws and has obtained and is currently in
compliance with all permits, licenses, registrations, consents and other
authorizations which are required with respect to any of its facilities or
operations under any applicable Environmental Law (the "Environmental Permits")
and all such Environmental Permits are in full force and effect;
(b) Neither the Company nor any of its Subsidiaries has
received any written notice of any claims, civil, criminal or administrative
actions, suits, hearings, investigations or proceedings which are pending or, to
its knowledge, threatened against it, in each case, on the basis of, or related
to, any Environmental Matter, or indicating that such Person is or may be a
potentially responsible party or otherwise liable under Environmental Law in
connection with any location which has experienced the release or threatened
release of any Hazardous Substances; and
(c) There are no conditions (including, without limitation,
any releases of Hazardous Substances), circumstances, actions or omissions that
are reasonably likely to (i) give rise to any liability or obligation of the
Company or any of its Subsidiaries under any Environmental Laws, (ii) form the
basis of any claim, action, suit, proceeding, hearing, investigation or inquiry
against the Company or any of its Subsidiaries or (iii) would interfere with or
prevent continued compliance by the Company or any of its Subsidiaries with
Environmental Laws and/or Environmental Permits; and
4.15. Status under Certain Statutes. Neither the Company nor
any of its Subsidiaries is or, after receipt of payment for the Securities and
the consummation of the other transactions contemplated by the Transaction
Documents, is required to be registered as (a) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, or controlled by such a company or (b) a "holding company," or
a "subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary" or a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
4.16. Insurance. Each of the Company and its Subsidiaries
carries insurance (including self-insurance) in such amounts and with such
deductibles and covering such risks as in its reasonable determination is
adequate for the conduct of its business and the value of its properties.
49
4.17. Use of Proceeds; Margin Regulations. The Company will apply all
of the proceeds from the sale of the Securities, together with the initial
borrowings under the Credit Agreement, proceeds from the sale of the Senior
Notes and proceeds from the sale of the Holdco Notes solely to repay in full the
indebtedness outstanding under the Existing Senior Credit Facility and the
Outstanding Senior Subordinated Term Loans and to pay fees and expenses in
connection therewith. No part of the proceeds from the sale of the Securities
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock or for the purpose of buying or carrying or trading in
any securities. Margin stock does not constitute more than 5% of the value of
the consolidated assets of the Company and its Subsidiaries and the Company has
no present intention that margin stock will constitute more than 5% of the value
of such assets. As used in this Section 4.17, the terms "margin stock" and
"purpose of buying or carrying" shall have the meanings assigned to them in
Regulation U.
4.18. Compliance with Laws; Permits. The Company and each of its
Subsidiaries has complied, and is in compliance, in all respects with all
Applicable Laws and has all Permits necessary in the conduct of its business as
currently conducted and all such Permits are in full force and effect, except in
each case as would not reasonably be expected to have a Material Adverse Effect.
No violations have been recorded in respect of any such Permits and no
proceeding is pending or, to the knowledge of the Company and its Subsidiaries,
threatened to revoke or limit any Permit, except for violations and proceedings
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
4.19. Solvency. The Company and its Subsidiaries on a consolidated
basis are, and after giving effect to the Transactions will be, Solvent.
4.20. Affiliate Transactions. Except as set forth on Schedule 4.20,
(a) there is no Indebtedness between the Company or any of its Subsidiaries, on
the one hand, and any officer, shareholder, director or Affiliate (other than
the Company or any of its Subsidiaries) of the Company, on the other, (b) no
such officer, shareholder, director or Affiliate provides or causes to be
provided any asset or facilities to the Company or any of its Subsidiaries, (c)
neither the Company nor any of its Subsidiaries provides or causes to be
provided any assets, services or facilities to any such officer, shareholder,
director or Affiliate, (d) neither the Company nor any of its Subsidiaries
beneficially owns, directly or indirectly, any investment in or issued by any
such officer, director or Affiliate and (e) no such officer, shareholder,
director or Affiliate has any direct or indirect ownership interest in any
Person with which the Company or any of its Subsidiaries competes or has a
business relationship.
4.21. Material Contracts. Schedule 4.21 contains a true, correct, and
complete list of all Material Contracts in effect on the Closing Date. As of the
Closing Date, each Material Contract is in full force and effect and no defaults
enforceable against the Company or any of its Subsidiaries currently exist
thereunder. To the Company's knowledge, no party to any Material Contract
intends to terminate such Material Contract.
4.22. No Changes to Applicable Law. To the Company's knowledge, no
changes to Applicable Law affecting the Company or any of its Subsidiaries have
occurred since
50
the Audit Date or are currently pending or threatened, in each case other than
those which have not had and would not reasonably be expected to have a Material
Adverse Effect.
4.23. Indebtedness. On the Closing Date, after consummation of the
Transactions, the consolidated Indebtedness of the Company and its Subsidiaries
(excluding the Indebtedness under the Credit Agreement and the Indebtedness
evidenced by the Notes, the Senior Notes, the Opco Notes and contingent
obligations in respect of letters of credit outstanding under the Credit
Agreement of approximately 10,100,000) will not exceed $300,000.
4.24. Fees. The Offering Circular includes the Company's good faith
estimate of the fees and expenses payable.
4.25. Labor and Employment Matters. (a) Neither the Company nor any
of its Subsidiaries is a party to, or bound by, any collective bargaining
agreement or other Contracts or understanding with a labor union or labor
organization; and (b) to the Company's knowledge, there is no (i) unfair labor
practice, labor dispute (other than routine individual grievances) or labor
arbitration proceeding pending or threatened against the Company or its
Subsidiaries, (ii) activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its Subsidiaries,
(iii) lockout, strike, slowdown, work stoppage or threat thereof by or with
respect to any such employees or (iv) dispute, grievance or litigation relating
to labor matters involving any employee (other than routine individual
grievances). Each of the Company and its Subsidiaries is in compliance with all
Applicable Laws regarding employment, employment practices, terms and conditions
of employment and wages, except for such noncompliance which, individually or in
the aggregate, do not and could not reasonably be expected to have a Material
Adverse Effect. Other than as provided pursuant to the Transaction Documents, no
employee of the Company will receive, accrue or be entitled to received or
accrue any additional benefits, service or accelerated rights to payments of
benefits, or any severance or termination payments as a result of the
consummation of the Transactions.
4.26. Brokerage Fees. Except as set forth on Schedule 4.26 and as
provided for in Section 3.13, neither the Company nor any of its Subsidiaries
has paid, or is obligated to pay, to any Person any brokerage or finder's fees
in connection with the Transactions.
4.27. Absence of Breach of Representations and Warranties. The
representations and warranties of (a) Holdco in the Holdco Purchase Agreement
relating to the Holdco Notes being issued at the Closing and (b) the Company in
the (i) purchase agreement relating to the Senior Notes being issued at the
Closing and (ii) Credit Agreement being entered into at the Closing, are true
and correct.
SECTION 5.
REPRESENTATIONS OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and warrants to
the Company and the Company as of the date hereof as follows:
51
5.1. Purchase for Investment.
(a) Such Purchaser is acquiring the Securities to be purchased by it
for its own account, for investment and not with a view to, or present intention
of, selling such Securities in any distribution thereof within the meaning of
the Securities Act in violation of the federal securities laws or any applicable
state securities laws.
(b) Such Purchaser understands that (i) the Securities to be
purchased by it have not been registered under the Securities Act and are being
issued by the Company in transactions exempt from the registration requirements
of the Securities Act and (ii) such Securities may not be offered or sold except
pursuant to an effective registration statement under the Securities Act or
pursuant to an applicable exemption from registration under the Securities Act.
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
(d) Such Purchaser did not employ any broker or finder in connection
with the transactions contemplated in this Agreement.
(e) Such Purchaser is an "Accredited Investor" (as defined in Rule
501(a) under the Securities Act).
(f) Such Purchaser has been given opportunity to obtain any
information or documents, and to ask questions and receive answers about such
documents, the Company and its Subsidiaries and the businesses of the Company
and its Subsidiaries, as it deems necessary to evaluate the merits and risks
related to its investment in the Securities and no representations concerning
such matters or any other matters related to such investment have been made to
such Purchaser except as set forth in the Transaction Documents. Such Purchaser
has consulted its own attorney, accountant, or investment adviser with respect
to the investment contemplated hereby and its suitability for such Purchaser,
including the tax and other economic considerations related to the investment.
(g) Such Purchaser (i) has knowledge and experience in financial and
business matters such that such Purchaser is capable of evaluating the merits
and risks of the purchase of the Securities as contemplated by the Transaction
Documents, (ii) understands and has taken cognizance of all risk factors related
to the purchase of the Securities to be purchased by it and (iii) is able to
bear the economic risk of the investment in the Securities for an indefinite
period of time and can afford to suffer a complete loss of the investment in
such Securities.
52
SECTION 6.
COVENANTS TO PROVIDE INFORMATION
The Company covenants and agrees with each Holder that for so long as
any of the Notes or any of the Warrants remain Outstanding:
6.1. Future Reports to the Company. The Company shall deliver to each
Purchaser and each Holder that is an Institutional Investor so long as such
Purchaser or such Holder holds any Note or Warrant:
(a) Audited Financial Statements. As soon as available, but in any
event within 90 days after the end of each fiscal year, an audited consolidated
and consolidating balance sheet of the Company and its Subsidiaries as of the
end of the Fiscal Year and the related consolidated and consolidating statements
of income, retained earnings, stockholders' equity and cash flows for the year,
audited by Deloitte & Touche or other firm of independent certified public
accountants of nationally recognized standing reasonably acceptable to the
Purchasers, setting forth in each case in comparative form the figures for the
previous year, reported without a "going concern" or like qualification or
exception, or qualification indicating that the scope of the audit was
inadequate to permit such independent certified public accountants to certify
such financial statements without such qualification or any other material
qualification or exception.
(b) Company-Prepared Financial Statements. As soon as available, but
in any event
(i) within 30 days after the end of each month, a
company-prepared unaudited consolidated balance sheet of the Company and
its Subsidiaries as of the end of such month and related company-prepared
consolidated statements of income for such monthly period and for the
fiscal year to date;
(ii) within 45 days after the end of each of the first three
Fiscal Quarters, the company-prepared unaudited consolidated balance sheet
of the Company and its Subsidiaries as of the end of such Fiscal Quarter
and related company-prepared consolidated statements of income, retained
earnings, stockholders' equity and cash flows for such Fiscal Quarter and
for the Fiscal Year to date or, in lieu thereof, the Company's report on
Form 10-Q filed with the Securities and Exchange Commission for such
period; and
(iii) within 60 days following the end of each Fiscal Year, an
annual business plan and budget for the Company and its Subsidiaries,
containing, among other things, pro forma financial statements for the
then current year,
in each case setting forth in comparative form the consolidated figures for the
corresponding period or periods of the preceding Fiscal Year or the portion of
the Fiscal Year ending with such period, as applicable, in each case subject to
normal recurring year-end audit adjustments and the absence of notes required by
GAAP.
53
(c) Officer's Certificate. Concurrently with the delivery of the
financial statements referred to in Sections 6.1(a) and 6.1(b)(ii) above, a
certificate of the chief financial officer of the Company (i) demonstrating
compliance with the covenants in Sections 6.1, 8.1, 8.2, 8.4, and 9.1 by
calculation thereof, if applicable, as of the end of each such fiscal period and
(ii) stating that, to the best of the chief financial officer's knowledge and
belief, (A) the financial statements fairly present in all material respects the
financial condition of the parties covered by such financial statements, (B)
during such period the Company and its Subsidiaries have observed or performed
in all material respects the covenants hereunder, and (C) in each case the chief
financial officer of the Company has obtained no knowledge of any Default or
Event of Default except as specified in such certificate.
(d) Accountants' Reports. Promptly upon receipt, a copy of any final
(as distinguished from preliminary or discussion draft) "management letter" or
other similar report submitted by independent accountants or financial
consultants to the Company or any of its Subsidiaries in connection with any
annual, interim or special audit.
(e) Public Information. Within ten days after the same are sent,
copies of all reports (other than those otherwise provided pursuant to this
Section 6.1) and other financial information which the Company or any of its
Subsidiaries sends to its public security holders, and within ten days after the
same are filed, copies of all financial statements and non-confidential reports
(other than those otherwise provided pursuant to this Section 6.1), if any,
which the Company or any of its Subsidiaries may make to, or file with, the
Securities and Exchange Commission or any successor or analogous Governmental
Authority.
SECTION 7.
OTHER AFFIRMATIVE COVENANTS
The Company covenants and agrees with each Holder that (i) in the
case of Sections 7.7 and 7.9, for so long as such Sections apply by their
respective terms and (ii) in the case of each other Section in this Section 7,
until the principal amount of (and premium, if any, on) all the Notes, and all
interest, and other obligations hereunder in respect thereof (other than
indemnification obligations that have not become due and payable), shall have
been paid in full:
7.1. 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 Agreement. The Company shall pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Notes.
7.2. Maintenance of Office or Agency.
(a) The Company shall maintain in the city of its principal
executive offices an office or agency where Notes may be surrendered for
registration of transfer and where notices and demands to or upon the Company in
respect of the Notes and this Agreement may be served.
54
The Company shall give prompt written notice to the Purchasers and the Holders
of the location, and any change in the location, of such office or agency.
(b) The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
city of its principal executive offices for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
7.3. Legal Existence. The Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its legal
existence, and the corporate, partnership or other existence of each Restricted
Subsidiary, in accordance with the respective organizational documents (as the
same may be amended from time to time) of each Restricted Subsidiary and the
material rights (charter and statutory), licenses and franchises of the Company
and its Restricted Subsidiaries; provided that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Restricted Subsidiaries if the Board of
Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Restricted Subsidiaries taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders.
7.4. Maintenance of Properties; Insurance; Compliance with Law.
(a) The Company shall, and shall cause each of its Restricted
Subsidiaries to, at all times cause all material properties used or useful in
the conduct of their respective businesses to be maintained and kept in good
condition, repair and working order (reasonable wear and tear excepted) and
supplied with all necessary equipment, and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereto.
(b) The Company shall maintain, and shall cause to be maintained
for each of its Restricted Subsidiaries, insurance covering such risks as are
usually and customarily insured against by corporations similarly situated, in
such amounts as shall be customary for corporations similarly situated and with
such deductibles and by such methods as shall be customary and reasonably
consistent with past practice.
(c) The Company shall, and shall cause each of its Subsidiaries
to, comply in all material respects with all statutes, laws, ordinances or
government rules and regulations to which they are subject, non-compliance with
which would materially adversely affect the business, prospects, earnings,
properties, assets or financial condition of the Company and its Subsidiaries
taken as a whole.
7.5. Waiver of Stay, Extension or Usury Laws. Each of the
Company and the Guarantors covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, or plead (as a defense or otherwise)
or in any manner whatsoever claim or take the benefit
55
or advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive any of the Company and the Guarantors from paying all
or any portion of the principal of, premium, if any, and/or interest on the
Notes as contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this Agreement;
and (to the extent that they may lawfully do so) each of the Company and the
Guarantors (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants (to the extent that it
may lawfully do so) that it will not hinder, delay or impede the execution of
any power herein granted to the Purchasers, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.6. Taxes.
(a) Payment of Taxes. Holdco shall pay or discharge or cause its
Subsidiaries (including the Company) to, pay or discharge, before the same shall
become delinquent, (i) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings diligently prosecuted which
stay the enforcement of any Lien and for which adequate reserves as required by
GAAP are being maintained by the Company or such Subsidiary; and (ii) all lawful
claims which, if unpaid, would by law become a Lien upon its property unless the
same are being contested in good faith by appropriate proceedings diligently
prosecuted which stay the imposition or enforcement of the Lien and for which
adequate reserves as required by GAAP are being maintained by the Company.
(b) Tax Returns. Holdco and its Subsidiaries (including the
Company) shall timely file or cause to be filed when due all Tax Returns that
are required to be filed by or with respect to the Company or any of its
Subsidiaries for taxable years ending after the Closing Date.
(c) Transfer Taxes. All transfer, transfer gains, documentary,
sales, use, stamp, registration and other similar Taxes and fees (including
costs and expenses relating to such Taxes) (collectively "Transfer Taxes"), if
any, incurred in connection with the consummation of the Transactions on the
Closing Date, shall be borne by the Company. The Company shall, at its own
expense, prepare and timely file, in accordance with Applicable Law, all Tax
Returns and other documentation with respect to all such Transfer Taxes. The
Purchasers shall reasonably cooperate with the Company in the preparation and
filing of any such Tax Returns and other documentation.
7.7. Books, Records and Access. The Company shall, and shall cause
each of its Subsidiaries to, keep complete and accurate books and records of
their transactions in accordance with good accounting practices on the basis of
GAAP. The Company and its Subsidiaries will provide reasonable opportunities to
GS Mezzanine to routinely consult with and advise management of the Company and
its Subsidiaries on all matters relating to the operation of the Company and its
Subsidiaries. The Company agrees to, and shall cause its Subsidiaries to, give
due consideration to the advice given and any proposals made by GS Mezzanine;
provided, that, the Company and its Subsidiaries shall be under no obligation to
follow such advice. The Company shall, and shall cause its Subsidiaries to,
permit representatives of any Purchaser as may be reasonably requested upon
reasonable advance notice to visit and inspect any of the
56
properties of the Company and its Subsidiaries and examine and make copies from
any of its or its Subsidiaries' books and records at any reasonable time and as
often as may reasonably be requested upon reasonable notice, and to discuss the
business, affairs, operations, properties and financial and other conditions of
the Company and its Subsidiaries with officers and employees thereof.
7.8. Repurchase at the Option of Holders upon Change of Control.
(a) If a Change of Control occurs, each Holder will have the right
to require the Company to purchase all or any part (equal to $1,000 or an
integral multiple thereof) of that Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") and the other procedures
required by this Agreement. In the Change of Control Offer, the Company will
offer a payment (the "Change of Control Payment") in cash equal to 101% of the
aggregate principal amount of the Notes purchased plus accrued and unpaid
interest on such Notes, if any, to the date of purchase (the "Change of Control
Payment Date").
(b) Within 30 days following the date on which a Change of Control
occurs, the Company shall send, by first-class mail, postage prepaid, a notice
to each Holder, which notice shall govern the terms of the Change of Control
Offer. The notice to the Holders shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Change of
Control Offer. Such notice shall state:
(1) that the Change of Control
Offer is being made pursuant to this Section 7.8 and that all Notes
validly tendered and not withdrawn will be accepted for payment;
(2) the Change of Control Payment
and the Change of Control Payment Date (which shall be no earlier
than 30 days nor later than 60 days from the date such notice is
mailed, other than as may be required by law, but in any event
shall be at least one Business Day following the change of control
payment date in respect of the change of control offer under the
Senior Notes Indenture);
(3) that any Note not tendered will
continue to accrue interest;
(4) that, unless the Company
defaults in making payment therefor, any Note accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date;
(5) that Holders electing to have a
Note purchased pursuant to a Change of Control Offer will be
required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed, to
the Company at the address specified in the notice prior
57
to the close of business on the third Business Day prior to the
Change of Control Payment Date;
(6) that Holders will be entitled to
withdraw their election if the Company receivers, not later than
the second Business Day prior to the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Notes the
Holder delivered for purchase and a statement that such Holder is
withdrawing its election to have such Note purchased;
(7) that Holders whose Notes are
purchased only in part will be issued new Notes in a principal
amount equal to the unpurchased portion of the Notes surrendered;
provided, however, that each Note purchased and each new Note
issued shall be in a principal amount of $1,000 or integral
multiples thereof; and
(8) the circumstances and relevant
facts regarding such Change of Control.
(c) On the Change of Control Payment Date, the Company will, to
the extent lawful: (i) accept for payment all Notes or portions of Notes
properly tendered in the Change of Control Offer, and (ii) pay to the Holders of
Notes or portions thereof so tendered an amount equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered.
(d) The Company will promptly mail to each Holder of Notes tendered
the Change of Control Payment for such Notes, and the Company will promptly
authenticate and mail (or cause to be Transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any. Each such new Note will be in a principal amount of $1,000
or an integral multiple of $1,000.
(e) Notwithstanding the foregoing, the Company will not be required
to make a Change of Control Offer, as provided above, if, in connection with or
in contemplation of any Change of Control, it or a third party has made an offer
to purchase (an "Alternate Offer") any and all Notes validly tendered at a cash
price equal to or higher than the Change of Control Payment and has purchased
all Notes properly tendered in accordance with the terms of such Alternate
Offer. The Alternate Offer must comply with all the other provisions applicable
to the Change in Control Offer, shall remain, if commenced prior to the Change
in Control, open for acceptance until the consummation of the Change of Control
and must permit Holders to withdraw any tenders of Notes made into the Alternate
Offer until the final expiration or consummation thereof.
(f) The Company will comply, or cause any third party making an
Alternate Offer to comply, with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer or an Alternate Offer.
To the extent that the provisions of any securities laws or regulations conflict
with the
58
provisions of this Section 7.8, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the provisions of this Section 7.8 by virtue thereof.
7.9. Board Representation.
(a) The Company shall, at the request of GS Mezzanine, cause, on
the Closing Date or, if later, upon receipt of notice from GS Mezzanine, the
appointment of a person, who may be a partner, managing director, officer or
employee of GS Mezzanine or any Affiliate of GS Mezzanine (other than an officer
or employee of another portfolio company, unless the Company consents, which
consent shall not be unreasonably withheld), as a non-voting observer (a
"Non-Voting Observer") to the Board of Directors of the Company, it being
understood that GS Mezzanine may from time to time change the designation of
such Non-Voting Observer. In the event of a vacancy caused by the resignation or
other cessation of service of any Non-Voting Observer from the Board of
Directors of the Company, the Company shall cause the appointment of a new
Non-Voting Observer nominated by GS Mezzanine at least seven days prior to the
date of the next regular or special meeting of the Board of Directors. The
Non-Voting Observer shall be permitted to attend meetings of the Board of
Directors of Holdco, the Board of Directors (or other similar managing body) of
the Company and any executive or comparable committee of each such Board of
Directors.
(b) The Non-Voting Observer shall be notified of any meeting of
the Board of Directors of Holdco, the Board of Directors (or other similar
managing body) of the Company and any executive or comparable committee of each
such Board of Directors, including such meeting's time and place, in the same
manner as Directors of the Company or Holdco and shall have the same access to
information (including copies of all materials distributed to members of such
Board of Directors or such committee) concerning the business and operations of
the Company or Holdco and at the same time as Directors of the Company or Holdco
and shall be entitled to participate in discussions and consult with, and make
proposals and furnish advice to, such Board of Directors or such committee.
(c) The Company shall indemnify and hold harmless, to the fullest
extent permitted under Applicable Law, any Non-Voting Observer to the same
extent as all other Directors of the Company and on terms no less favorable than
the terms of the Company's certificate of incorporation and bylaws in existence
on the date hereof.
(d) At all times after the first consummation of an Initial
Public Offering, the Company shall cause to be maintained directors' and
officers' liability insurance covering all Directors and officers of the Company
and covering any Non-Voting Observer (regardless of whether such insurance shall
be obtained prior to an Initial Public Offering or after an Initial Public
Offering) (i) to the same extent as that maintained for all other Directors of
the Company and (ii) on terms no less favorable than the coverage provided for
in the Company's directors', officers' and corporate liability insurance then so
maintained, including coverage in an amount of at least $10,000,000.
59
(e) The Board of Directors of the Company shall not establish
or employ committees as a means designed to circumvent or having the effect of
circumventing the rights of GS Mezzanine under this Agreement to representation
on such Board of Directors.
7.10. Additional Guarantees.
(a) If the Company or any of its Restricted Subsidiaries
acquires or creates another Restricted Subsidiary (other than any Foreign
Subsidiary) after the date of this Agreement, or Transfers more than $1,000 to
any Restricted Subsidiary (other than a Foreign Subsidiary) that is not a
Guarantor as of the Issue Date, or designates any Unrestricted Subsidiary (other
than any Foreign Subsidiary) as a Restricted Subsidiary, then that newly
acquired, created, capitalized or designated Restricted Subsidiary must become a
Guarantor and shall, within 30 days of the date on which it was acquired,
created, capitalized or designated, execute and deliver to the Company a
Supplemental Agreement in the form of Exhibit B hereto pursuant to which such
Restricted Subsidiary shall unconditionally guarantee all of the Company's
obligations under the Notes and this Agreement on the terms set forth in this
Agreement. Thereafter, such Restricted Subsidiary shall be a Guarantor for all
purposes of this Agreement until released in accordance with the terms of this
Agreement.
(b) Notwithstanding Section 7.10(a), any Guarantee will
provide by its terms that it will be automatically and unconditionally released
and discharged under the circumstances described in Section 15.
SECTION 8.
NEGATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees with each Holder that
until the principal amount of (and premium, if any, on) all the Notes, and all
interest and other Obligations hereunder in respect thereof, shall have been
paid in full:
8.1. Limitation on Incurrence of Additional Indebtedness.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, incur any Indebtedness other
than Permitted Indebtedness; provided, however, that if no Default has occurred
and is continuing at the time of or would occur as a consequence of the
incurrence of any such Indebtedness, the Company or any Subsidiary Guarantor may
incur Indebtedness and the Restricted Subsidiaries of the Company which are not
Guarantors may incur Acquired Indebtedness, in each case if, after giving effect
to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the
Company is at least 2.0 to 1.0 (the "Coverage Ratio Exception"). Notwithstanding
the foregoing, the Company will not permit PCA Finance Corp. to incur any
Indebtedness other than (i) the Senior Notes, (ii) guarantee of the Credit
Documents and (iii) guarantees or co-issuances of Indebtedness of the Company
permitted under the Senior Notes Indenture.
60
(b) No Subsidiary Guarantor will, directly or indirectly, in
any event incur any Indebtedness that purports to be by its terms (or by the
terms of any agreement governing such Indebtedness) subordinated to any other
Indebtedness of such Guarantor unless such Indebtedness is also by its terms (or
on the terms of any agreement governing such Indebtedness) subordinated to the
Guarantee of such Guarantor to the same extent and in the same manner as such
Indebtedness is subordinated to such other Indebtedness of such Guarantor.
(c) Notwithstanding any other provision in this Section 8.1,
the maximum amount of Indebtedness that the Company or any Restricted Subsidiary
may incur pursuant to this Section 8.1 shall not be deemed to be exceeded as a
result of fluctuations in the exchange rates of currencies. The outstanding
principal amount of any particular Indebtedness shall be counted only once and
any obligation arising under any guarantee, Lien, letter of credit or similar
instrument supporting such Indebtedness shall be disregarded, so long as the
obligor is permitted to incur such obligation. In the event that an item of
Indebtedness meets the criteria of more than one of the categories of Permitted
Indebtedness described in clauses (3) through (17) of the definition of
Permitted Indebtedness or is entitled to be incurred pursuant to the Coverage
Ratio Exception, the Company shall, in its sole discretion, classify such item
of Indebtedness in any manner that complies with this Section 8.1 (provided that
all Indebtedness outstanding under the Credit Agreement on the Issue Date shall
be deemed to have been incurred pursuant to clause (3) of the definition of
Permitted Indebtedness) and may later reclassify such item into any one or more
of the categories of Permitted Indebtedness described in clauses (3) through
(17) of the definition of Permitted Indebtedness (provided that at the time of
reclassification it meets the criteria in such category or categories).
(d) Notwithstanding any provision contained in this Section 8.1
to the contrary, the Company shall not, nor shall it permit any of its
respective Subsidiaries to, incur any Indebtedness to the Sponsor and its
Affiliates other than trade payables constituting Indebtedness incurred in the
ordinary course of business between the Company and/or its Subsidiaries and
other company portfolio Affiliates of the Sponsor unless such Indebtedness is,
pursuant to such agreements, expressly subordinated to the Notes to the same
extent and in the same manner as the Notes are subordinated to Senior
Indebtedness (and treating any such Indebtedness incurred by a Subsidiary of the
Company as if it were incurred by the Company for purposes of such subordination
provisions).
8.2. Limitation on Restricted Payments.
(a) The Company will not, and will not cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, make any Restricted
Payment, if at the time of such Restricted Payment or immediately after giving
effect thereto,
(A) a Default has occurred and is continuing;
(B) the Company is not able to incur at least $1.00 of
additional Indebtedness pursuant to the Coverage Ratio Exception;
or
61
(C) the aggregate amount of such Restricted Payments made after
the Issue Date, including the fair market value as reasonably
determined in good faith by the Board of Directors of the
Company of non-cash amounts constituting Restricted Payments (but
excluding Restricted Payments made pursuant to clause (2), (3),
(4), (5), (6), (7), (8) or (9) of Section 8.2(b)), shall exceed
the sum (the "Basket") of, without duplication,
(1) 50% of the cumulative Consolidated Net Income
(or if cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss) of the Company from the beginning of the fiscal quarter in which the Issue
Date occurs through the last day of the most recently ended fiscal quarter for
which internal financial statements are available at the time of the Restricted
Payment (treating such period as a single accounting period); plus
(2) 100% of the aggregate net cash proceeds
received on or subsequent to the Issue Date by the Company from any Person
(other than a Subsidiary of the Company) (i) as a contribution to its common
equity capital or from the issuance and sale of Qualified Capital Stock or (ii)
from the issuance and sale of Disqualified Capital Stock or Indebtedness of the
Company that has been converted into or exchanged for Qualified Capital Stock,
less the amount of any cash, or the fair market value of any other assets,
distributed by the Company or any of its Restricted Subsidiaries upon such
conversion or exchange; plus
(3) to the extent not otherwise included in the
calculation of Consolidated Net Income for purposes of clause (1) above, 100% of
(x) any amount received in cash by the Company or any of its Restricted
Subsidiaries as dividends, distributions or return of capital from, or payment
of interest or principal on any loan or advance to, and (y) the aggregate net
cash proceeds received by the Company or any of its Restricted Subsidiaries upon
the sale or other disposition of, the investee (other than an Unrestricted
Subsidiary) of any Investment made by the Company and its Restricted
Subsidiaries since the Issue Date; provided that the foregoing sum shall not
exceed, in the case of any investee, the aggregate amount of Investments
previously made (and treated as a Restricted Payment) by the Company or any of
its Restricted Subsidiaries in such investee subsequent to the Issue Date; plus
(4) to the extent not otherwise included in the
calculation of Consolidated Net Income for purposes of clause (1) above, 100% of
(x) any amount received in cash by the Company or any of its Restricted
Subsidiaries as dividends, distributions or return of capital from, or payment
of interest or principal on any loan or advance to, or upon the sale or other
disposition of the Capital Stock of, an Unrestricted Subsidiary of the Company
and (y) the fair market value of the net assets of an Unrestricted Subsidiary of
the Company, at the time such Unrestricted Subsidiary is redesignated as a
Restricted Subsidiary or is merged, consolidated or amalgamated with or into, or
is liquidated into the Company or any of its Restricted Subsidiaries, multiplied
by the Company's proportionate interest in such Subsidiary; provided that the
foregoing sum shall not exceed, in the case of any Unrestricted Subsidiary, the
aggregate amount of Investments previously made (and treated as a Restricted
Payment) by the Company or any of its Restricted Subsidiaries in such
Unrestricted Subsidiary subsequent to the Issue Date; plus
62
(5) to the extent not otherwise included in the
calculation of Consolidated Net Income for purposes of clause (1) above, 100% of
the amount of any Investment made (and treated as a Restricted Payment) since
the Issue Date in a Person that subsequently becomes a Restricted Subsidiary of
the Company.
(b) Notwithstanding the foregoing, the provisions set forth in
Section 8.2(a) do not prohibit:
(1) the payment of any dividend
within 60 days after the date of declaration of such dividend if
the dividend would have been permitted on the date of
declaration, or the consummation of any redemption of
Indebtedness or Capital Stock if the terms of such redemption are
required to be irrevocable under applicable law or contract and
such redemption would have been permitted on the date of the
notice of redemption;
(2) the making of any Investment or
the redemption, repurchase or other acquisition or retirement for
value of any Capital Stock of the Company, either (A) solely in
exchange for Qualified Capital Stock or (B) if no Default has
occurred and is continuing, through the application (within 10
Business Days of the sale thereof) of the net proceeds of an
issuance and sale for cash (other than to a Subsidiary of the
Company) of Qualified Capital Stock; provided that no issuance of
Qualified Capital Stock under this clause (2) shall increase the
Basket;
(3) the prepayment, defeasance,
redemption, repurchase or other acquisition or retirement for
value of any Indebtedness of the Company or any Guarantor that is
subordinate or junior in right of payment to the Notes or the
Guarantee of such Guarantor, as the case may be, either (A)
solely in exchange for Qualified Capital Stock or Refinancing
Indebtedness in respect of such Indebtedness, or (B) if no
Default has occurred and is continuing, through the application
(within 60 days of the sale thereof) of net proceeds of an
issuance and sale or incurrence for cash (other than to a
Subsidiary of the Company) of (x) Qualified Capital Stock or (y)
Refinancing Indebtedness in respect of such Indebtedness;
provided that no issuance of Qualified Capital Stock under this
clause (3) shall increase the Basket;
(4) the payment of any dividend or
distribution by a Restricted Subsidiary of the Company to the
holders of all of its Capital Stock on a pro rata basis;
(5) if no Default has occurred and
is continuing, dividends or distributions to Holdco to be used,
and which are used, to repurchase Capital Stock of Holdco from
any director, officer or employee (or such person's estate or
direct members of such person's family) of Holdco, the Company or
any of their Restricted Subsidiaries (A) upon the death, or the
termination of the directorship or employment, of such person or
(B) pursuant to an agreement
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(including employment agreements or plans (or amendments)
approved by the Board of Directors of Holdco, the Company or the
applicable Restricted Subsidiary) with such person, in an
aggregate amount under this clause (5) not to exceed, for any
fiscal year, the sum of $1.0 million and the net cash proceeds
received by the Company after the Issue Date from the
contribution to the common equity capital of the Company by
Holdco with the proceeds from the issuance and sale by Holdco of
its Capital Stock (other than Disqualified Capital Stock) to
employees, directors or officers of Holdco, the Company and their
Subsidiaries that occurs in such fiscal year (to the extent such
proceeds do not increase the Basket and are not otherwise used to
provide the basis for any other Restricted Payment); provided
that any such amount not used in any fiscal year may be used in
the immediately following fiscal year (but not any succeeding
fiscal year thereafter);
(6) the payment of any dividend or
distribution or the making of any loan or advance to Holdco to
enable Holdco to pay its reasonable general administrative costs
and expenses including, without limitation, in respect of
franchise taxes and other fees required to maintain its existence
and administrative, legal and accounting services provided by
third parties, in an aggregate amount not to exceed $250,000 per
fiscal year;
(7) Tax Distributions;
(8) the use of the proceeds from the
offering of the Notes on the Issue Date, the borrowings under the
Credit Agreement and the Senior Notes as described in the
Offering Circular under the caption "Offering Circular Summary --
The Transactions"; and
(9) Restricted Payments in an
aggregate amount not to exceed $5.0 million since the Issue Date.
(c) The amount of all non-cash Restricted Payments shall be the
fair market value on the date of the Restricted Payment of the asset(s) proposed
to be Transferred or issued by the Company or such Restricted Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
assets that are required to be valued by this Section 8.2 shall be based upon an
opinion or appraisal issued by an Independent Financial Advisor if the fair
market value exceeds $5.0 million. Not later than the date of making any
Restricted Payment in excess of $5.0 million, the Company shall deliver to each
Purchaser and each Holder that is an Institutional Investor so long as such
Purchaser or such Holder holds any Note an Officer's Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 8.2 were computed, together with a copy of
any fairness opinion or appraisal required by this Agreement.
(d) In determining whether any Restricted Payment is permitted
by this Section 8.2, the Company may allocate or reallocate all or any portion
of such Restricted Payment between clauses (5) and (9) of Section 8.2(b) or
between such clauses and Section
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8.2(a); provided that at the time of such allocation or reallocation, all such
Restricted Payments, or allocated portions thereof, would be permitted under
such provisions of this Section 8.2.
(e) In making the computations required by this Section 8.2:
(1) the Company may use audited
financial statements for the portions of the relevant period for
which audited financial statements are available on the date of
determination and unaudited financial statements and other
current financial data based on the books and records of the
Company for the remaining portion of such period; and
(2) the Company may rely in good
faith on the financial statements and other financial data
derived from its books and records that are available on the date
of determination.
If the Company makes a Restricted Payment that, at the time of
the making of such Restricted Payment, would in the good faith determination of
the Company be permitted under the requirements of this Agreement, such
Restricted Payment will be deemed to have been made in compliance with this
Agreement notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements for any period which adjustments affect any of
the financial data used to make the calculations with respect to such Restricted
Payment.
8.3. Limitation on Liens. The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, incur or
permit or suffer to exist any Lien (other than Permitted Liens) of any nature
whatsoever on any assets of the Company or any of its Restricted Subsidiaries
(including Capital Stock of a Restricted Subsidiary), whether owned at the Issue
Date or thereafter acquired, or any proceeds therefrom, or assign or otherwise
convey any right to receive income or profits therefrom, unless
contemporaneously therewith, effective provision is made to secure the Notes and
the Guarantees equally and ratably with or prior to such obligation with a Lien
on the same collateral for so long as such obligation is secured by such Lien;
provided that, in the case of any Lien securing an obligation that is
subordinated in right of payment to the Notes or a Guarantee, the Lien securing
the Notes or such Guarantee, as the case may be, will also be subordinated by
its terms at least to the same extent.
8.4. Limitation on Asset Sales
(a) The Company will not, and will not cause or permit any of
its Restricted Subsidiaries to, consummate an Asset Sale, unless
(1) the Company or the applicable
Restricted Subsidiary receives consideration at the time of such
Asset Sale at least equal to the fair market value of the assets
that are sold or otherwise disposed of, as reasonably determined
in good faith by the Company's Board of Directors; and
(2) at least 75% of the consideration
received by the Company or the applicable Restricted Subsidiary
from the Asset Sale is in the
65
form of cash or Cash Equivalents, Replacement Assets or a
combination of the foregoing, and is received at the time of the
Asset Sale.
For the purposes of clause (2) above, (a) the amount of any
Indebtedness shown on the most recent applicable balance sheet of the Company or
the applicable Restricted Subsidiary, other than Indebtedness that is by its
terms subordinated to the Notes or the Guarantees, that is assumed by the
Transferee of any such assets, and (b) any notes or other obligations received
by the Company or the applicable Restricted Subsidiary from such transferee or
purchaser that are converted by the Company or such Restricted Subsidiary into
cash or Cash Equivalents within 60 days after receipt (to the extent of any cash
or Cash Equivalents received in that conversion), will be deemed to be cash
received at the time of the Asset Sale.
(b) Additionally, the Company or such Restricted Subsidiary, as
the case may be, may apply the Net Cash Proceeds from each Asset Sale to:
(1) repay obligations under the
Credit Agreement, the Senior Notes Indenture and/or any other
Senior Indebtedness;
(2) repay any Indebtedness that was
secured by the assets sold in such Asset Sale; and/or
(3) make an investment in or
expenditures for assets (excluding securities other than Capital
Stock of any Person that (A) becomes a Restricted Subsidiary or
(B) is merged, consolidated or amalgamated with or into, or
Transfers all or substantially all of its assets to, or is
liquidated into the Company or any of its Restricted
Subsidiaries) that replace the assets that were the subject of
the Asset Sale or in assets (excluding securities other than
Capital Stock of any Person that (A) becomes a Restricted
Subsidiary or (B) is merged, consolidated or amalgamated with or
into, or Transfers all or substantially all of its assets to, or
is liquidated into the Company or any of its Restricted
Subsidiaries) that will be used in the Permitted Business
("Replacement Assets").
Pending the final application of any such Net Cash Proceeds, the
Company may temporarily reduce revolving credit borrowings or otherwise invest
such Net Cash Proceeds in any manner that is not prohibited by this Agreement.
(c) Any Net Cash Proceeds that the Company does not apply, or
decides not to apply, in accordance with Section 8.4(b) will constitute a "Net
Proceeds Offer Amount." The 411th day after an Asset Sale or any earlier date on
which the Board of Directors of the Company determines not to apply the Net Cash
Proceeds in accordance with the preceding paragraph is a "Net Proceeds Offer
Trigger Date." When the aggregate Net Proceeds Offer Amount is equal to or
exceeds $5.0 million, the Company must make an offer to purchase (the "Net
Proceeds Offer") on a date that is not less than 30 nor more than 45 days
following the applicable Net Proceeds Offer Trigger Date, from
66
(1) all Holders; and
(2) all holders of other Indebtedness of the Company
or any of its Restricted Subsidiaries ("Other
Indebtedness") that (x) is not, by its terms,
expressly subordinated in right of payment to the
Notes or any Guarantee and (y) requires that an offer
to purchase or otherwise repay such Other
Indebtedness be made with the proceeds from the Asset
Sale,
on a pro rata basis, the maximum principal amount of Notes and Other
Indebtedness that may be purchased with the Net Proceeds Offer Amount. The offer
price for Notes in any Net Proceeds Offer will be equal to 100% of the principal
amount of the Notes to be purchased, plus any accrued and unpaid interest on
such Notes, if any, to the date of purchase.
(d) The following events will be deemed to constitute an
Asset Sale and the Net Cash Proceeds from such Asset Sale must be applied in
accordance with this Section 8.4:
(1) in the event any non-cash
consideration received by the Company or any of its
Restricted Subsidiaries in connection with any Asset Sale
is converted into or sold or otherwise disposed of for
cash, or
(2) in the event of the Transfer of
substantially all, but not all, of the assets of the
Company and its Restricted Subsidiaries as an entirety to
a Person in a transaction permitted under Section 9, and
as a result thereof the Company is no longer an obligor
on the Notes, the successor corporation shall be deemed
for purposes of this Section 8.4 to have sold the assets
of the Company and its Restricted Subsidiaries not so
Transferred, and shall comply with the provisions of this
Section 8.4 with respect to such deemed sale as if it
were an Asset Sale. In addition, the fair market value of
such assets of the Company or its Restricted Subsidiaries
deemed to be sold shall be deemed to be Net Cash Proceeds
for purposes of this Section 8.4.
(e) The Company shall mail a notice of a Net Proceeds
Offer by first-class mail, postage prepaid, to the record Holders as shown on
the register of Holders within 30 days following the Net Proceeds Offer Trigger
Date, containing all instructions and materials necessary to enable such Holders
to tender Notes pursuant to the Net Proceeds Offer and shall state the following
terms:
(1) that the Net Proceeds Offer is
being made pursuant to this Section 8.4, that all Notes
tendered will be accepted for payment; provided, however,
that if the aggregate principal amount of Notes and other
Indebtedness tendered in a Net Proceeds Offer plus
accrued interest at the expiration of such offer exceeds
the Net Proceeds Offer Amount, the Company shall select
on a pro rata basis, the Notes and Other Indebtedness to
be purchased (with such adjustments as may be deemed
appropriate by the Company so that only Notes in
denominations of $1,000, as applicable, or multiples
thereof shall be
67
purchased), and that the Net Proceeds Offer shall remain
open for a period of 20 Business Days or such longer
periods as may be required by law;
(2) the offer price (including the
amount of accrued interest) and the Net Proceeds Offer
date of payment ("Net Proceeds Offer Payment Date"),
which shall be not less than 30 nor more than 45 days
following the applicable Net Proceeds Offer Trigger Date
and which shall be at least five Business Days after the
Trustee receives notice thereof from the Company;
(3) that any Note not tendered will
continue to accrue interest;
(4) that, unless the Company defaults
in making payment therefor, any Note accepted for payment
pursuant to the Net Proceeds Offer shall cease to accrue
interest after the Net Proceeds Offer Payment Date;
(5) that Holders electing to have a
Note purchased pursuant to a Net Proceeds Offer will be
required to surrender such Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Company at the address
specified in the notice prior to the close of business on
the Business Day prior to the Net Proceeds Offer Payment
Date;
(6) that Holders will be entitled to
withdraw their election if the Company receives, not
later than the second Business Day prior to the Net
Proceeds Offer Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of such
Holder, the principal amount of the Notes such Holder
delivered for purchase and a statement that such Holder
is withdrawing his election to have such Note purchased;
and
(7) that Holders whose Notes are
purchased only in part will be issued new Notes in a
principal amount equal to the unpurchased portion of the
Note surrendered; provided, however, that each Note
purchased and each new Note issued shall be in an
original principal amount of $1,000 or integral multiples
thereof.
(f) On or before the Net Proceeds Offer Payment Date,
the Company shall (1) accept for payment Notes or portions thereof (in integral
multiples of $1,000) validly tendered pursuant to the Net Proceeds Offer, and
(2) deliver to the Holders an Officers' Certificate stating the Notes or
portions thereof being purchased by the Company. The Company shall promptly mail
or deliver to the Holders so accepted payment in an amount equal to the purchase
price plus accrued and unpaid interest, if any. The Company shall promptly
authenticate and mail to such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Upon the payment of the purchase
price for the Notes accepted for purchase, the Company shall promptly cancel
such Notes.
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(g) To the extent the amount of Notes tendered pursuant to any
Net Proceeds Offer is less than the amount of Net Cash Proceeds subject to such
Net Proceeds Offer, the Company may use any remaining portion of such Net Cash
Proceeds not required to fund the repurchase of tendered Notes for general
corporate purposes and such Net Proceeds Offer Amount shall be reset to zero.
(h) The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 8.4, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
the provisions of this Section 8.4 by virtue thereof.
8.5. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. The Company will not, and will not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary of the Company to:
(A) pay dividends or make any other distributions on or in
respect of its Capital Stock to the Company or any other Restricted Subsidiary;
(B) make loans or advances or pay any Indebtedness or other
obligations owed to the Company or any other Restricted Subsidiary; or
(C) Transfer any of its assets to the Company or any other
Restricted Subsidiary, except for
(1) such encumbrances or restrictions
existing under or by reason of applicable law;
(2) such encumbrances or restrictions
under this Agreement and the Notes;
(3) customary provisions in any
contract limiting the assignment of such contract;
(4) such encumbrances or restrictions
under agreements existing at the time of acquisition of any
Person or the assets of the Person so acquired by the Company or
any of its Restricted Subsidiaries (including agreements
governing Acquired Indebtedness), which encumbrances or
restrictions are not applicable to any Person, or the assets of
any Person, other than the Person or the assets or Capital Stock
of the Person so acquired;
(5) such encumbrances or restrictions
under agreements existing on the Issue Date;
69
(6) restrictions imposed by any agreement to sell
assets permitted under this Agreement relating to such assets pending
the closing of such sale;
(7) Liens permitted under Section 8.3 to the extent
such Liens restrict the Transfer of assets subject thereto;
(8) restrictions on cash or other deposits or net
worth under contracts entered into in the ordinary course of business;
(9) such encumbrances or restrictions under the
Credit Agreement, the Senior Notes and the Holdco Notes as in effect
on the Issue Date;
(10) such encumbrances or restrictions under
agreements governing Indebtedness of a Foreign Subsidiary incurred in
compliance with Section 8.1, which encumbrances or restrictions are
not applicable to the Company or any Restricted Subsidiary other than
with respect to the Capital Stock of such Foreign Subsidiary;
(11) such encumbrances or restrictions under any
agreement relating to a Sale and Leaseback Transaction or Capitalized
Lease Obligation, but only on the property subject to such transaction
or lease and only to the extent that such restrictions or encumbrances
are customary with respect to such arrangements;
(12) customary restrictions imposed on the Transfer of
copyrighted or patented materials; and
(13) such encumbrances and restrictions in any
agreement amending or Refinancing any agreement referred to in clause
(2), (4), (5) or (9) above, which encumbrances and restrictions are
not, taken as a whole, more restrictive in any material respect than
the encumbrances and restrictions in such agreement prior to the
amendment or Refinancing.
8.6. Limitation on Transactions with Affiliates.
(a) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction or
series of related transactions with, or for the benefit of, any of its
Affiliates (each, an "Affiliate Transaction"), other than Affiliate Transactions
described in Section 8.6(b), unless
(1) the Affiliate Transaction is on terms, taken as a
whole, that are no less favorable to the Company or the relevant
Subsidiary than those terms that would reasonably have been obtained
at that time in a comparable transaction by the Company or the
relevant Subsidiary and an unrelated Person; and
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(2) (a) with respect to any Affiliate
Transaction involving aggregate consideration in excess of $1.0
million, the Board of Directors of the Company has determined that
such Affiliate Transaction complies with this Section 8.6 and that
such Affiliate Transaction has been approved by a majority of the
Disinterested Members of such Board of Directors, if there are any
such Disinterested Members; and
(b) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $5.0 million, or in excess of
$1.0 million and not approved by a majority of the Disinterested Members of the
Board of Directors of the Company, a favorable opinion from an Independent
Financial Advisor as to the fairness of such Affiliate Transaction to the
Company or the relevant Restricted Subsidiary, as the case may be, from a
financial point of view.
(b) The restrictions set forth in Section 8.6(a) do not apply to
(1) transactions exclusively between or among
the Company and/or one or more of its Restricted Subsidiaries;
provided, in each case, that such transaction is not otherwise
prohibited by this Agreement and that no Affiliate of the Company
(other than another Restricted Subsidiary) owns Capital Stock in any
such Restricted Subsidiary;
(2) any agreement in effect on the Issue Date as
in effect on the Issue Date or as thereafter amended in a manner which
is, taken as a whole, in the good faith judgment of the Board of
Directors of the Company not materially less favorable to the Company
or such Restricted Subsidiary as the original agreement as in effect
on the Issue Date;
(3) any employment, compensation, benefit or
indemnity agreements, arrangements or plans in respect of any officer,
director, employee or consultant of the Company or any of its
Restricted Subsidiaries entered into in the ordinary course of
business and approved by the Board of Directors of the Company;
(4) loans and advances permitted by clause (5)
of the definition of Permitted Investments;
(5) the issuance and sale of Qualified Capital
Stock;
(6) Restricted Payments of the type described in
clause (1), (2) or (3) of the definition of "Restricted Payments" made
in compliance with Section 8.2; and
(7) Restricted Payments permitted by clause (5),
(6), (7) or (8) of Section 8.2(b).
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8.7. Limitation on Sale and Leaseback Transactions. The Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into any Sale and Leaseback Transaction; provided that the
Company or any of its Restricted Subsidiaries may enter into a Sale and
Leaseback Transaction if:
(1) The Company or such Restricted Subsidiary could
have (a) incurred the Indebtedness attributable to such Sale and
Leaseback Transaction pursuant to Section 8.1 and (b) incurred a Lien
to secure such Indebtedness without equally and ratably securing the
Notes pursuant to Section 8.3;
(2) the gross cash proceeds of such Sale and
Leaseback Transaction are at least equal to the fair market value of
the asset that is the subject of such Sale and Leaseback Transaction;
and
(3) the Transfer of assets in such Sale and Leaseback
Transaction is permitted by, and the Company or the applicable
Restricted Subsidiary applies the proceeds of such transaction in
accordance with, Section 8.4.
8.8. Limitation on Designations of Unrestricted Subsidiaries.
(a) The Board of Directors of the Company may designate (a
"Designation") any Restricted Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary of the Company) to be an Unrestricted
Subsidiary of the Company, so long as such Designation would not cause a
Default.
(b) For purposes of making the determination of whether such
Designation would cause a Default, the portion of the fair market value of the
net assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary that is represented by the interest of the
Company and its Restricted Subsidiaries in such Subsidiary, in each case as
determined in good faith by the Board of Directors of the Company, shall be
deemed to be an Investment. Such Designation will be permitted only if such
Investment would be a Permitted Investment or would otherwise be permitted at
such time under Section 8.2.
(c) The Board of Directors of the Company may revoke any Designation
of a Subsidiary of the Company as an Unrestricted Subsidiary (a "Revocation");
provided that
(1) no Default exists at the time of or after giving
effect to such Revocation; and
(2) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately after such Revocation would, if
incurred at such time, have been permitted to be incurred (and shall
be deemed to have been incurred) for all purposes of this Agreement.
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8.9. Conduct of Business. The Company and its Restricted Subsidiaries
will not engage in any businesses that are not the same, similar, ancillary or
related to the businesses in which the Company and its Restricted Subsidiaries
are engaged on the Issue Date ("Permitted Business"). PCA Finance Corp. will not
engage in any business or activities other than as necessary (1) to maintain its
corporate existence, (2) to perform its obligations under the Senior Notes, the
Credit Documents and this Agreement and (3) to guarantee or co-issue
Indebtedness as permitted by Section 8.1(a).
8.10. Limitation on Repurchases of Notes. Any Notes repurchased by the
Company or its Subsidiaries will be retired and will not be reissued.
SECTION 9.
Successor Corporation
9.1. Merger, Consolidation and Sale of Assets. The Company will not,
directly or indirectly, consolidate or merge with or into another Person
(whether or not the Company is the surviving Person), or Transfer all or
substantially all of the Company's assets (determined on a consolidated basis
for the Company and its Restricted Subsidiaries), in one or more related
transactions, to another Person, unless
(a) either (x) the Company is the surviving Person or (y) the Person
(the "Surviving Person") formed by or surviving any such consolidation or merger
(if other than the Company) or to which such Transfer has been made is a
corporation or limited liability company organized or existing under the laws of
the United States, any State thereof or the District of Columbia and expressly
assumes all of the obligations of the Company under the Notes and this Agreement
pursuant to an amendment to this Agreement;
(b) immediately after such transaction no Default exists (including,
without limitation, after giving effect to any Indebtedness incurred or Liens
incurred or granted in connection with such transaction);
(c) immediately after such transaction, Holdco owns beneficially and
of record all outstanding Capital Stock of the Company; and
(d) the Company or the Surviving Person, as the case may be, will,
on the date of such transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at the beginning of
the applicable Four-Quarter Period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Coverage Ratio Exception.
The foregoing clauses (b) and (d) shall not apply to (i) a merger or
consolidation of any Restricted Subsidiary with or into the Company or (ii) a
transaction solely for the purpose of and with the effect of reincorporating the
Company in another jurisdiction and/or forming a holding company to hold all of
the Capital Stock of the Company or forming an intermediate holding company to
hold all of the Capital Stock of the Company's Subsidiaries.
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9.2. Merger or Consolidation of any Guarantor. The Company will not
cause or permit any Subsidiary Guarantor, directly or indirectly, to consolidate
or merge with or into another Person (whether or not such Guarantor is the
Surviving Person), unless
(a) either (x) such Guarantor is the Surviving Person or (y) the
Person formed by or surviving any such consolidation or merger (if other than
such Guarantor) expressly assumes all of the obligations of such Guarantor under
its Note Guarantee and this Agreement; and
(b) immediately after such transaction no Default exists (including,
without limitation, after giving effect to any Indebtedness incurred or Liens
incurred or granted in connection with such transaction).
The requirements of this Section 9.2 shall not apply to (x) a
consolidation or merger of any Subsidiary Guarantor with or into the Company or
any other Subsidiary Guarantor so long as the Company or a Subsidiary Guarantor
survives the consolidation or merger or (y) the sale by consolidation or merger
of a Subsidiary Guarantor, which sale is covered by and complies with Section
8.4.
The Company will deliver to the Purchasers prior to the consummation
of each proposed transaction an Officer's Certificate that the conditions set
forth above are satisfied and an Opinion of Counsel that the proposed
transaction and the supplemental indenture, if any, comply with this Agreement.
9.3. Successor Person Substituted. Upon any consolidation or merger,
or any transfer of all or substantially all of the assets of the Company or any
Restricted Subsidiary in accordance with Section 9.1 above, 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 or such Restricted Subsidiary
under this Agreement with the same effect as if such successor corporation had
been named as the Company or such Restricted Subsidiary herein, and thereafter
the predecessor corporation shall be relieved of all obligations and covenants
under this Agreement and the Notes.
SECTION 10.
PROVISIONS RELATING TO RESALES OF NOTES
10.1. Private Offerings. The Company and the Purchasers agree that the
following provisions will apply to any Private Offerings:
(a) Offers and Sales only to Institutional Accredited Investors or
Qualified Institutional Buyers. Offers and sales of the Securities will be made
only by the Purchasers or Affiliates thereof who are qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer or sale
shall only be made (i) to Persons whom the offeror or seller reasonably believes
to be Qualified Institutional Buyers, (ii) to not more than five other
74
institutional accredited investors (as such term is defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D) that the offeror or seller reasonably believes
to be and, with respect to sales and deliveries, that are Accredited Investors
("Institutional Accredited Investors") or (iii) to not more than five non-U.S.
Persons outside the United States to whom the offeror or seller reasonably
believes offers and sales of the Securities may be made in reliance upon
Regulation S.
(b) No General Solicitation. The Securities will be offered
by approaching prospective Subsequent Purchasers on an individual basis. No
general solicitation or general advertising (within the meaning of Rule 502(c)
under the Securities Act) will be used in the United States and no directed
selling efforts (as defined in Regulation S) will be made outside the United
States in connection with the offering of the Notes.
(c) Purchases by Non-Bank Fiduciaries. In the case of a
non-bank Subsequent Purchaser acting as a fiduciary for one or more third
parties, in connection with an offer and sale to such purchaser pursuant to this
Section 10.1, such third parties shall, in the reasonable judgment of the
applicable Purchaser, be an Institutional Accredited Investor or a Qualified
Institutional Buyer or a non-U.S. Person outside the United States.
(d) Restrictions on Transfer. Upon original issuance by the
Company, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Notes (and all securities
issued in exchange therefor or in substitution thereof) shall bear such legend
as is required under Section 11.4. The restrictions on Transfer set forth in
this Section 10.1 are in addition to any other restrictions on Transfer set
forth in this Agreement
10.2. Procedures and Management Cooperation in Private
Offerings. The Company and the Purchasers agree that the following will apply to
any Private Offerings:
(a) At the request of the Required Holders, in order to
facilitate the consummation of the Private Offering, the Company with reasonable
assistance from the Required Holders will prepare and deliver to each Holder
copies of an offering memorandum (the "Offering Memorandum") describing the
terms of the Notes and of the Private Offering contemplated by such resales and
containing such other information customarily included in offering memoranda for
similar transactions. The Offering Memorandum for any Private Offering will not,
as of its date and as of the closing of such Private Offering, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that this agreement shall not apply to
statements in or omissions from the Offering Memorandum made in reliance upon
and in conformity with information furnished to the Company in writing by any
Holder expressly for use in the Offering Memorandum. The Offering Memorandum for
any Private Offering will contain all the information specified in, and meeting
the requirements of, subsection (d)(4) of Rule 144A and all other applicable
regulations. The Company will not distribute any offering material in connection
with the offering and sale of the Notes other than the Offering Memorandum or
any other offering material required or permitted to be distributed by the
Commission.
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(b) The Offering Memorandum for any Private Offering as
delivered from time to time shall contain information that is required to be
included in such Offering Memorandum by the Commission and that is customarily
included in offering materials of such type. Prior to distributing, amending or
supplementing the Offering Memorandum (including any amendment or supplement
through incorporation by reference of any report under the Exchange Act) in
connection with any Private Offering, the Company shall furnish to the Holders
for review a copy of each such proposed Offering Memorandum, or amendment or
supplement thereto, and the Company shall not distribute, use or file the
Offering Memorandum or any such proposed amendment or supplement to which the
Purchasers object. The Company agrees to furnish to the Holders, without charge,
as many copies of the Offering Memorandum in connection with any Offering and
any amendments and supplements thereto as they may reasonably request.
(c) If, prior to the completion of the placement of the Notes
by the Holders with the Subsequent Purchasers (as evidenced by a notice in
writing from the Holders to the Company) in any Private Offering, any event
shall occur or condition exist as a result of which it is necessary to amend or
supplement the related Offering Memorandum in order to make the statements
therein, in the light of the circumstances when the Offering Memorandum is
delivered to a Holder or a Subsequent Purchaser and at the closing of the sales
of the Notes covered thereby, not misleading, or if in the opinion of the
Holders or counsel for the Holders it is otherwise necessary to amend or
supplement the Offering Memorandum to comply with Applicable Law, the Company
agrees to promptly prepare, and furnish at its own expense to the Holders,
amendments or supplements to the Offering Memorandum so that the statements in
the Offering Memorandum as so amended or supplemented will not, in the light of
the circumstances when the Offering Memorandum is delivered to a Holder or a
Subsequent Purchaser and at the closing of the sales of such Notes, be
misleading or so that the Offering Memorandum, as amended or supplemented, will
comply with Applicable Law.
(d) During the period of 90 days following the later of the
date of the Offering Memorandum in connection with any Private Offering in which
the application of this Section 10.2(d) is necessary in the judgment of a sales
agent and the date of the consummation of such Private Offering, the Company
will not, without the prior written consent of the Holders (which consent may be
withheld at the sole discretion of the Purchasers), directly or indirectly,
sell, offer, contract or grant any option to sell, pledge, transfer or establish
an open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of or transfer, or announce the offering of,
or file any registration statement under the Securities Act in respect of, any
debt securities of the Company or securities exchangeable for or convertible
into debt securities of the Company (other than as contemplated by this
Agreement).
(e) The Company agrees that it will not and will cause its
Affiliates (to the extent in its control) not to make any offer or sale of
securities of any class of the Company if, as a result of the doctrine of
"integration" referred to in Rule 502 under the Securities Act, such offer or
sale would render invalid (for the purpose of (i) the sale of the Notes by the
Company to the Purchasers, (ii) the resale of Notes by the Holders to Subsequent
Purchasers or (iii) the resale of Notes by such Subsequent Purchasers to others)
any applicable exemption from the registration requirements of the Securities
Act provided by Section 4(2) thereof or by Rule 144A
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or by Regulation S or otherwise. In addition, until the expiration of two years
after the original issuance of the Notes, the Company will not, and will cause
its Affiliates not to, purchase or agree to purchase or otherwise acquire any
Notes which are "restricted securities" (as such term is defined under Rule
144(a)(3) under the Securities Act), whether as beneficial owner or otherwise
unless, immediately upon any such purchase, the Company or any Affiliate shall
cancel such Notes.
(f) The Company will, if so requested by the Holders, actively
assist the Holders in completing any private resale by the Holders of the Notes
or any portion thereof (including any such resales of the Notes pursuant to any
Private Offering) in accordance with the Holders' intended method of
distribution. Such assistance shall, in each case, include the following:
(i) the Company's using commercially reasonable efforts
to ensure that the distribution efforts benefit materially from the
Company's existing lending relationships;
(ii) direct contact (at reasonable times approved in
advance) between the Company's senior management and advisors and
prospective purchasers;
(iii) responding to reasonable inquiries of, and providing
answers to, each prospective purchaser who so requests concerning the
Company and its Subsidiaries (to the extent such information is
available or can be acquired and made available to prospective
purchasers without unreasonable effort or expense and to the extent the
provision thereof is not prohibited by Applicable Law) and the terms
and conditions of the applicable distribution;
(iv) if requested by the Holders in connection with any
Private Offering, (A) preparing an Offering Memorandum and other
materials to be used in connection with the distribution (including
assistance in completion of the Purchasers', any sales or placement
agent's, if any, due diligence review of the Company and its
Subsidiaries as an aid to such preparation) and (B) complying with the
customary procedures that would be applicable to such Private Offering;
(v) hosting of one or more meetings of prospective
purchasers; and
(vi) promptly preparing and providing to the Holder (or
any sales or placement agent therefor) all information with respect to
the Company, including revised projections (if requested), as the
Holders (or any sales or placement agent therefor) may reasonably
request. Any such revised projections that will so be made available to
the Purchasers (or each placement or sales agent, if any, therefor) by
the Company or any of its representatives will be prepared in good
faith based upon reasonable assumptions.
(g) The Company will allow the Holders (or any sales or
placement agent therefor, as may be selected by the Purchasers and is reasonably
acceptable to the Company), in consultation with the Company, to manage all
aspects of the distribution, including decisions as
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to the selection of institutions to be approached and when they will be
approached, when their commitment will be accepted, which institutions will
participate, the allocations of the commitments among the prospective purchasers
and the amount and distribution of fees among the prospective purchasers.
Notwithstanding anything in this Section 10.2 to the contrary, the management of
the Company shall not be obligated to participate in a "road show" in connection
with any such distribution.
(h) The Company will, promptly following the request of and
with the cooperation of the Required Holders, use its best efforts to cause the
Notes to (i) be registered in book-entry form in the name of Cede & Co., as
nominee of The Depository Trust Company pursuant to a customary form DTC
Agreement and (ii) be eligible for the National Association of Securities
Dealers, Inc. PORTAL market.
(i) The parties hereto expressly agree that, in addition to
the indemnification provisions set forth in Section 16.2, the obligations of the
parties under this Section 10.2 shall be subject to the indemnification and
contribution provisions set forth in Section 10.2.
SECTION 11.
THE NOTES
11.1. Form and Execution. The Notes shall be in the form set
forth in Exhibit A hereto. The Notes shall be executed on behalf of the Company
by an authorized officer thereof. The signature of any such officers on the
Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the execution and delivery of such Notes or did not hold such
offices at the date of such Notes.
11.2. Terms of the Notes. The terms of the Notes shall be as
set forth in Exhibit A hereto. Without limiting the foregoing:
(a) Stated Maturity. The Stated Maturity of the Notes shall
be June 27, 2010.
(b) Interest. The Notes will bear interest as provided in
Exhibit A hereto.
11.3. Denominations. The Notes shall be issuable only in
registered form without coupons and only in denominations of $1,000 and any
multiple thereof.
11.4. Form of Legend for the Notes. Unless otherwise permitted
by Section 11.7, every Note issued and delivered hereunder shall
bear a legend in substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE
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SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES AND OTHER JURISDICTIONS.
THE HOLDER OF THIS NOTE IS SUBJECT TO THE TERMS OF THE PURCHASE
AGREEMENT, DATED AS OF JUNE 27, 2002 (AS AMENDED, SUPPLEMENTED
OR MODIFIED FROM TIME TO TIME), AMONG PCA LLC, THE GUARANTORS
NAMED THEREIN, GS MEZZANINE PARTNERS II, L.P., AND GS MEZZANINE
PARTNERS II OFFSHORE, L.P.
11.5. Payments and Computations.
(a) All cash payments of interest on the Notes shall be paid
to the Persons in whose names such Notes are registered on the Security Register
at the close of business on the Regular Record Date and all payments of
principal on the Notes shall be paid to the Persons in whose names such Notes
are registered at Maturity. The principal of and any premium on any Note shall
be payable only against surrender therefor, while payments of interest on Notes
shall be made, in accordance with this Agreement and subject to Applicable Law,
by check mailed on or before the due date for such payment to the Person
entitled thereto at such Person's address appearing on the Security Register
(or, in the case of a Holder holding not less than $1,000,000 aggregate
principal amount of Notes, by wire transfer to such account as such Holder shall
designate by written instructions received by the Company no less than 15 days
prior to any applicable Interest Payment Date, which wire instruction shall
continue in effect until such time as the Holder otherwise notifies the Company
or such Holder no longer is the registered owner of such Note or Notes).
(b) Notwithstanding anything to the contrary contained in the
Notes, if any principal amount payable with respect to a Note is payable on a
Legal Holiday, then the Company will pay such amount on the next succeeding
Business Day, and interest will accrue on such amount until the date on which
such amount is paid and payment of such accrued interest will be made
concurrently with the payment of such amount; provided that the Company may
elect to pay in full (but not in part) any such amount on the last Business Day
prior to the date such payment otherwise would be due, and no additional
interest will accrue on such amount.
(c) Notwithstanding anything to the contrary contained in the
Notes, if any interest amount payable with respect to a Note is payable on a
Legal Holiday, then the Company will pay such amount on the next succeeding
Business Day. The interest amount payable will include interest calculated form
the last scheduled interest payment date up to and including the current
scheduled interest payment date.
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(d) Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
11.6. Register, Registration of Transfer and Exchange.
(a) Security Register. The Company shall maintain a register (the
"Security Register") for the registration of Transfer of the Notes. The name and
address of the Holder of each Note, records of any Transfers of the Notes and
the name and address of any Transferee of a Note shall be entered in the
Security Register and the Company shall, promptly upon receipt thereof, update
the Security Register to reflect all information received from a Holder. There
shall be no more than one Holder for each Note, including all beneficial
interests therein.
(b) Registration of Transfer. Subject to Section 11.7, upon
surrender for registration of Transfer of any Note at the office or agency of
the Company, the Company shall execute and deliver, in the name of the
designated Transferee or Transferees, one or more new Notes, of any authorized
denominations and like aggregate principal amount. Notwithstanding the
foregoing, the Company shall not be required to register a Transfer by the
Purchasers and their respective Subsequent Purchasers to any Person, if such
sale will result in the aggregate number of Subsequent Purchasers of the
Purchasers (exclusive of the Affiliates of the Purchasers) exceeding five.
(c) Exchange. At the option of the Holder, Notes may be exchanged
for other Notes, of any authorized denominations and of like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Company shall execute
and deliver the Notes which the Holder making the exchange is entitled to
receive.
(d) Effect of Registration of Transfer or Exchange. All Notes issued
upon any registration of Transfer or exchange of Notes shall be the valid
obligations of the Company, evidencing the same Indebtedness, and entitled to
the same benefits under this Agreement, as the Notes surrendered upon such
registration of Transfer or exchange.
(e) Requirements; Charges. Every Note presented or surrendered for
registration of Transfer or for exchange shall (if so required by the Company)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company duly executed by the Holder thereof or its attorney
duly authorized in writing. No service charge shall be made for any registration
of Transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of Transfer or exchange of Notes, other than
exchanges pursuant to Section 10.1 not involving any Transfer.
(f) Certain Limitations. If the Notes are to be redeemed in part,
the Company shall not be required (i) to issue, register the Transfer of or
exchange any Note during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of any such Notes
selected for redemption under Section 13.2 and ending at the close of business
on the day of such mailing, or (ii) to register the Transfer of or exchange any
Note so
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selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
11.7. Transfer Restrictions.
(a) No Note may be sold, pledged, Transferred or otherwise disposed
of (any such sale, pledge, Transfer or other disposition is herein referred to
as a "sale"), except in aggregate principal amount of at least $2,000,000 and
except to a Subsequent Purchaser and in compliance with this Section 11.7.
(b) A Holder may sell its Notes to a Transferee that is an
Accredited Investor or a Qualified Institutional Buyer; provided, however, that
each of the following conditions is satisfied:
(i) such Transferee shall make the same representations and
warranties with respect to itself as those required to be made by the Purchasers
in clauses (a), (b), (c) and (e) of Section 5.1; and
(ii) such Transferee agrees to be bound by the provisions of
this Agreement (including the confidentiality provisions set forth in
Section 16.4).
(c) A Holder may sell its Notes to a Transferee in accordance with
Regulation S; provided, however, that each of the following conditions is
satisfied:
(i) if such Holder would be deemed to be an issuer, a
distributor or any of their respective Affiliates or any Person acting on
behalf of any of the foregoing for purposes of Regulation S:
(A) such Issuer is a "reporting issuer" as such term
is defined in Rule 902(i) under the Securities Act;
(B) any distributor (as defined in Rule 902(d) under
the Securities Act) involved in a sale of Notes has agreed in writing
that all offers and sales of Notes shall be made only in accordance
with the provisions of Rule 903 or Rule 904 under the Securities Act;
(C) all offering materials and documents (other than
press releases) used in connection with offers and sales of the Notes
shall conform to the requirements of Rule 902(g)(2) under the
Securities Act; and
(D) each distributor (as defined in clause (i)(B)
above) selling Notes to a distributor, dealer (as defined in Section
2(12) of the Securities Act) or a person receiving a selling
concession, fee or other remuneration in respect of the Notes sold
sends a confirmation or other notice to the purchaser stating that the
purchaser is subject to the same restrictions on offers and sales that
apply to a distributor prescribed by Regulation S.
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(ii) if such sale by a Holder is not governed by clause (i)
above the transferor represents that:
(A) the offer of Notes is not made to a Person in the
United States;
(B) either:
(1) at the time the buy order is originated, the
Transferee is outside the United States or the Holder and
any Person acting on its behalf reasonably believes that
the Transferee is outside the United States, or
(2) the transaction is executed in, on or through
the facilities of a designated offshore securities market
and neither the Holder nor any Person acting on its behalf
knows that the transaction was pre-arranged with a buyer in
the United States;
(C) no directed selling efforts are made in contravention
of the requirements of Rule 903(b) or 904(b) of Regulation S, as
applicable;
(D) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(E) the transferor has advised the transferee of the
transfer restrictions applicable to the Notes.
(d) In the event of a proposed sale that does not qualify under
either Section 11.7(b) or 11.7(c) above, a Holder may sell its Notes only if:
(i) such Holder gives written notice to the Company of its
intention to exercise or effect such sale, which notice (A) shall describe
the manner and circumstances of the proposed transaction in reasonable
detail and (B) shall designate the counsel for such Holder, which counsel
shall be reasonably satisfactory to the Company;
(ii) counsel for the Holder shall render an opinion (in form and
substance reasonably satisfactory to the Company), to the effect that such
proposed sale may be effected without registration under the Securities Act
or under applicable "blue sky" laws;
(iii) such Holder or transferee complies with Sections 11.7(b)(i)
and 11.7(b)(ii); and
(iv) such Holder and/or transferee provides such certificates or
other documents reasonably requested by the Company and its counsel.
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11.8. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated
Note is surrendered to the Company, the Company shall execute and deliver in
exchange therefor a new Note of the same principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company (a) evidence to its
satisfaction of the destruction, loss or theft of any Note and (b) such security
or indemnity as may be required by the Company and any agent to save each of the
Company and such agent harmless, then, in the absence of notice that such Note
has been acquired by a bona fide purchaser, the Company shall execute and
deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of a
like initial principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses connected therewith.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
11.9. Persons Deemed Owners. Prior to due presentment of a Note for
registration of transfer, the Company and any agent of the Company shall treat
the Person in whose name such Note is registered as the owner of such Note for
the purpose of receiving payment of principal of and interest on such Note and
for all other purposes whatsoever, whether or not such Note be overdue and
neither the Company nor any agent of the Company shall be affected by notice or
knowledge to the contrary.
11.10. Cancellation. All Notes surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Company, be delivered to the Company and shall be promptly canceled by
it. The Company shall cancel any Notes previously issued and delivered hereunder
which the Company may have reacquired.
11.11. Home Office Payment. So long as any Purchaser or its nominee
shall be the holder of any Note, and notwithstanding anything contained in this
Agreement or such Note to the contrary, the Company will pay all sums becoming
due on such Note for principal, premium, if any, and interest by such method and
at the address specified for such purpose in Schedule B or at such other address
as such Purchaser shall have from time to time specified to the Company in
writing for such purpose, without the presentation or surrender of such Note or
the making of any notation thereon, except that, upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, such Purchaser shall surrender such Note for
cancellation reasonably promptly after any such request to the Company at its
principal executive office. Prior to any sale or other disposition of any Note
held by such Purchaser or its nominee such Purchaser will, at its election,
either endorse
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thereon the amount of principal paid thereon and the last date to which interest
has been paid thereon or surrender such Note to the Company in exchange for a
new Note or Notes pursuant to Section 11.6. The Company will afford the benefits
of this Section 11.11 to any Institutional Investor that is the direct or
indirect Transferee of any Note purchased by such Purchaser under this Agreement
and that has made the same agreement relating to such Note as such Purchaser
made in this Section 11.11.
SECTION 12.
EVENTS OF DEFAULT; REMEDIES
12.1. Events of Default.
"Event of Default" is defined as any one of the following events
(whatever the reason for such Event of Default and 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):
(a) the Company defaults in the payment of any installment of
interest on any Note when and as the same becomes due and payable and such
failure continues for a period of 30 days;
(b) the Company defaults in the payment of the principal of any
Note when and as the same becomes due and payable at maturity, upon redemption
or purchase or otherwise;
(c) (i) there shall be a default in the performance or breach of
the provisions of Section 9.1; (ii) the Company shall have failed to make or
consummate a Net Proceeds Offer in accordance with Section 8.4; or (iii) the
Company shall have failed to make or consummate a Change of Control Offer in
accordance with Section 7.8;
(d) the Company fails to perform or observe any of its covenants,
conditions or agreements in this Agreement or in the Notes (other than a
covenant, condition or agreement a default in whose performance or whose breach
is elsewhere in this Section 12 specifically dealt with), and such failure
continues for a period of 60 days after the date on which written notice of such
Default has been given to the Company by the Holders of not less than 45% of the
principal amount of the Notes then outstanding under this Agreement;
(e) Holdco, the Company or any of its Subsidiaries defaults under
any agreement governing any of its other Indebtedness, if that default
(i) is caused by the failure to pay at final maturity the
principal amount of such Indebtedness after giving effect to any applicable
grace periods, or
(ii) results in the acceleration of the final stated maturity
of such Indebtedness,
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and in each case, the aggregate principal amount of such Indebtedness unpaid or
accelerated equals or exceeds $10.0 million and has not been discharged in full
or such acceleration has not been rescinded or annulled within 30 days after
such final maturity or acceleration;
(f) Holdco, the Company or any of its Restricted Subsidiaries fails to
pay or otherwise cause to be discharged or stayed one or more judgments in an
aggregate amount exceeding $10.0 million, which are not covered by indemnities
or third party insurance as to which the Person giving such indemnity or such
insurer has not disclaimed coverage, for a period of 60 days after such
judgments become final and non-appealable;
(g) a court having jurisdiction in the premises enters (x) a decree or
order for relief in respect of Holdco, the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding under any applicable federal
or state bankruptcy, insolvency, reorganization or other similar law or (y) a
decree or order adjudging Holdco, the Company or any of its Significant
Subsidiaries a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of Holdco, the Company or any of its Significant Subsidiaries under any
applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of Holdco,
the Company or any of its Significant Subsidiaries or of any substantial part of
its property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days;
(h) Holdco, the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or any other case or proceeding to be
adjudicated a bankrupt or insolvent; or
(ii) consents to the entry of a decree or order for relief in
respect of the Company or any of its Significant Subsidiaries in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
Holdco, the Company or any of its Significant Subsidiaries; or
(iii) files a petition or answer or consent seeking reorganization
or relief under any applicable federal or state law; or
(iv) consents to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of Holdco, the Company
or any of its Significant Subsidiaries or of any substantial part of their
property; or
(v) makes an assignment for the benefit of creditors; or
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(vi) admits in writing its inability to pay its debts
generally as they become due; or
(vii) takes corporate action in furtherance of any such
actions in this subsection (h); or
12.2. Remedies. (a) If an Event of Default (other than an Event of
Default specified in Sections 12.1(g) and (h) with respect to the Company)
occurs and is continuing, then and in every such case the Holders of a majority
in aggregate principal amount of the Notes at the time Outstanding may declare
all principal of, accrued and unpaid interest on, any premium on, and all other
amounts owing in respect of, all Notes (the "Default Amount") to be due and
payable immediately, by a notice in writing to the Company, and upon any such
declaration such Default Amount and any accrued interest, if any, either (i)
shall become immediately due and payable or (ii) if there are any amounts
outstanding under any Senior Indebtedness, shall become immediately due and
payable upon the first to occur of an acceleration under such Senior
Indebtedness or 5 Business Days after receipt by the Company and the
Representative under such Senior Indebtedness of such written notice but only if
such Event of Default is then continuing. If an Event of Default specified in
Sections 12.1(g) and (h) with respect to the Company occurs and is continuing,
the Default Amount of and any accrued interest, if any, on the Outstanding Notes
shall automatically, and without any declaration or other action on the part of
any Holder, become immediately due and payable. Subject to Section 12.212.3., if
an Event of Default has occurred and is continuing, the Notes will accrue
interest at a rate per annum equal to (a) the stated interest rate on the Notes,
plus (b) 200 basis points, until such time as no Event of Default shall be
continuing (to the extent that the payment of such interest shall be legally
enforceable).
(b) Notwithstanding the provisions of Section 12.2(a), in the
event that the Holders of the Notes shall accelerate the payment of the Default
Amount pursuant to Section 12.2(a) solely as a result of the occurrence of an
Event of Default under Section 12.1(e)(ii), and within 60 days after the
occurrence of such Event of Default, the holders of all Indebtedness that was
accelerated shall have rescinded and annulled their acceleration of such
Indebtedness, then the Holders of Notes shall be deemed to have rescinded their
acceleration of the Notes pursuant to Section 12.2(a) and the Event of Default
shall be deemed to have been cured and the Notes shall no longer accrue interest
at a rate per annum equal to (a) the stated interest of the Notes, plus (b) 200
basis points but at the stated interest on the Notes only.
12.3. Waiver of Past Defaults. The Required Holders may on behalf
of the Holders of all the Notes waive any existing Default or Event of Default
hereunder and its consequences, except a Default or Event of Default:
(a) in the payment of the principal of (or premium, if any) or
interest (other than a waiver of any increase in the interest rate on the Notes
upon the occurrence of an Event of Default pursuant to Section 12.2) on any
Note, including any Note which is required to have been purchased pursuant to an
offer to purchase that the Company is required to make hereunder, or
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(b) in respect of a covenant or provision hereof which under
Section 17.4 cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured and cease,
for every purpose of this Agreement; provided, however, that no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.
SECTION 13.
REDEMPTION
13.1. Right of Redemption. The Notes may be redeemed at the election
of the Company at such times, in such amounts and at the Redemption Prices
(together with any applicable accrued interest to the Redemption Date) specified
in the form of Note attached as Exhibit A hereto.
13.2. Partial Redemptions. In case the Company elects to redeem less
than all of the Notes, the Company shall redeem the Notes pro rata from each
Holder; provided, however, that any such redemption shall be for an aggregate
principal amount of not less than $2,000,000. For all purposes of this
Agreement, unless the context otherwise requires, all provisions relating to the
redemption of Notes shall relate, in the case of any Notes redeemed or to be
redeemed only in part, to the portion of the principal amount of such Notes
which has been or is to be redeemed.
13.3. Notice of Redemption. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 10 nor more than 60 days
prior to the Redemption Date, to each Holder of Notes to be redeemed, at its
address appearing in the Security Register. Notice of redemption of Notes to be
redeemed at the election of the Company shall be given by the Company and at the
expense of the Company.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Outstanding Notes are to be redeemed, the
portion of each Note to be redeemed,
(d) that on the Redemption Date the Redemption Price will become
due and payable upon each such Note to be redeemed and that interest thereon
will cease to accrue on and after said date, and
(e) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
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13.4. Deposit of Redemption Price. Prior to any Redemption Date, the
Company shall segregate and hold in trust an amount of money sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) any applicable accrued interest on, all the Notes which are to be
redeemed on that date.
13.5. Notes Payable on Redemption Date. If notice of redemption shall
have been given as provided above, the Notes so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified and from and after such date (unless the Company shall default in the
payment of the Redemption Price and any applicable accrued interest) such Notes
shall not bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with any applicable accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Notes or one or more Predecessor Notes, registered as such at the close
of business on the relevant Regular Record Dates according to their terms and
the provisions of this Agreement.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate provided by the Note.
13.6. Notes Redeemed in Part. Any Note which is to be redeemed only
in part shall be surrendered at the principal offices of the Company (with, if
the Company so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company duly executed by, the Holder thereof or its
attorney duly authorized in writing) and the Company shall execute and deliver
to the Holder of such Note without service charge a new Note or Notes, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
SECTION 14.
SUBORDINATION OF NOTES
14.1. Notes Subordinate to Senior Indebtedness. The Company covenants
and agrees, and each Holder of a Note, by its acceptance thereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Section 14, the payment of all Obligations under the Notes (the
"Subordinated Obligations") are hereby expressly made subordinate and subject in
right of payment to the prior payment in full in cash or Cash Equivalents of all
Senior Indebtedness of the Company, whether on the date of this Agreement or
hereafter Incurred. The provisions of this Section 14 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by a
holder of Senior Indebtedness upon any Proceeding or otherwise, all as though
such payment had not been made.
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14.2. Payment over of Proceeds upon Dissolution, Etc. In the event of
(a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization, adjustment, composition or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of the Company, then and in any
such event specified in clause (a), (b) or (c) above (each such event, if any,
herein sometimes referred to as a "Proceeding") the holders of Senior
Indebtedness shall be entitled to receive or retain payment in full in cash or
Cash Equivalents of all amounts due or to become due on or in respect of all
Senior Indebtedness (including interest accruing after the commencement of any
such Proceeding at the rate specified in the applicable Senior Indebtedness),
before the Holders of the Notes are entitled to receive any payment or
distribution of any kind or character, whether in cash, property or securities,
on account of Subordinated Obligations, including, without limitation, principal
of (or premium, if any) or interest on or other Obligations in respect of the
Notes (including any interest accruing on or after the filing of any Proceeding
relating to the Company, whether or not allowed in such Proceeding) or on
account of any purchase or other acquisition of Notes by the Company or any
Subsidiary of the Company (all such payments, distributions, purchases and
acquisitions, whether payable in any Proceeding or otherwise, herein referred
to, individually and collectively, as a "Notes Payment"), and, to that end, the
holders of Senior Indebtedness shall be entitled to receive, for application to
the payment thereof, any Notes Payment which may be payable or deliverable in
respect of the Subordinated Obligations in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section 14.2, the Holder of any Note shall have received any Notes Payment
before all Senior Indebtedness of the Company is paid in full in cash or Cash
Equivalents, then and in such event such Notes Payment shall be paid over or
delivered forthwith to the Representative under the Credit Agreement (or, if the
Credit Agreement is not then in effect, a designated representative for the
holders of the Senior Indebtedness) for the application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay the Senior
Indebtedness in full in cash or Cash Equivalents, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.
For purposes of this Section 14 only (including for purposes of the
definition of "Notes Payment") the words "any payment or distribution of any
kind or character, whether in cash, property or securities" shall not be deemed
to include a payment or distribution of stock or securities of the Company
provided for by a plan of reorganization or readjustment authorized by
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an order or decree of a court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law or of any other corporation
provided for by such plan of reorganization or readjustment which stock or
securities are subordinated in right of payment to all then outstanding Senior
Indebtedness to substantially the same extent as, or to a greater extent than,
the Notes are so subordinated as provided in this Section 14. The consolidation
of the Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the conveyance or transfer
of all or substantially all of its properties and assets as an entirety to
another Person upon the terms and conditions set forth in Section 9 shall not be
deemed a Proceeding for the purposes of this Section 14.2 if the Person formed
by such consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets, as the case may
be, shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions set forth in Section 9.
The Representative under the Credit Agreement (or in the
absence thereof, a designated Representative for the holders of the Senior
Indebtedness specified as such in a notice to the Holders) shall have the right
to request the Holders to file and, in the event that a Holder fails to do so
within 10 days, is hereby authorized to file, a proper claim or proof of debt in
the form required in any Proceeding for and on behalf of such Holder (including
on behalf of each such Holder with respect to any such rights received by such
Holder from holders of Indebtedness of the Company due to such Indebtedness
being subordinated to the Subordinated Obligations), to accept and receive any
payment or distribution which may be payable or deliverable at any time upon or
in respect of the Subordinated Obligations in an amount not in excess of the
Senior Indebtedness then outstanding and to take such other action as may be
reasonably necessary to effectuate the foregoing. Each Holder shall provide to
the Representative under the Credit Agreement all information and documents
reasonably necessary to present claims or seek enforcement as aforesaid.
Notwithstanding the foregoing, each Holder shall retain the right to vote to
accept or reject any plan of partial or complete liquidation, reorganization,
arrangement, composition, or extension; provided that such Holder shall not take
any action or vote in any way so as to contest the enforceability of this
Section 14 or the Senior Indebtedness. The Representative under the Credit
Agreement and each holder of the Senior Indebtedness shall retain the right to
vote its Senior Indebtedness to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition or extension; provided
that such Representative or such holder shall not take any action or vote in any
way so as to contest the enforceability of this Section 14 or the Subordinated
Obligations.
14.3. No Payment When Senior Indebtedness in Default. In the
event that any Senior Payment Default (as defined below) shall have occurred and
be continuing, then no Notes Payment shall be made unless and until such Senior
Payment Default shall have been cured or waived or shall have ceased to exist or
all amounts then due and payable in respect of Senior Indebtedness shall have
been paid in full in cash or Cash Equivalents. "Senior Payment Default" means
any default in the payment of principal of (or premium, if any) or interest fees
or other amounts owing in respect of Senior Indebtedness when due, whether at
the due date of any such payment or by declaration of acceleration, prepayment,
call for redemption or otherwise.
Upon the occurrence of a Senior Nonmonetary Default and
delivery of written notice of the occurrence of such Senior Nonmonetary Default
by the Representative under the
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Credit Agreement or the Senior Notes Indenture (or, if the Credit Agreement or
the Senior Notes Indenture is not then in effect, a designated Representative
for the holders of the Senior Indebtedness which is the subject of such Senior
Nonmonetary Default specified as such in a notice to the Holders) in accordance
with Section 17.1, no Notes Payment may be made during a period (the "Payment
Blockage Period") commencing on the date of such notice and ending the earlier
of (a) the date on which such Senior Nonmonetary Default shall have been cured
or waived or ceased to exist or all Senior Indebtedness which was the subject of
such Senior Nonmonetary Default shall have been paid in full in cash or Cash
Equivalents, (b) the Holders receive notice thereof from such Representative
terminating the Payment Blockage Period and (c) the 179th day after the date of
the receipt of such notice. No Senior Nonmonetary Default that existed or was
continuing on the date of the commencement of a Payment Blockage Period may be
made the basis of the commencement of a subsequent Payment Blockage Period
whether or not within a period of 360 consecutive days, unless such Senior
Nonmonetary Default shall have been cured, waived or otherwise ceased to exist
for a period of not less than 90 consecutive days. In any event, notwithstanding
the foregoing, no more than one Payment Blockage Period may be commenced during
any 360-day period and there shall be a period of at least 181 days during each
360-day period when no Payment Blockage Period is in effect. "Senior Nonmonetary
Default" means the occurrence or existence and continuance of an event of
default with respect to Senior Indebtedness, other than a Senior Payment
Default, that permits the holders of the Senior Indebtedness (or a trustee or
other agent on behalf of the holders thereof) then to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise
become due and payable.
The failure to make any payment on the Notes by reason of the
provisions of this Section 14.3 will not be construed as preventing the
occurrence of an Event of Default with respect to the Notes arising from any
such failure to make payment. Upon termination of any Payment Blockage Period,
the Company shall resume making any and all required payments in respect of the
Notes, including any missed payments.
In the event that, notwithstanding the foregoing, the Company
shall make any Notes Payment to any Holder prohibited by the foregoing
provisions of this Section 14.3, then and in such event such Notes Payment shall
be paid over and delivered forthwith to the holders of the Senior Indebtedness
of the Company in the same form received and, until so turned over, the same
shall be held in trust by such Holder as the property of the holders of the
Senior Indebtedness.
The provisions of this Section 14.3 shall not apply to any
Notes Payment with respect to which Section 14.2 would be applicable.
14.4. Payment Permitted If No Default. Nothing contained in
this Section 14 or elsewhere in this Agreement or in any of the Notes shall
prevent the Company, at any time except during the pendency of any Proceeding
referred to in Section 14.2 or under the conditions described in Section 14.3,
from making Notes Payments.
14.5. Subrogation to Rights of Holders of Senior Indebtedness.
Only after the payment in full in cash or Cash Equivalents of all Obligations
due or to become due on or in
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respect of Senior Indebtedness of the Company and the termination of all
commitments in respect thereof, the Holders of the Notes shall be subrogated to
the rights of the holders of Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to such Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Notes shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of the Company of any
cash, property or securities to which the Holders of the Notes would be entitled
except for the provisions of this Section 14, and no payments pursuant to the
provisions of this Section 14 to the holders of Senior Indebtedness by Holders
of the Notes, shall, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness of the
Company.
14.6. Provisions Solely to Define Relative Rights. The
provisions of this Section 14 are and are intended solely for the purpose of
defining the relative rights of the Holders on the one hand and the holders of
Senior Indebtedness on the other hand. Nothing contained in this Section 14 or
elsewhere in this Agreement or in the Notes is intended to or shall (a) impair,
as among the Company, its creditors (other than holders of Senior Indebtedness)
and the Holders of the Notes, the obligation of the Company, which is absolute
and unconditional (and which, subject to the rights under this Section 14 of the
holders of Senior Indebtedness, is intended to rank equally with all other
general unsecured obligations of the Company), to pay to the Holders of the
Notes the principal of (and premium, if any) and interest on the Notes as and
when the same shall become due and payable in accordance with their terms; (b)
affect the relative rights against the Company of the Holders of the Notes and
creditors of the Company other than the holders of Senior Indebtedness; or (c)
prevent the Holder of any Note from exercising all remedies otherwise permitted
by Applicable Law upon default under this Agreement, subject to the rights, if
any, under this Section 14 of the holders of Senior Indebtedness to receive
cash, property and securities otherwise payable or deliverable to such Holder.
The Holders agree that they will not challenge the validity,
enforceability or perfection of any Senior Indebtedness or the liens, guarantees
and security interests securing the same and that as between the holders of the
Senior Indebtedness on the one hand and the Holders on the other, the terms
hereof shall govern even if all or part of the Senior Indebtedness or such liens
and security interests are avoided, disallowed, subordinated, set aside or
otherwise invalidated in any judicial proceeding or otherwise, regardless of the
theory upon which such action is premised.
14.7. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder or by any noncompliance by the Company or
any Holder with the terms, provisions and covenants of this Agreement,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with. Without in any way limiting the generality of the foregoing, the
holders of the Senior Indebtedness may at any time and from time to time,
without the consent of or the notice to the Holders, without incurring
responsibility to the Holders and without impairing or releasing the
subordination
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provided in this Section 14 or the Obligations hereunder of the Holders to the
holders of the Senior Indebtedness, do any one or more of the following: (a)
subject to the limitations on Senior Indebtedness contained in the definition
thereof or in Section 8.1 or the definitions of the terms used therein, change
the manner, place or terms of payment or extend the time of payment of, or
alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person liable in any
manner for the collection of the Senior Indebtedness; and (d) exercise or
refrain from exercising or waiving any rights, powers or remedies against the
Company and any other Persons.
14.8. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets or securities of
the Company referred to in this Section 14, the Holders of the Notes shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such Proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors or agent, delivered to the Holders of Notes, for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Section
14.
14.9. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder of a Note, by accepting such Note,
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Note, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and each such holder of such Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
14.10. Third Party Beneficiary; No Amendment. The provisions
of this Section 14 (including the defined terms used herein) are for the benefit
of the holders of any Senior Indebtedness and shall be enforceable by each of
them directly against any Holder and the Company and may not be amended without
the consent of the Representative under the Credit Agreement or, in the absence
thereof, the holders holding the majority in principal amount of such Senior
Indebtedness.
14.11. Acceleration of Notes. If payment of the Notes is
accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Indebtedness of the acceleration.
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SECTION 15.
NOTE GUARANTEES
15.1. Note Guarantees. Each of the Guarantors hereby, jointly and
severally, absolutely and unconditionally guarantees, on a senior subordinated
basis, to each Holder of a Note executed and delivered by the Company,
irrespective of the validity and enforceability of this Agreement, the Notes or
the Obligations of the Company hereunder or thereunder, that: (a) the principal
of and premium and interest on the Notes shall be promptly paid in full when
due, whether at Stated Maturity, by acceleration, redemption or otherwise and
interest on the overdue principal of (and any premium) and interest on the Notes
and all other Obligations of the Company to the Holders hereunder or thereunder
shall be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other Obligations, that the same shall be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration or otherwise.
The Guarantee set forth herein is a Guarantee of payment and performance and not
a Guarantee of collection only. The Guarantors hereby agree that their
Obligations hereunder shall be absolute and unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this Agreement, the
absence of any action to enforce the same, any waiver or consent by any Holder
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor, other than payment in full of the underlying Obligations. Each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a prior proceeding against the Company, protest, notice with
respect to the Notes or the Indebtedness evidenced thereby and all demands
whatsoever and covenant that this Note Guarantee shall not be discharged except
by complete performance of the Obligations contained in the Notes and this
Agreement. If any Holder is required by any court or otherwise to return to the
Company or Guarantors, or any Custodian, trustee, liquidator or other similar
official acting in relation to either the Company or such Guarantors, any amount
paid by such Holder, this Note Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor agrees that it
shall not be entitled to exercise any right of subrogation in relation to the
Holders of Notes in respect of any Obligations guaranteed hereby until payment
in full of all Obligations guaranteed hereby. The Guarantors shall have the
right to seek contribution from any non-paying Guarantor so long as the exercise
of such right does not impair the rights of the Holders under this Note
Guarantee.
15.2. Execution and Delivery of Note Guarantees. To evidence its
Note Guarantee set forth in Section 15.1, each Guarantor hereby agrees that this
Agreement shall be executed on behalf of such Guarantor by any Officer and, to
the extent not a party to this Agreement on the date hereof, each Person which
becomes obligated to guarantee the Notes pursuant to the terms of Section 7.10
to execute and deliver to the Holders a supplemental agreement substantially in
the form of Exhibit B hereto ("Supplemental Agreement"), pursuant to which such
Person shall become a Guarantor under this Section 15 and shall guarantee the
Obligations of the Company under this Agreement and the Notes. Concurrently with
the
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execution and delivery of such Supplemental Agreement, such Guarantor shall
deliver to the Holders an opinion of counsel that the foregoing have been duly
authorized, executed and delivered by such Guarantor and that such Supplemental
Agreement is a valid and legally binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms.
If an officer whose signature is on this Agreement no longer
holds that office at the time the Company executes and delivers any Note with
respect to which this Note Guarantee is given, this Note Guarantee shall be
valid nevertheless. The execution and delivery of any Note by the Company shall
constitute due delivery of the Note Guarantee set forth in this Agreement on
behalf of the Guarantors.
15.3. Guarantors May Consolidate, Etc. on Certain Terms. No
Guarantor may consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) another Person (other than the Company or
another Guarantor) unless:
(a) subject to the provisions of Section 15.4, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) unconditionally assumes all the Obligations of such Guarantor under
the Notes and this Agreement pursuant to a Supplemental Agreement;
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(c) immediately after giving effect to such transaction, the
Company would be permitted to incur at least $1.00 of additional Indebtedness in
accordance with Section 8.1.
Notwithstanding the foregoing, no Guarantor shall be permitted
to consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person (other than the Company or any Guarantor)
pursuant to the preceding sentence if such consolidation or merger would not be
permitted by Section 9.
In case of any such consolidation or merger and upon the
assumption by the successor entity, by Supplemental Agreement executed and
delivered to the Holders, of the Note Guarantee and execution of the Notation of
Note Guarantee endorsed upon the Notes and the due and punctual performance of
all of the covenants and conditions of this Agreement to be performed by the
Guarantor, such successor entity shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a Guarantor.
Such successor corporation thereupon may cause to be signed any or all of the
Note Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company. All the Note Guarantees
so given shall in all respects have the same legal rank and benefit under this
Agreement as the Note Guarantees theretofore and thereafter issued in accordance
with the terms of this Agreement as though all of such Note Guarantees had been
issued at the date of the execution hereof.
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Nothing contained in this Agreement or in any of the Notes
shall prevent (x) any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, (y) any sale or conveyance of any of the property
of a Guarantor to the Company or another Guarantor, or (z) the sale by
consolidation or merger of a Subsidiary Guarantor, which sale is covered by and
complies with Section 8.4.
15.4. Releases of Note Guarantees. In the event of (a) a sale
or other disposition of all or substantially all of the assets of any Guarantor,
by way of merger, consolidation or otherwise in a transaction made in compliance
with this Agreement, (b) a sale or other disposition of all of the Capital Stock
of any Guarantor, (c) a distribution of all of the Capital Stock of any
Guarantor to shareholders of the Company in a transaction that complies with the
provisions of Section 8.2 or (d) the designation of such Guarantor as an
Unrestricted Subsidiary in accordance with the provisions of this Agreement,
such Guarantor (in the event of a sale or other disposition, by way of such a
merger, consolidation, distribution or otherwise, of all of the capital stock of
such Guarantor) or the entity acquiring the property (in the event of a sale or
other disposition of all or substantially all of the assets of such Guarantor)
will be released and relieved of any Obligations under such Guarantor's Note
Guarantee; provided that the Net Cash Proceeds of such sale or other disposition
shall be applied in accordance with the provisions of Section 8.4.
15.5. Subordination of Note Guarantees. The Obligations of
each Guarantor under its Note Guarantee pursuant to this Section 15 shall be
junior and subordinated in right of payment to the prior payment in full in cash
or Cash Equivalents of the Guarantor Senior Indebtedness and the Senior
Indebtedness on the same basis and to the same extent as the Subordinated
Obligations are junior and subordinated in right of payment to Senior
Indebtedness of the Company pursuant to Section 14, mutatis mutandis, and the
provisions of Section 14 are incorporated mutatis mutandis in this Section 15 by
this reference. For the purposes of the foregoing sentence, the Holders shall
have the right to receive and/or retain payments by any of the Guarantors only
at such times as they may receive and/or retain payments in respect of the Notes
pursuant to this Agreement, including Section 14.
15.6. Limitation on Guarantor Liability. Each Guarantor and,
by its acceptance of the Notes, each Holder hereby confirms that it is the
intention of all such parties that the Note Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any Note Guarantee.
To effectuate the foregoing intention, the Holders and the Guarantors hereby
irrevocably agree that the Obligations of such Guarantor under its Note
Guarantee and this Section 15 shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
Obligations of such other Guarantor under this Section 15, result in the
Obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
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15.7. Endorsement of Note Guarantees. To evidence its Note
Guarantee set forth in Section 15.1, each Guarantor hereby agrees that a
notation of such Note Guarantee substantially in the form of Exhibit C hereto
("Notation of Note Guarantee") shall be endorsed by an officer of such Guarantor
on each Note executed and delivered by the Company.
Each Guarantor hereby agrees that its Note Guarantee set forth
in Section 15.1 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a Notation of Note Guarantee.
SECTION 16.
EXPENSES AND CONFIDENTIALITY
16.1. Expenses. Whether or not the transactions contemplated
hereby are consummated, the Company will pay all reasonable out-of-pocket costs
and reasonable out-of-pocket expenses (including reasonable and documented
attorneys' and accountants' fees and disbursements) incurred by the Purchasers
or any holder of a Security in connection with the Transactions. In addition,
the Company will pay all reasonable out-of-pocket costs and reasonable
out-of-pocket expenses (including reasonable and documented attorneys' and
accountants' fees and disbursements) incurred by the Purchasers or any holder of
a Security in connection with any amendments, waivers or consents requested by
the Company under or in respect of the Transaction Documents (whether or not
such amendments, waivers or consents become effective). Furthermore, the Company
agrees to pay all reasonable out-of-pocket costs and reasonable out-of-pocket
expenses (including reasonable and documented attorneys' and accountants' fees
and disbursements) incurred by the Purchasers or any holder of a Security,
following and related to any Event of Default, including, without limitation:
(a) the Purchasers' reasonable and documented out-of-pocket expenses in
connection with the Purchasers' examinations and appraisals of the Company's
properties, books and records; (b) the reasonable and documented out-of-pocket
costs and expenses incurred in enforcing, defending or declaring any rights or
remedies under the Transaction Documents or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
the Financing Documents or by reason of being a holder of any Security; and (c)
the reasonable and documented out-of-pocket costs and expenses, including
reasonable and documented consultants' and advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary of
the Company or in connection with any work-out or restructuring of the
transactions contemplated by the Financing Documents. The Company will pay, and
will save the Purchasers and each other holder of a Security harmless from, all
claims in respect of any reasonable fees, costs, or expenses if any, of brokers
and finders in relation to the Transactions (other than any brokers or lenders
of the Purchasers or any other Holder).
16.2. Indemnification. In addition to all other sums due
hereunder or provided for in this Agreement, the Company, agrees to indemnify
and hold harmless each Purchaser and its Affiliates and its officers, directors,
agents, employees, subsidiaries, partners and controlling Persons (each, an
"Indemnified Person"), to the fullest extent permitted by law, from and against
any and all out-of-pocket losses, claims, damages, expenses (including
reasonable fees,
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disbursements, and other charges of counsel) or other liabilities (collectively,
"Liabilities") resulting from or arising out of any investigation or proceeding
against the Company or its Subsidiaries or Affiliates or any Indemnified Person
and arising out of or in connection with this Agreement or any of the
Transaction Documents, whether or not the transactions contemplated by this
Agreement are consummated, which investigation or proceeding requires the
participation of, or is commenced or filed against, any Indemnified Person
because of this Agreement, any other Transaction Document or such other
documents and the transactions contemplated hereby or thereby; provided that the
Company shall not be liable under this Section 16.2 to an Indemnified Person for
any Liabilities resulting primarily from any actions that involved the gross
negligence, willful misconduct, or bad faith of such Indemnified Person or the
breach by such Indemnified Person of any representation, warranty, covenant or
other agreement of such Indemnified Person contained herein or in the other
Financing Documents; and provided, further, that if and to the extent that such
indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such Liabilities for
which it would otherwise be liable hereunder which shall be permissible under
Applicable Laws. In connection with the obligation of the Company to indemnify
for Liabilities as set forth above, the Company further agrees, upon
presentation of appropriate invoices containing reasonable detail, to reimburse
each Indemnified Person for all such Liabilities (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Person; provided that if an Indemnified Person is reimbursed
hereunder for any Liabilities, such reimbursement of Liabilities shall be
refunded to the extent it is finally judicially determined that the Liabilities
in question resulted primarily from the gross negligence, willful misconduct, or
bad faith of such Indemnified Person. The Obligations of the Company under this
Section 16.2 will survive any Transfer of the Notes by the Purchasers. In the
event that the foregoing indemnity is unavailable or insufficient to hold an
Indemnified Person harmless, then the Company will contribute to amounts paid or
payable by such Indemnified Person in respect of such Indemnified Person's
Liabilities in such proportions as appropriately reflect the relative benefits
received by and fault of the Company and such Indemnified Person in connection
with the matters as to which such Liabilities relate and other equitable
considerations.
16.3. Notification. Each Indemnified Person under this Section
16 will, promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Person in
respect of which indemnity may be sought from the Company under this Section 16,
notify the Company in writing of the commencement thereof. The omission of any
Indemnified Person so to notify the Company of any such action shall not relieve
the Company from any liability which it may have to such Indemnified Person
under this Section 16 unless, and only to the extent that, such omission results
in the Company's forfeiture of substantive rights or defenses or the Company are
otherwise irrevocably prejudiced in defending such proceeding. In case any such
action, claim or other proceeding shall be brought against any Indemnified
Person and it shall notify the Company of the commencement thereof, the Company
shall be entitled to assume the defense thereof at its own expense, with counsel
satisfactory to the Company; provided that any Indemnified Person may, at its
own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action, claim or proceeding in which both
the Company, on the one hand, and an Indemnified Person, on the other hand, is,
or is reasonably likely to become, a party, such Indemnified Person
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shall have the right to employ separate counsel at the Company's expense and to
control its own defense of such action, claim or proceeding if, (a) the Company
has failed to assume the defense and employ counsel as provided herein, (b) the
Company has agreed in writing to pay such fees and expenses of separate counsel
or (c) in the reasonable opinion of counsel to such Indemnified Person, a
conflict or likely conflict exists between the Company, on the one hand, and
such Indemnified Person, on the other hand, that would make such separate
representation advisable; provided, however, that the Company shall not in any
event be required to pay the fees and expenses of more than one separate counsel
(and if deemed necessary by such separate counsel, appropriate local counsel who
shall report to such separate counsel). The Company agrees that it will not,
without the prior written consent of an Indemnified Person, settle, compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding relating to the matters contemplated hereby (if such
Indemnified Person is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Person from all liability arising or
that may arise out of such claim, action or proceeding. The Company shall not be
liable for any settlement of any claim, action, or proceeding effected against
an Indemnified Person without the prior written consent of the Company. The
rights accorded to Indemnified Persons hereunder shall be in addition to any
rights that any Indemnified Person may have at common law, by separate agreement
or otherwise.
16.4. Confidentiality.
(a) Subject to the provisions of clause (b) of this Section
16.4, each Purchaser agrees that it will not disclose without the prior consent
of the Company (other than to its employees, auditors, creditors, advisors or
counsel or to another Purchaser if the Purchaser or such Purchaser's holding or
parent company in its sole discretion determines that any such party should have
access to such information; provided that such Persons shall be subject to the
provisions of this Section 16.4 to the same extent as such Purchaser) any
nonpublic information which is now or in the future furnished pursuant to this
Agreement or any other Financing Document; provided that any Purchaser may
disclose any such information (i) as has become generally available to the
public other than by virtue of a breach of this Section 16.4(a) by such
Purchaser or any other Person to whom such Purchaser has provided such
information as permitted by this Section 16.4, (ii) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
such Purchaser or to the Commission or similar organizations (whether in the
United States of America or elsewhere) or their successors, (iii) as may be
required or appropriate in respect to any summons or subpoena or in connection
with any litigation, (iv) in order to comply with any law, order, regulation or
ruling applicable to such Purchaser and (v) to any prospective or actual
Transferee or participant in connection with any contemplated Transfer of any of
the Notes by such Purchaser; provided that such prospective Transferee agrees to
be bound by the confidentiality provisions contained in this Section 16.4.
(b) The Company hereby acknowledges and agrees that each
Purchaser may share with any of its Affiliates, and such Affiliates may share
with such Purchaser, any information related to the Company or any of its
Subsidiaries (including, without limitation, any nonpublic customer information
regarding the creditworthiness of the Company and its
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Subsidiaries); provided that such Persons shall be subject to the provisions of
this Section 16.4 to the same extent as such Purchaser.
SECTION 17.
MISCELLANEOUS
17.1. Notices. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (a) when personally delivered, (b) when transmitted via telecopy (or
other facsimile device) to the number set out below (or to such other number as
such party may specify by written notice to the other parties hereto) if the
sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), (c) the day following the day on
which the same has been delivered prepaid to a reputable national overnight air
courier service or (d) the third Business Day following the day on which the
same is sent by certified or registered mail, postage prepaid, in each case to
the respective parties at the address set forth below, or at such other address
as such party may specify by written notice to the other party hereto:
(i) if to a Purchaser or its nominee, to the Purchaser or its
nominee at the address specified for such communications in Schedule B,
with a copy to Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.,
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇, or at such other address as the Purchaser or
its nominee shall have specified to the Company in writing;
(ii) if to any other Holder of any Note, to such Holder at the
address of such Holder appearing in the Security Register or such other
address as such other Holder shall have specified to the Company in
writing; or
(iii) if to the Company or any Guarantor, to the Company at PCA
LLC, c/o PCA International, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Chief Financial Officer, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇,
with copies to ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Esq., Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇, or at such other address as the
Company shall have specified to the Holders in writing.
17.2. Benefit of Agreement; Assignments and Participations. Except as
otherwise expressly provided herein, all covenants, agreements and other
provisions contained in this Agreement by or on behalf of any of the parties
hereto shall bind, inure to the benefit of and be enforceable by their
respective successors and permitted assigns (including, without limitation, any
subsequent permitted holder of a Note) whether so expressed or not; provided,
however, that the Company may not assign and transfer any of its rights or
obligations without the prior written consent of the other parties hereto and
each such holder.
Nothing in this Agreement or in the Notes, express or implied, shall
give to any Person other than the parties hereto (and, with respect to Section
14 only, the holders of Senior
100
Indebtedness), their successors and permitted assigns and the holders from time
to time of the Notes any benefit or any legal or equitable right, remedy or
claim under this Agreement.
17.3. No Waiver; Remedies Cumulative. No failure or delay on the part
of any party hereto or any Holder in exercising any right, power or privilege
hereunder or under the Notes and no course of dealing between the Company and
any other party or Holder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or under
the Notes preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein and in the Notes are cumulative and not exclusive of any rights
or remedies which the parties or Holders would otherwise have. No notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the other parties hereto or the Holders to any other or
further action in any circumstances without notice or demand.
17.4. Amendments, Waivers and Consents. This Agreement may be amended,
and the observance of any term hereof may be waived (either retroactively or
prospectively) with (and only with) the written consent of the Company and the
Required Holders; provided, however, that no such amendment or waiver may,
without the prior written consent of the Holder of each Note then Outstanding
and affected thereby, (a) reduce the principal of (or premium, if any) or rate
of interest on, any Note, (b) postpone the date fixed for any payment of
principal of (or premium, if any) or interest on any Note (other than a waiver
of any increase in the interest rate on the Notes upon the occurrence of an
Event of Default pursuant to Section 12.2), (c) change the ranking or priority
of the Notes or the percentage of the aggregate principal amount of the Notes
the Holders of which shall be required to consent or take any other action under
this Section 17.4 or any other provision of this Agreement, (d) modify or change
any provision of this Agreement or the related definitions affecting the
subordination or ranking of the Notes or any Note Guarantee in a manner which
adversely affects the Holders, or (e) release any Guarantor from any of its
Obligations under its Note Guarantee or this Agreement otherwise than in
accordance with the terms of this Agreement; provided, further, that no such
amendment or waiver may, without the prior written consent of GS Mezzanine (only
for so long as GS Mezzanine owns any Securities), amend or waive the provisions
of Section 7.7 or 7.9. No amendment or waiver of this Agreement will extend to
or affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or thereby impair any right consequent thereon. As
used herein, the term this "Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended, supplemented or modified.
17.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. Each counterpart may consist of a number of copies hereof,
each signed by less than all, but together signed by all, of the parties hereto.
17.6. Reproduction. This Agreement, the other Transaction Documents,
and all documents relating hereto and thereto, including, without limitation,
(a) consents, waivers and
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modifications that may hereafter be executed, (b) documents received by the
Purchasers at the Closing (except the Securities themselves) and (c) financial
statements, certificates and other information previously or hereafter furnished
in connection herewith, may be reproduced by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and any
original document so reproduced may be destroyed. The Company agrees and
stipulates that, to the extent permitted by Applicable Law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. This Section 17.6 shall
not prohibit the Company, any other party hereto or any holder of Securities
from contesting any such reproduction to the same extent that it could contest
the original or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
17.7. Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
17.8. Survival of Covenants and Indemnities. All covenants and
indemnities set forth herein shall survive the execution and delivery of this
Agreement, the issuance of the Notes, and, except as otherwise expressly
provided herein with respect to covenants, the payment of principal of the Notes
and any other Obligations hereunder.
17.9. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.
(b) If any action, proceeding or litigation shall be brought by any
Purchaser or any holder of a Security in order to enforce any right or remedy
under this Agreement or any of the Securities, the Company hereby consents and
will submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent jurisdiction sitting
within the area comprising the Southern District of New York on the date of this
Agreement. The Company hereby irrevocably waives any objection, including, but
not limited to, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action, proceeding or litigation in such jurisdiction. The Company further
agrees that it shall not, and shall cause its Subsidiaries not to, bring any
action, proceeding or litigation arising out of this Agreement or the Securities
in any state or federal court other than any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of New
York on the date of this Agreement.
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(c) The Company irrevocably consents to the service of process of
any of the aforementioned courts in any such action, proceeding or litigation by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to the Company at the address set forth in Section 17.1(iii), such service to
become effective 30 days after such mailing.
(d) Nothing herein shall affect the right of any holder of a
Security to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction. If service of process is made on a designated agent it should be
made by either (i) personal delivery or (ii) mailing a copy of summons and
complaint to the agent via registered or certified mail, return receipt
requested.
(e) EACH PARTY HERETO HEREBY WAIVES ANY AND ALL RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE SECURITIES.
17.10. Severability. If any provision of this Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
to the extent of such illegality, invalidity or unenforceability and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
17.11. Entirety. This Agreement together with the other Financing
Documents represents the entire agreement of the parties hereto and thereto, and
supersedes all prior agreements and understandings, oral or written, if any,
relating to the Financing Documents or the transactions contemplated herein or
therein.
17.12. Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the first anniversary of the Closing Date,
except for (a) Sections 4.l, 4.4 and 4.26 which representations and warranties
shall survive until the third anniversary of the Closing Date, and (b) Section
4.11, which shall survive until the later to occur of (i) the lapse of the
statute of limitations with respect to the assessment of any Taxes to which such
representation and warranty relates (including any extensions or waivers
thereof) and (ii) sixty (60) days after the final administrative or judicial
determination of the Taxes to which such representation and warranty relates.
All statements contained in any certificate delivered by or on behalf of the
Company pursuant to this Agreement shall be deemed representations and
warranties of the Company under this Agreement.
17.13. Construction. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision
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shall be applicable whether such action is taken directly or indirectly by such
Person, whether or not expressly specified in such provision.
17.14. Incorporation. All Exhibits and Schedules attached hereto are
incorporated as part of this Agreement as if fully set forth herein.
[Signature Pages Follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
PCA LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
GS MEZZANINE PARTNERS II, L.P.
By: GS Mezzanine Advisors II, L.L.C.,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
GS MEZZANINE PARTNERS II OFFSHORE, L.P.
By: GS Mezzanine Advisors II, L.L.C.,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Guarantors:
PCA International, Inc.
American Studios, Inc.
PCA National LLC
PCA Photo Corporation of Canada, Inc.
Photo Corporation of America
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
PCA National of Texas LP
By: PCA National LLC,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer