Exhibit 10(p)
[CONFORMED COPY WITH SUBSTANTIALLY
ALL EXHIBITS CONFORMED AS EXECUTED]
INTERSTATE/▇▇▇▇▇▇▇ ▇▇▇▇, INC.
NOTE PURCHASE AGREEMENT
DATED AS OF APRIL 15, 1997
$21,000,000 SENIOR SECURED NOTES DUE APRIL 15, 2007
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF NOTES................................................1
1.1 Issue of Notes.....................................................1
1.2 The First Closing..................................................1
1.3 The Second Closing.................................................2
1.4 Closing Fee........................................................2
1.5 Security...........................................................2
2. WARRANTIES AND REPRESENTATIONS............................................3
3. CLOSING CONDITIONS........................................................3
3.1 First Closing......................................................3
3.2 Second Closing.....................................................3
4. PAYMENTS..................................................................3
4.1 Interest Payment...................................................3
4.2 Required Principal Payments........................................3
4.3 Optional Principal Payments........................................4
4.4 Partial Payment Pro Rata...........................................5
4.5 Notation of Notes on Payment.......................................5
4.6 Offer to Pay upon Change in Control................................5
4.7 No Other Payments of Principal; Acquisition of Notes...............8
4.8 Payments on Notes..................................................8
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.............................9
5.1 Registration of Notes..............................................9
5.2 Exchange of Notes..................................................9
5.3 Replacement of Notes..............................................10
5.4 Issuance Taxes....................................................10
5.5 Limitation on Transfer to Competitors.............................10
5.6 Securities Act Legends............................................11
6. GENERAL COVENANTS........................................................12
6.1 Payment of Taxes and Claims.......................................12
6.2 Maintenance of Properties and Existence...........................12
6.3 Maintenance of Security Licenses..................................13
6.4 Payment of Notes and Maintenance of Office........................13
6.5 ERISA.............................................................13
6.6 Maintenance of Business Characteristics...........................14
6.7 Maintenance of Ownership..........................................14
6.8 Subsidiary Guaranties.............................................14
6.9 Transactions with Affiliates......................................14
6.10 Private Offering.................................................15
6.11 Ranking of Notes.................................................15
6.12 Further Assurances...............................................15
7. FINANCIAL COVENANTS......................................................15
7.1 Required Net Capital..............................................15
7.2 Consolidated Tangible Net Worth...................................16
7.3 Limitation on Indebtedness........................................17
7.4 Restricted Payments and Restricted Investments....................18
7.5 Merger; Sale of Assets; Restricted Subsidiary Stock...............19
8. REPORTING COVENANTS......................................................22
8.1 Financial and Business Information................................22
8.2 Manager's Certificates............................................24
8.3 Accountants'Certificates..........................................25
8.4 Inspection........................................................25
8.5 Confidentiality...................................................25
9. EVENTS OF DEFAULT........................................................26
9.1 Events of Default.................................................26
9.2 Default Remedies..................................................30
9.3 Annulment of Acceleration of Notes................................31
10. INTERPRETATION OF THIS AGREEMENT........................................32
10.1 Terms Defined....................................................32
10.2 Accounting Principles............................................50
10.3 Section Headings and Table of Contents and Construction..........50
10.4 Governing Law....................................................50
11. PURCHASER REPRESENTATIONS...............................................50
11.1 Purchase of Notes................................................50
11.2 ERISA............................................................51
12. MISCELLANEOUS...........................................................52
12.1 Communications...................................................52
12.2 Reproduction of Documents........................................52
12.3 Survival.........................................................53
12.4 Successors and Assigns...........................................53
12.5 Amendment and Waiver.............................................53
12.6 Consent to Jurisdiction..........................................55
12.7 Expenses.........................................................56
12.8 Entire Agreement.................................................56
12.9 Execution in Counterpart.........................................56
Attachment A -- Warranties and Representations
Attachment B -- First Closing Conditions Precedent
Attachment C -- Second Closing Conditions Precedent
Annex 1 -- Information as to Purchasers
Annex 2 -- Payment Instructions at Closing
Annex 3 -- Information as to the Company
Exhibit A -- Form of Note
Exhibit B -- Form of Subsidiary Guaranty
Exhibit C -- Form of Indenture
Exhibit D -- Form of Pledge Agreement
Exhibit E1 -- Form of Company Counsel's Closing Opinion
Exhibit E2 -- Form of Trustee's Counsel's Closing Opinion
Exhibit E3 -- Form of Special Counsel's Closing Opinion
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Exhibit F1 -- Form of Company Secretary's Certificate
Exhibit F2 -- Form of Subsidiary Secretary's Certificate
Exhibit G1 -- Form of Company Officer's Certificate
Exhibit G2 -- Form of Company Secretary's Certificate
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INTERSTATE/▇▇▇▇▇▇▇ LANE, INC.
NOTE PURCHASE AGREEMENT
$21,000,000 SENIOR SECURED NOTES DUE APRIL 15, 2007
Dated as of April 15, 1997
The Northwestern Mutual Life Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Interstate/▇▇▇▇▇▇▇ ▇▇▇▇, Inc., (together with its successors and assigns,
the "Company"), a Delaware corporation, hereby agrees with you as follows:
1. PURCHASE AND SALE OF NOTES
1.1 Issue of Notes.
The Company will authorize the issue of Twenty-One Million Dollars
($21,000,000) in aggregate principal amount of its Senior Secured Notes due
April 15, 2007 (all such notes, whether initially issued, or issued in exchange
or substitution for, any such note, in each case in accordance with this
Agreement, and as amended from time to time, the "Notes"). The Notes shall be in
the form of Exhibit A, and shall have the terms as herein and therein provided.
1.2 The First Closing.
(a) Purchase and Sale of Notes. The Company hereby agrees to sell to
you and you hereby agree to purchase from the Company, in accordance with
the provisions hereof, the aggregate principal amount of Notes set forth
below your name on Annex 1 in reference to the First Closing at one
hundred percent (100%) of the principal amount thereof.
(b) The Closing. The first closing (the "First Closing") of the
Company's sale of Notes will be held on April 17, 1997 (the "First Closing
Date") at 9:00 a.m., local time, at the office of ▇▇▇▇ & ▇▇▇▇▇▇, a
Professional Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
At the First Closing, the Company will deliver to you one or more Notes
(as set forth below your name on Annex 1), in the denominations indicated
on Annex 1, in the aggregate principal amount of your purchase, dated the
First Closing Date and payable to you or payable as indicated on Annex 1,
against payment by federal funds wire transfer in immediately available
funds of the purchase price thereof, as directed by the Company on Annex
2, which shall be an account at a bank located in the United States of
America.
1.3 The Second Closing.
(a) Notice. On or after the First Closing Date, and prior to July 1,
1997, the Company may, but shall not be required to, deliver to the
Purchaser an irrevocable written notice specifying:
(i) the date (the "Second Closing Date") of the second closing
(the "Second Closing"), which shall be not more than ninety (90)
days after the First Closing Date and which shall be not less than
three (3) Business Days after the date of the giving of such notice;
and
(ii) the amount of the Notes to be sold at the Second Closing,
which shall be in an aggregate principal amount not less than One
Million Dollars ($1,000,000) in multiples of One Hundred Thousand
Dollars ($100,000) and not greater than Five Million Dollars
($5,000,000).
(b) Purchase and Sale of Notes. The Company hereby agrees to sell to
you and you hereby agree to purchase from the Company, in accordance with
the provisions hereof, the aggregate principal amount of Notes at the
Second Closing specified in accordance with Section 1.3(a) at one hundred
percent (100%) of the principal amount thereof. The failure of the Company
to deliver a notice complying with the provisions of Section 1.3(a) shall
relieve the Purchaser of the obligation to purchase Notes after the First
Closing Date.
(c) The Second Closing. The Second Closing of the Company's sale of
Notes will be held on the Second Closing Date at 9:00 a.m., local time, at
the office of ▇▇▇▇ & ▇▇▇▇▇▇, a Professional Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. At the Second Closing, the Company will
deliver to you one or more Notes in the denominations complying with this
Section 1.3, dated the Second Closing Date and payable to you or payable
as indicated on Annex 1, against payment by federal funds wire transfer in
immediately available funds of the purchase price thereof, as directed by
the Company on Annex 2, which shall be an account at a bank located in the
United States of America.
1.4 Closing Fee.
In consideration of your commitment to purchase the Notes at the First
Closing and at the Second Closing, the Company agrees to pay to you on the First
Closing Date and on the Second Closing Date, a fee equal to three and six
hundred seventy-six one-thousandths percent (3.676%) of the principal amount of
each of the Notes purchased by you at each of the First Closing and the Second
Closing.
1.5 Security.
The Company's obligations in respect of the Notes will be secured by a
pledge of the capital stock of the Restricted Subsidiaries, a pledge of a Twenty
One Million Dollar ($21,000,000) subordinated loan maturing March 31, 2011 from
the Company to IJLC and guarantees of the Notes and the obligations hereunder by
certain of the Restricted Subsidiaries.
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2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to purchase and pay for the
Notes to be delivered to you at the First Closing and the Second Closing, the
Company makes the warranties and representations set forth in Attachment A,
effective as of the First Closing Date, which are incorporated herein by
reference with the same force and effect as though set forth herein in full.
3. CLOSING CONDITIONS
3.1 First Closing.
Your obligations under this Agreement, including, without limitation, the
obligation to purchase and pay for the Notes to be delivered to you at the First
Closing, are subject to the conditions precedent set forth in Attachment B,
which are incorporated herein by reference with the same force and effect as
though set forth herein in full, and the failure by the Company to satisfy all
such conditions shall relieve you, at your election, of all obligations set
forth in the Financing Documents. The failure of the Company to satisfy such
conditions shall not operate to relieve the Company of its obligations hereunder
or to waive any of your rights against the Company.
3.2 Second Closing.
Your obligations under this Agreement to purchase and pay for the Notes to
be delivered to you at the Second Closing are subject to the conditions
precedent set forth in Attachment C, which are incorporated herein by reference
with the same force and effect as though set forth herein in full, and the
failure by the Company to satisfy all such conditions shall relieve you, at your
election, of all such obligations. The failure of the Company to satisfy such
conditions shall not operate to relieve the Company of its obligations hereunder
or to waive any of your rights against the Company.
4. PAYMENTS
4.1 Interest Payment.
Interest on the Notes shall be computed and paid in the manner and on the
dates provided in the Notes.
4.2 Required Principal Payments.
The Company shall pay (each such payment a "Scheduled Principal Payment"),
and there shall become due and payable, an amount of the principal of the Notes
equal to the Scheduled Principal Payment Amount on April 15 in each year
beginning on April 15, 2001 and ending on April 15, 2007, inclusive. Each such
Scheduled Principal Payment shall be at one hundred percent (100%) of the
principal amount prepaid, together with interest accrued thereon to the date of
payment. The principal of the Notes remaining outstanding on April 15, 2007,
together with interest accrued thereon, shall become due and payable on April
15, 2007. The "Scheduled Principal Payment Amount" shall equal 14.2857143% of
the principal amount of the Notes outstanding on the close of business on the
Second Closing Date.
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4.3 Optional Principal Payments.
(a) Optional Principal Payments. The Company may pay the principal
amount of the Notes in whole or in part, at any time, in amounts equal to
or greater than Five Hundred Thousand Dollars ($500,000) (or, if the
aggregate outstanding principal amount of the Notes is less than Five
Hundred Thousand Dollars ($500,000) at such time, then such principal
amount), together with
(i) an amount equal to the Make-Whole Amount due at such time
in respect of the principal amount of the Notes being so paid, and
(ii) interest on such principal amount then being paid accrued
to the payment date.
(b) Notice of Optional Payment. The Company will give notice of any
optional payment of the Notes to each holder of Notes not less than thirty
(30) days nor more than sixty (60) days before the specified payment date,
stating:
(i) the specified payment date;
(ii) the Section under which the payment is to be made;
(iii) the principal amount of each Note to be paid on such
date;
(iv) the interest to be paid on each such Note, accrued to the
specified payment date; and
(v) the calculation (with details) of an estimated Make-Whole
Amount (calculated as if the date of such notice was the date of
payment) due in connection with such payment.
Notice of payment having been so given, the aggregate principal amount of
the Notes to be paid stated in such notice (at one hundred percent (100%)
of the principal amount thereof), together with the Make-Whole Amount
determined as of the specified payment date, if any, and interest thereon
accrued to the specified payment date, shall become due and payable on the
specified payment date. Two (2) Business Days prior to the making of such
payment, the Company shall deliver to each holder of Notes by facsimile
transmission a certificate of a Senior Officer specifying the details of
the calculation of such Make-Whole Amount as of the specified payment
date, and including a copy of the source of interest rate information used
in the calculation thereof (confirmed by the sending on the same day by
overnight courier of such certificate and information).
(c) Effect of Optional Payments on Required Payments. The amount of
each payment of principal of the Notes made pursuant to this Section 4.3
will, at the time of such payment, be applied against and reduce the then
remaining Scheduled Principal Payments in the inverse order of the due
dates of such payments.
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4.4 Partial Payment Pro Rata.
If at the time any required or optional prepayment under this Section 4 is
due there is more than one Note outstanding, the aggregate principal amount of
each required or optional partial prepayment of the Notes shall be allocated
among the holders of the Notes at the time outstanding in proportion, as nearly
as practicable, to the respective unpaid principal amounts of the Notes then
outstanding, with adjustments, to the extent practicable, to equalize for any
prior prepayments not in such proportion.
4.5 Notation of Notes on Payment.
Upon any partial payment of a Note, the holder of such Note may (but shall
not be required to), at its option,
(a) surrender such Note to the Company pursuant to Section 5.2 in
exchange for a new Note in a principal amount equal to the principal
amount remaining unpaid on the surrendered Note,
(b) make such Note available to the Company for notation thereon of
the portion of the principal so paid, or
(c) ▇▇▇▇ such Note with a notation thereon of the portion of the
principal so paid.
In case the entire principal amount of any Note is paid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the paid principal amount of any Note.
4.6 Offer to Pay upon Change in Control.
(a) Notice of Change in Control Notice Event. In the event of the
obtaining of knowledge of a Change in Control Notice Event by any Senior
Officer (including, without limitation, via the receipt of notice of a
Change in Control Notice Event from any holder of Notes), the Company
will, not later than five (5) days after such obtaining of knowledge, give
notice of such Change in Control Notice Event to each holder of Notes.
Such notice will
(i) refer to this Section 4.6(a),
(ii) be dated the date of the sending of such notice,
(iii) specify, in reasonable detail, the nature and date of
the Change in Control Notice Event, and
(iv) be executed by a Senior Officer.
(b) Offer in Respect of a Change in Control. In connection with a
Change in Control, the Company shall make one (1) irrevocable separate
offer to each holder of Notes to pay the entire principal of all of such
holder's Notes (together with any interest accrued and unpaid thereon, but
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without a Make-Whole Amount), on a date (the "Change in Control Payment
Date") specified in such offer, which date will be not less than ten (10)
days nor more than twenty (20) days after the date the making of such
offer to the holders of the Notes. If the Change in Control Payment Date
shall not be specified in such offer, the Change in Control Payment Date
shall be the tenth (10th) day after the date of the making of such offer.
(c) Timing of Offer.
(i) Change in Control Requiring Company Action. The Company
will not take any action that consummates or finalizes a Change in
Control unless
(A) the offer required by Section 4.6(b) is given not
later than ten (10) days prior, nor earlier than twenty (20)
days prior, to the consummation or finalization of such Change
in Control, and
(B) contemporaneously with such action, the Company pays
all Notes in respect of which such offer shall have been
accepted.
(ii) Other Change in Control. If a Change in Control has
occurred in respect of which the Company did not take any action to
consummate or finalize, the offer required by Section 4.6(b) shall
be given not later than five (5) days after a Senior Officer obtains
knowledge of such Change in Control.
(iii) Failure to Respond. If the Company shall not have
received a written response to such offer from any holder of Notes
at least five (5) days prior to the expiration of the specified
offer period, then the Company shall immediately redeliver such
offer to each such holder of Notes.
(d) Content of Offer. Each such offer will
(i) refer to this Section 4.6(b),
(ii) be dated the date of the sending of such offer,
(iii) describe in reasonable detail the nature and material
terms of the Change in Control,
(iv) specify the Change in Control Date and the Change in
Control Payment Date,
(v) specify the last date upon which the offer can be accepted
or rejected, and the consequences of failing to provide an
acceptance or rejection as provided in Section 4.6(e),
(vi) specify the principal amount of each Note outstanding,
and the interest that would be due on each Note offered to be paid
if such offer was accepted, accrued to the Change in Control Payment
Date, and state that no Make-Whole Amount will be paid in connection
with such payment,
(vii) represent that this Section has been complied with, to
the extent applicable, and
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(viii) be executed by a Senior Officer.
(e) Acceptance, Rejection. To accept or reject such offered payment,
a holder of Notes shall send a notice of acceptance or rejection to the
Company prior to the expiration of the specified offer period. A failure
to respond to any such written offer of payment as provided in this
Section 4.6(e) shall be deemed to constitute an acceptance of such offer.
(f) Deferral of Obligation to Pay. The obligation of the Company to
pay the principal of the Notes pursuant to the offers required by Section
4.6(b) and accepted in accordance with Section 4.6(e) is subject to the
occurrence of the Change in Control in respect of which such offers and
acceptances have been made. In the event that such Change in Control does
not occur on or prior to the specified Change in Control Payment Date in
respect thereof, such payment shall be deferred until and shall be made on
the Change in Control Date (as deferred). The Company shall keep each
holder of Notes reasonably and timely informed of
(i) any deferral in, and the expected dates of, the Change in
Control Date and the Change in Control Payment Date, and
(ii) any determination by the Company that efforts to effect
such Change in Control have ceased or been abandoned (in which case
the offers and acceptances made pursuant to this Section 4.6 in
respect of such Change in Control shall be deemed rescinded,
provided that if such abandoned Change in Control is revived, it
shall be deemed to be a new Change in Control hereunder).
If the Change in Control Payment Date is deferred, the Company will
promptly deliver to the holders of the Notes the information required by
Section 4.6(d), updated accordingly.
(g) Material Alteration in Transaction. If, prior to the Change in
Control Payment Date, the terms of the transaction constituting the
related Change in Control are altered in any material respect, the Company
will immediately notify each holder of Notes of the details of such
alteration. Each holder of Notes will have the right to reverse its
acceptance or rejection of such offer (if already accepted or rejected)
until the end of the fifth (5th) day following the day on which such
holder is notified by the Company of such alteration. Each holder of Notes
which reverses its acceptance or rejection of such offer shall notify the
Company thereof during such five (5) day period. If any holder of Notes
fails to notify the Company of a reversal of its acceptance or rejection
of such offer during such five (5) day period, such holder of Notes shall
be deemed to have confirmed such acceptance or rejection. The Change in
Control Payment Date will be deferred, to the extent necessary, to
accommodate such five (5) day period, and the Company will promptly
deliver to the holders of the Notes the information required by Section
4.6(d), updated accordingly.
(h) Payment. The offered payment shall be made at one hundred
percent (100%) of the principal amount of the Notes to be prepaid
(together with any interest accrued and unpaid thereon, determined as of
the Change in Control Payment Date). Two (2) days prior to the making of
such payment, the Company shall deliver to each holder of Notes by
facsimile transmission a certificate of a Senior Officer specifying the
amounts and the due dates of the then remaining Scheduled Principal
Payments determined after giving effect to such payment.
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(i) Effect of Partial Payments on Scheduled Principal Payments. The
amount of each payment of principal of the Notes made pursuant to this
Section 4.6, will, at the time of such payment, be applied against and
reduce each of the then remaining Scheduled Principal Payments by a
percentage equal to the aggregate principal amount of the Notes so paid
divided by the aggregate principal amount of the Notes outstanding
immediately prior to such payment.
4.7 No Other Payments of Principal; Acquisition of Notes.
Except for payments of principal made in accordance with this Section 4,
the Company may not make any payment of principal in respect of the Notes. The
Company will not, and will not permit any Subsidiary or any Affiliate to,
directly or indirectly, acquire or make any offer to acquire any Notes unless
(a) the Company or such Subsidiary or Affiliate shall have offered
to acquire Notes, pro rata, from all holders of the Notes upon the same
terms,
(b) such offer will remain open for at least thirty (30) days from
the date the offer is received by each holder of Notes,
(c) the Company will provide each holder of Notes with sufficient
information (including, without limitation, a calculation of the estimated
Make-Whole Amount that would be due if the Company were to pay, in
accordance with Section 4.3, the amount of Notes in respect of which such
offer is being made) to enable each such holder to make an informed
decision with respect to such offer, and
(d) the Company will promptly provide each holder of Notes which
shall inquire (and as often as any such holder shall request) a written
list of all holders of Notes indicating the amount of the holdings of each
and whether such holder shall have accepted or rejected such offer, as of
the date of the provision of such list.
In case the Company acquires any Notes, such Notes will thereafter be cancelled
and no Notes will be issued in substitution therefor. The aggregate principal
amount of Notes so repurchased by the Company shall be applied against and
reduce the then remaining Required Principal Payments in the inverse order of
the due dates of such payments.
4.8 Payments on Notes.
(a) Manner of Payment. The Company shall pay all amounts payable
with respect to each Note (without any presentment of such Notes and
without any notation of such payment being made thereon) by crediting, by
federal funds bank wire transfer of immediately available funds, the
account of the holder thereof in any bank in the United States of America
as may be designated in writing by such holder, or in such other manner as
may be reasonably directed or to such other address in the United States
of America as may be reasonably designated in writing by such holder.
Annex 1 shall be deemed to constitute direction or designation (as
appropriate) by the Purchaser to the Company with respect to payments to
be made to the Purchaser as aforesaid. In the absence of written direction
or designation, all amounts payable with respect to each Note shall be
paid by check mailed and addressed to the registered holder of such Note
at the address shown in the register maintained by the Company pursuant to
Section 5.1.
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(b) Payments Due on Holidays. If any payment due on, or with respect
to, any Note shall fall due on a day other than a Business Day, then such
payment shall be made on the first Business Day following the day on which
such payment shall have so fallen due; provided that if all or any portion
of such payment shall consist of a payment of interest, for purposes of
calculating such interest, such payment shall be deemed to have been
originally due on such first following Business Day, such interest shall
accrue and be payable to (but not including) the actual date of payment,
and the amount of the next succeeding interest payment shall be adjusted
accordingly.
(c) Payments, When Received. Any payment to be made to a holder of
Notes hereunder or under the Notes shall be deemed to have been made on
the Business Day such payment actually becomes available to such holder at
such holder's bank prior to 12:00 noon (local time of such bank).
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
5.1 Registration of Notes.
The Company will keep at its office, maintained pursuant to Section 6.4, a
register for the registration and transfer of Notes. The name and address of
each holder of one or more Notes, each transfer thereof made in accordance with
Section 5.2 and the name and address of each transferee of one or more Notes
shall be registered in such register. The Person in whose name any Note shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary, other than in accordance with Section 5.2.
5.2 Exchange of Notes.
(a) Exchange of Notes. Upon surrender of any Note at the office of
the Company maintained pursuant to Section 6.4, duly endorsed or
accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or such holder's attorney duly authorized
in writing, the Company will execute and deliver, at the Company's expense
(except as provided in Section 5.2(b)), a new Note or Notes in exchange
therefor, in an aggregate principal amount equal to the unpaid principal
amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the
form of Exhibit A. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered
Note or dated the date of the surrendered Note if no interest shall have
been paid thereon. Each such new Note shall carry the same rights to
unpaid interest and interest to accrue that were carried by the Note so
exchanged or transferred. Notes shall not be transferred in denominations
of less than One Million Dollars ($1,000,000), provided that a holder of
Notes may transfer its entire holding of Notes regardless of the principal
amount of such holder's Notes.
(b) Costs. The Company will pay the cost of delivering to or from
such holder's home office or custodian bank from or to the Company,
insured to the reasonable satisfaction of such holder, the surrendered
Note and any Note issued in substitution or replacement for the
surrendered Note. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes.
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5.3 Replacement of Notes.
Upon receipt by the Company from the registered holder of a Note of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Note (which evidence shall be, in the case of an
institutional investor, notice from such institutional investor of such loss,
theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the Company (provided that if the holder of
such Note is an institutional investor or a nominee of an institutional
investor, such holder's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense will execute and deliver, in lieu thereof, a
replacement Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
5.4 Issuance Taxes.
The Company will pay all taxes (if any) due (but not, in any event, income
taxes) in connection with and as the result of the initial issuance and sale of
the Notes and in connection with any modification, waiver or amendment of this
Agreement or the Notes and shall save each holder of Notes harmless without
limitation as to time against any and all liabilities with respect to all such
taxes.
5.5 Limitation on Transfer to Competitors.
(a) Transfer to Competitors. No holder of Notes may, without the
prior written consent of the Company, transfer its Notes to a Competitor,
provided that the prior written consent of the Company will not be
required in connection with any of the following transfers:
(i) a transfer to a Person which is a holder of Notes at such
time;
(ii) a transfer by a holder of Notes to a Person which is not
a Competitor;
(iii) a transfer by a holder of Notes to an Allowed
Intermediary for the purpose of resale to a Person which is not a
Competitor; and
(iv) a transfer made at any time after a Senior Officer has
obtained knowledge (including knowledge obtained by notification by
a holder of Notes) of the existence and continuation for thirty (30)
days of an Event of Default, until such Event of Default is no
longer continuing and the Company has informed the holders of the
Notes in writing thereof.
(b) Competitor Defined. The term "Competitor" means
(i) (A) any Person or any subsidiary of any such Person that
is listed on Part 5.5 of Annex 3, or
10
(B) a registered broker-dealer with capital in excess of
One Hundred Million Dollars ($100,000,000),
(each a "Broker-Dealer"), or
(ii) a Person that
(A) owns and controls more than fifty percent (50%) of
the equity interest (determined by voting rights) of any
Broker-Dealer, and
(B) does not, at all times while such Person holds any
Notes, have procedures and policies in effect to reasonably
assure that non-public information obtained pursuant hereto
with respect to the Company or any Subsidiary will not be
shared with or made available to such Broker-Dealer.
The Purchaser shall not be deemed to be a Competitor hereunder. In
determining whether a Person is a Competitor pursuant to the immediately
preceding clause (ii), reliance may be placed on a written representation
of such Person.
(c) Allowed Intermediary Defined. An "Allowed Intermediary" is a
financial intermediary engaged by a holder of Notes to effect the transfer
of Notes, provided that
(i) such financial intermediary is purchasing the Notes only
for prompt resale to a Person which is not a Competitor, and
(ii) only pricing information and information that is publicly
available with respect to the Notes is provided by the transferor to
a financial intermediary that is a Competitor.
In determining compliance with the immediately preceding clause (i),
reliance may be placed on a written representation of such financial
intermediary.
5.6 Securities Act Legends.
Each Note issued prior to the second anniversary of the Second Closing
shall contain the following legend:
The Notes have not been registered under the Securities Act of 1933 and may not
be offered or sold except pursuant to an effective registration statement or in
accordance with an applicable exemption from the registration requirements of
the Securities Act of 1933.
Notes issued after such date shall not contain such legend. On or after the
second anniversary of the Second Closing (or such earlier date as may be
permitted under applicable securities law) any holder of Notes may return any of
the Notes held by it in exchange for a Note that does not contain such legend,
and any transferee of a Note may request in writing to the Company that Notes
issued to such transferee not contain such legend, in which cases the Company
shall issue such Notes without such legend.
11
6. GENERAL COVENANTS
The Company covenants that on and after the First Closing Date and so long
as any of the Notes shall be outstanding:
6.1 Payment of Taxes and Claims.
The Company will, and will cause each Restricted Subsidiary to, pay before
they become delinquent,
(a) all taxes, assessments and governmental charges or levies
imposed upon it or its Property, and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons that, if unpaid, could
reasonably be expected to result in the creation of a Lien upon its
Property,
provided, that items of the foregoing description need not be paid
(i) while being contested in good faith and by appropriate
proceedings as long as book reserves in compliance with GAAP have been
established and maintained and exist with respect thereto, and
(ii) so long as the title of the Company or the Restricted
Subsidiary, as the case may be, to, and its right to use, such Property,
is not materially adversely affected thereby.
6.2 Maintenance of Properties and Existence.
The Company will, and will cause each Restricted Subsidiary to:
(a) Property -- maintain its Property in good condition, ordinary
wear and tear excepted, and make all necessary renewals, replacements,
additions, betterments and improvements thereto, except where the failure
to do so could not reasonably be expected to have a Material Adverse
Effect;
(b) Insurance -- maintain, with financially sound and reputable
insurers, insurance with respect to its Property and business against such
casualties and contingencies, of such types and in such amounts as is
customary in the case of entities of established reputations engaged in
the same or a similar business and similarly situated;
(c) Financial Records -- keep adequate books of records and accounts
of its business transactions that permit the provision of accurate and
complete financial statements in accordance with GAAP;
(d) Legal Existence and Rights -- do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate,
company and partnership existence, rights (charter and statutory) and
12
franchises, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, provided that this Section
6.2(d) is subject in each case to Section 7.5; and
(e) Compliance with Law -- not be in violation of any law, ordinance
or governmental rule or regulation to which it is subject (including,
without limitation, any Environmental Protection Law) and not fail to
obtain any license, certificate, permit, franchise or other governmental
authorization necessary to the ownership of its Properties or to the
conduct of its business if such violation or failure to obtain could be
reasonably expected to have a Material Adverse Effect.
6.3 Maintenance of Security Licenses.
The Company will cause IJLC to at all times be registered as a
broker-dealer with the SEC under the Securities Exchange Act, be registered with
state securities authorities in each state where IJLC is required to be so
registered, be a member organization in good standing of the NYSE and the NASD,
and to the extent necessary, with the CFTC under the CEA as a futures commission
merchant.
6.4 Payment of Notes and Maintenance of Office.
The Company will punctually pay, or cause to be paid, the principal of and
interest (and Make-Whole Amount, if any) on, the Notes, as and when the same
shall become due according to the terms hereof and of the Notes, and will
maintain an office at the address of the Company referred to in Section 12.1
where notices, presentations and demands in respect hereof or of the Notes may
be made upon it. Such office will be maintained at such address until such time
as the Company will notify the holders of the Notes of any change of location of
such office, which will in any event be located within the United States of
America.
6.5 ERISA.
(a) Compliance. The Company will, and will cause each ERISA
Affiliate to, at all times with respect to each Pension Plan, comply with
all applicable provisions of ERISA and the IRC, except for such failures
to comply that, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
(b) Prohibited Actions. The Company will not, and will not permit
any ERISA Affiliate to:
(i) engage in any "prohibited transaction" (as such term is
defined in section 406 of ERISA or section 4975 of the IRC) or
"reportable event" (as such term is defined in section 4043 of
ERISA) that could result in the imposition of a tax or penalty;
(ii) incur with respect to any Pension Plan any "accumulated
funding deficiency" (as such term is defined in section 302 of
ERISA), whether or not waived;
(iii) terminate any Pension Plan in a manner that could result
in the imposition of a Lien on the Property of the Company or any
Subsidiary pursuant to section 4068 of ERISA or the creation of any
liability under section 4062 of ERISA;
(iv) fail to make any payment required by section 515 of
ERISA;
13
(v) incur any withdrawal liability under Title IV of ERISA
with respect to any Multiemployer Plan or any liability as a result
of the termination of any Multiemployer Plan; or
(vi) incur any liability or suffer the existence of any Lien
on the Property of the Company or any ERISA Affiliate, in either
case pursuant to Title I or Title IV of ERISA or pursuant to the
penalty or excise tax or security provisions of the IRC,
if the aggregate amount of the taxes, penalties, funding deficiencies,
interest, amounts secured by Liens, and other liabilities in respect of
any of the foregoing at any time could reasonably be expected to have a
Material Adverse Effect.
6.6 Maintenance of Business Characteristics.
(a) Line of Business. The Company will not, and will not permit any
Restricted Subsidiary to, engage in any business if as a result thereof,
the business of the Company and the Restricted Subsidiaries, considered as
a whole, will not be substantially the same as the businesses engaged in
by such Persons during the fiscal year of the Company ended September 30,
1996 and activities that are ancillary, incidental or necessary to the
ongoing business of the Company and the present and future Restricted
Subsidiaries as conducted during such fiscal year.
(b) Maintenance of Status. The Company will cause IJLC to, at all
times, maintain its status, among the consolidated group of the Company
and the Restricted Subsidiaries, as the principal underwriter of and
dealer in securities products.
6.7 Maintenance of Ownership.
The Company will at all times hold legal and beneficial title to the
entire outstanding equity interest of IJLC and to all Securities and instruments
exchangeable for, convertible into, or representing the right to purchase, any
equity interest in IJLC.
6.8 Subsidiary Guaranties.
The Company will cause each Person which becomes a Restricted Subsidiary
other than CapTrust to duly authorize, execute and deliver to each holder of
Notes a Subsidiary Guaranty within 30 days of so becoming a Restricted
Subsidiary of the Company.
6.9 Transactions with Affiliates.
The Company will not, nor will it permit any Restricted Subsidiary to, at
any time, enter into any transaction, including, without limitation, the
purchase, sale or exchange of Property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Restricted Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Restricted
Subsidiary than would obtain in a comparable arm's-length transaction with a
Person not an Affiliate.
14
6.10 Private Offering.
The Company will not, nor will it permit any Person acting on its behalf
to, offer the Notes or any part thereof or any similar Securities for issue or
sale to, or solicit any offer to acquire any of the same from, any Person so as
to bring the issuance and sale of the Notes within the provisions of section 5
of the Securities Act.
6.11 Ranking of Notes.
The Notes shall at all times rank as direct unsubordinated obligations of
the Company, shall rank at least pari passu with all other unsubordinated
Indebtedness of the Company present and future, and shall rank senior to all
capital stock, limited partnership interests, general partnership interests,
membership interests and all other equity interests in the Company that may from
time to time exist.
6.12 Further Assurances.
(a) Generally. The Company will, and will cause each Restricted
Subsidiary to, execute and deliver, within 30 days after any request
therefor by the Required Holders, all further instruments and documents
and take all further action that may be necessary, in order to give effect
to, and to aid in the exercise and enforcement of the Liens, rights and
remedies of the holders of Notes under, the Financing Documents.
(b) Pledge of Restricted Subsidiary Stock. The Company will and will
cause each Restricted Subsidiary to, deliver to the Trustee all capital
stock of Restricted Subsidiaries that is obtained by the Company or any
Restricted Subsidiary after the First Closing Date, within thirty (30)
days after becoming the owner thereof (including capital stock of Persons
that become Restricted Subsidiaries after the First Closing Date) to be
pledged pursuant to the Pledge Agreement, provided that the membership
interest of CapTrust shall not be so pledged. The Company will, and will
cause each Restricted Subsidiary to, execute and deliver, within thirty
(30) days after any request therefor by the Required Holders, all further
instruments and documents and take all further action that may be
necessary, in order to create and perfect Liens in favor of the Trustee in
such capital stock.
7. FINANCIAL COVENANTS
7.1 Required Net Capital.
The Company will not permit, at any time,
(a) (i) NYSE Net Capital to be less than one hundred fifty percent
(150%) of NYSE Required Net Capital, and
(ii) SEC Net Capital to be less than one hundred fifty percent
(150%) of SEC Required Net Capital,
in each case determined at such time, and
15
(b) Excess Net Capital to be less than Seventeen Million Dollars
($17,000,000), determined as of the then most recently ended fiscal
quarter of the Company.
7.2 Consolidated Tangible Net Worth.
The Company will not permit, on any date (the "determination date"),
Consolidated Tangible Net Worth to be less than the sum of
(a) on any date
(i) prior to October 31, 1997, Fifty-Six Million Dollars
($56,000,000), and
(ii) on or after October 31, 1997, the greater of
(A) eighty-five percent (85%) of Consolidated Tangible
Net Worth, determined as of October 31, 1997, or
(B) Fifty Million Dollars ($50,000,000), plus
(b) on any date
(i) prior to October 31, 1997, an amount equal to 50% of its
Consolidated Net Earnings (but, in each case, only if a positive
number) for each completed fiscal quarter after December 31, 1996,
and
(ii) on or after October 31, 1997, an amount equal to 50% of
its Consolidated Net Earnings (but, in each case, only if a positive
number) for each completed fiscal quarter after October 31, 1997,
plus
(c) on any date, an amount equal to the greater of
(i) Zero Dollars ($0) or
(ii) (A) if such date is prior to October 31, 1997,
seventy-five percent (75%) of an amount equal to
(I) the net proceeds from each sale of all capital
stock of the Company sold by the Company subsequent to
December 31, 1996 to Persons other than Subsidiaries
(including in such net proceeds the net amount paid upon
issuance and exercise of a right to acquire any capital
stock, or to convert a convertible debt security to
capital stock, but excluding any amount paid to the
Company upon issuance of such convertible debt
security), minus
(II) the aggregate amount of cash expended by the
Company subsequent to December 31, 1996 in repurchasing
or redeeming capital stock of the Company, and
16
(B) if such date is on or after to October 31, 1997,
seventy-five percent (75%) of an amount equal to
(I) the net proceeds from each sale of all capital
stock of the Company sold by the Company subsequent to
October 31, 1997 to Persons other than Subsidiaries
(including in such net proceeds the net amount paid upon
issuance and exercise of a right to acquire any capital
stock, or to convert a convertible debt security to
capital stock, but excluding any amount paid to the
Company upon issuance of such convertible debt
security), minus
(II) the aggregate amount of cash expended by the
Company subsequent to October 31, 1997 in repurchasing
or redeeming capital stock of the Company.
7.3 Limitation on Indebtedness.
(a) Leverage Test. The Company shall not at any time permit Total
Debt to exceed forty percent (40%) of Total Capitalization, in each case
determined at such time.
(b) Incurrence of Indebtedness. The Company will not, nor will it
permit any Restricted Subsidiary to, at any time, create, incur, or assume
any Indebtedness, provided that:
(i) the Company and the Restricted Subsidiaries may incur
obligations in respect of the Notes;
(ii) any one or more of the Company and the Restricted
Subsidiaries may incur Short-Term Ordinary Course Debt;
(iii) the Company may incur Funded Debt, provided that after
giving effect to such incurrence,
(A) the aggregate amount of Consolidated Funded Debt
outstanding at such time will not exceed twenty percent (20%)
of Total Capitalization determined as of the last day of the
then most recently ended fiscal quarter of the Company, and
(B) Consolidated Priority Debt at such time will not
exceed fifteen percent (15%) of Consolidated Tangible Net
Worth determined as of the last day of the then most recently
ended fiscal quarter of the Company; and
(iv) the Restricted Subsidiaries may incur Funded Debt,
provided that after giving effect to such incurrence, Consolidated
Priority Debt at such time will not exceed fifteen percent (15%) of
Consolidated Tangible Net Worth determined as of the last day of the
then most recently ended fiscal quarter of the Company.
Any Person which becomes a Restricted Subsidiary after the First Closing
Date shall be deemed to have incurred, on the date it becomes a Restricted
Subsidiary, all of the Indebtedness of such Person existing immediately
17
after such Person becomes a Restricted Subsidiary. The sale or other
transfer (but not repayment) of Indebtedness of a Restricted Subsidiary by
the Company or another Restricted Subsidiary to a Person other than the
Company or a Restricted Subsidiary will be deemed to be an incurrence of
Indebtedness under this Agreement.
7.4 Restricted Payments and Restricted Investments.
(a) Generally. The Company will not, nor will it permit any
Restricted Subsidiary to, at any time,
(i) make or authorize any Restricted Investment, or
(ii) declare or make or incur any liability to declare or make
any Restricted Payment,
unless, immediately after giving effect to the proposed Restricted
Investment or Restricted Payment,
(A) the sum of
(I) the aggregate amount of all Restricted Investments
(valued immediately after such action), plus
(II) the aggregate amount of all Restricted Payments
made during the period commencing on the First Closing Date
and ending at such time, inclusive,
would not exceed twenty-five percent (25%) of Consolidated Tangible
Net Worth, determined as of the immediately preceding fiscal quarter
of the Company, and
(B) no Default or Event of Default would exist.
Any Person which becomes a Restricted Subsidiary after the First Closing
Date shall be deemed to have made, at the time it becomes a Restricted
Subsidiary, all Restricted Investments of such Person existing immediately
after it becomes a Restricted Subsidiary. All outstanding Investments in a
Restricted Subsidiary will be deemed to be Restricted Investments if a
transaction or transactions occur that result in such Restricted
Subsidiary no longer qualifying as a Restricted Subsidiary, and such
Investments will be deemed to have been made at the time such Person no
longer so qualifies. Restricted Investments made solely by issuance of
common stock of the Company shall be excluded.
(b) Investments in CapTrust. Neither the Company nor any Restricted
Subsidiary will make any Investment in CapTrust if, after giving effect to
such Investment, the aggregate amount of the Investment of the Company and
the Restricted Subsidiaries in CapTrust
(i) exceeds Five Million Dollars and at the time of the making
of such Investment, the retained earnings of CapTrust is less than
Zero Dollars ($0), or
(ii) exceeds Ten Million Dollars.
18
The Investment of the Company and the Restricted Subsidiaries in CapTrust
shall be valued at cost less any dividends or distributions paid in cash
in respect thereof to the Company or the Restricted Subsidiaries other
than IJL Holdings.
7.5 Merger; Sale of Assets; Restricted Subsidiary Stock.
(a) Merger and Consolidation. The Company will not, nor will it
permit any Restricted Subsidiary to, at any time, merge into, consolidate
with, or sell, lease, transfer or otherwise dispose of all or
substantially all of its Property (collectively, a "Merger Transaction")
to, any other Person or permit any other Person to consolidate with or
merge into it, or enter into any transaction that is in substance a
transaction of such type; provided that
(i) The Company -- the foregoing restriction does not apply to
a Merger Transaction of the Company so long as each of the following
conditions is satisfied with respect thereto:
(A) if the Company is not the Person (the "Surviving
Person") which results from such Merger Transaction,
(I) the Surviving Person shall be a corporation,
limited liability company, general partnership or
limited partnership organized under the laws of the
United States of America or any jurisdiction thereof,
and
(II) the due and punctual payment of the principal
of and Make-Whole Amount, if any, and interest on all of
the Notes, according to their tenor, and the due and
punctual performance and observance of all the covenants
in the Financing Documents to be performed or observed
by the Company, are expressly assumed by the Surviving
Person pursuant to such agreements and instruments of
assumption as shall be approved by the Required Holders,
and the Company will cause to be delivered to each
holder of Notes an opinion of independent counsel to the
effect that such agreements and instruments are
enforceable in accordance with their terms;
(B) no Default or Event of Default exists or would exist
under any provision hereof; and
(C) the Surviving Person would be permitted to incur at
least One Dollar ($1.00) of additional Funded Debt under
Section 7.3(b)(iii);
(ii) Restricted Subsidiaries -- the foregoing restriction does
not apply to a Merger Transaction of a Restricted Subsidiary so long
as each of the following conditions is satisfied with respect
thereto:
(A) the Person surviving such Merger Transaction shall
be another Restricted Subsidiary or the Company;
19
(B) after giving effect to such Merger Transaction, no
Default or Event of Default shall exist under any provision
hereof; and
(C) the due and punctual performance and observance of
all the covenants in the Financing Documents to be performed
or observed by such Restricted Subsidiary are expressly
assumed by the Person surviving such Merger Transaction
pursuant to such agreements and instruments of assumption as
shall be approved by the Required Holders, and the Company
will cause to be delivered to each holder of Notes an opinion
of independent counsel to the effect that such agreements and
instruments are enforceable in accordance with their terms.
(b) Sale of Assets. Except as permitted under Section 7.5(a), the
Company will not, and will not permit any of its Restricted Subsidiaries
to, make any Asset Disposition unless:
(i) In the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market
Value at least equal to that of the property exchanged and is in the
best interest of the Company or such Restricted Subsidiary;
(ii) immediately after giving effect to the Asset Disposition,
no Default or Event of Default would exist;
(iii) immediately after giving effect to the Asset
Disposition,
(A) the aggregate Disposition Value of all Property that
was the subject of any Asset Disposition occurring in the
period commencing on the first day of the period of twelve
(12) consecutive calendar months then most recently completed
and ending on and including the date of such Asset Disposition
does not exceed ten percent (10%) of Consolidated Assets,
determined as of the end of the then most recently completed
fiscal year of the Company, and
(B) the Property that was the subject of any Asset
Disposition occurring in the period commencing on the first
day of the period of twelve (12) consecutive calendar months
then most recently completed and ending on and including the
date of such Asset Disposition did not contribute more than
ten percent (10%) of Consolidated Net Earnings (the
determination of such contribution to be based on the
aggregation of the respective percentage contribution of each
item of such Property to Consolidated Net Earnings during the
twelve (12) calendar months preceding the disposition of each
such item of Property); and
(iv) immediately after giving effect to the Asset Disposition,
(A) the aggregate Disposition Value of all Property that
was the subject of any Asset Disposition occurring in the
period commencing on the First Closing Date and ending on and
including the date of such Asset Disposition would not exceed
20
twenty-five (25%) of Consolidated Assets, determined as of the
end of the then most recently completed fiscal year of the
Company, and
(B) the Property that was the subject of any Asset
Disposition occurring in the period commencing on the First
Closing Date and ending on and including the date of such
Asset Disposition did not contribute more than twenty-five
percent (25%) of Consolidated Net Earnings determined in
respect of such period (the determination of such contribution
to be based on the aggregation of the respective percentage
contribution of each item of such Property to Consolidated Net
Earnings during such period).
Notwithstanding the foregoing sentence, the Company will not, and will not
permit any Restricted Subsidiary to, make Asset Dispositions of Property
of the Interstate Group that, when aggregated with all other Asset
Dispositions of Property of the Interstate Group occurring on or after the
First Closing date, constitute a Substantial Part of the Property of the
Interstate Group, without the written consent of the Required Holders.
(c) Transfers of Restricted Subsidiary Stock. The Company will not,
nor will it permit any Restricted Subsidiary to, issue, sell or otherwise
dispose of any equity interest (or any Securities or agreements
exchangeable for, convertible into, or representing the right to purchase
any equity interest) of a Restricted Subsidiary (such equity interest and
Securities and agreements referred to as "Restricted Subsidiary Stock"),
nor will any Restricted Subsidiary issue, sell or otherwise dispose of any
shares of its own Restricted Subsidiary Stock, provided that the foregoing
restrictions do not apply to:
(i) the sale or other disposition by the Company or a
Restricted Subsidiary of shares of Restricted Subsidiary Stock to
the Company or to a Wholly-Owned Subsidiary;
(ii) the issuance by a Restricted Subsidiary of shares of its
own Restricted Subsidiary Stock to either the Company or a
Wholly-Owned Subsidiary;
(iii) the issuance by a Restricted Subsidiary of directors'
qualifying shares;
(iv) the sale of up to ninety-eight percent (98%) of
non-voting capital stock of IJL Holdings so long as such sales are
to registered broker-dealers or financial advisors employed by
CapTrust, and provided that the Company shall at all times be the
direct or indirect owner of one hundred percent of the voting
capital stock of IJL Financial and not less than two percent (2%) of
non-voting capital stock of IJL Holdings; and
(v) the Transfer of all of the Restricted Subsidiary Stock of
a Restricted Subsidiary of the Company owned by the Company and the
Restricted Subsidiaries if:
(A) such Transfer satisfies the requirements of Section
7.5(b); and
(B) the Restricted Subsidiary being disposed of has no
continuing Investment in the Company or any other Restricted
Subsidiary not being simultaneously disposed of.
21
Notwithstanding any provision of this Section 7.5(c) to the contrary,
neither the Company nor any Restricted Subsidiary will sell any Restricted
Subsidiary Stock issued by IJLC or IJL Financial. Prior to the sale of any
Restricted Subsidiary Stock pursuant to this Section 7.5(c) which has been
pledged pursuant to the Pledge Agreement, the Company shall provide each
holder of Notes a certificate of a Senior Officer which sets forth the
financial information to establish that such sale is in compliance with
Section 7.5(b).
8. REPORTING COVENANTS
8.1 Financial and Business Information.
The Company shall deliver to each holder of Notes:
(a) Quarterly Statements --
(i) as soon as practicable after the end of each quarterly
fiscal period of the Company, and in any event within thirty (30)
days thereafter, duplicate copies of IJLC's FOCUS Report for such
period as filed, and accompanied by the certificate required by
Section 8.2;
(ii) as soon as practicable after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), and in any
event within forty-five (45) days thereafter,
(A) a consolidated balance sheet as at the end of such
quarter,
(B) and consolidated statements of income, changes in
shareholders' equity and cash flows for such quarter and (in
the case of the second and third quarters) for the portion of
the fiscal year ending with such quarter,
separately for the Company and its consolidated subsidiaries, and
the Company and the Restricted Subsidiaries, setting forth in each
case, in comparative form, the financial statements for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified as complete and
correct by a Senior Financial Officer, and accompanied by the
certificate required by Section 8.2; provided, that delivery of
copies of the Company's Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission within the time period specified
above shall be deemed to satisfy the requirements of this Section
8.1(a) so long as such Quarterly Report contains or is accompanied
by the information specified in this Section 8.1(a)(ii);
(b) Annual Financial Statements -- as soon as practicable after the
end of each fiscal year of the Company, and in any event within ninety
(90) days thereafter,
(i) consolidated and consolidating balance sheets as at the
end of such year, and
22
(ii) consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows for such year,
separately for the Company and its consolidated subsidiaries, and the
Company and the Restricted Subsidiaries, setting forth in the case of each
consolidated financial statement, in comparative form, the financial
statement for the previous fiscal year, all in reasonable detail, prepared
in accordance with GAAP, and accompanied by
(A) in the case of the consolidated financial statements of
the Company and its consolidated subsidiaries, an audit report
thereon of independent certified public accountants of recognized
national standing, which report shall state without qualification
(including, without limitation, qualifications related to the scope
of the audit, the compliance of the audit with generally accepted
auditing standards, or the ability of the Company or a material
subsidiary thereof to continue as a going concern), that such
financial statements have been prepared and are in conformity with
GAAP,
(B) a certification by a Senior Officer that such consolidated
and consolidating statements are complete and correct, and
(C) the certificates required by Section 8.2 and Section 8.3,
provided, that the delivery of the Company's Annual Report on Form 10-K
for such fiscal year filed with the Securities and Exchange Commission
within the time period specified above shall be deemed to satisfy the
requirements of this Section 8.1(b) so long as such Annual Report contains
or is accompanied by the reports and other information otherwise specified
in this Section 8.1(b);
(c) Audit Reports -- promptly upon receipt thereof, a copy of each
other report submitted to the Company or any Restricted Subsidiary by
independent accountants in connection with any annual, interim or special
audit made by them of the books of the Company or any Subsidiary,
including, without limitation, any comment letter submitted to a Senior
Officer by such accountants in connection with their annual audit;
(d) SEC and Other Reports -- promptly upon their becoming available,
during any period in which the Company has Securities registered under the
Securities Act, one copy of each regular or periodic report, and any
registration statement, prospectus or written communication (other than
routine transmittal letters), and each amendment thereto, in respect
thereof required to be filed by the Company or any Subsidiary as a result
of the existence of such Securities, with, or received by, such Person in
connection therewith from, the NASD, any securities exchange or the SEC or
any successor agency;
(e) ERISA -- immediately upon becoming aware of the occurrence of
any
(i) "reportable event" (as such term is defined in section
4043 of ERISA) or
(ii) "prohibited transactions" (as such term is defined in
section 406 or section 4975 of the IRC),
23
in connection with any Pension Plan, any Multiemployer Plan, or any trust
created thereunder, a written notice specifying the nature thereof, what
action the Company is taking or proposes to take with respect thereto,
and, when known, any action taken by the IRS, the Department of Labor or
the PBGC with respect thereto;
(f) Notice of Default or Event of Default -- within two (2) Business
Days of becoming aware
(i) of the existence of any condition or event which
constitutes a Default or an Event of Default, or
(ii) that the holder of any Note, or of any Indebtedness of
the Company or any Subsidiary, shall have given notice or taken any
other action with respect to a claimed Default, Event of Default or
default or event of default,
a notice specifying the nature of the claimed Default, Event of Default or
default or event of default and the notice given or action taken (if any)
by such holder and what action the Company is taking or proposes to take
with respect thereto;
(g) Actions, Proceedings -- promptly after the commencement of any
action or proceeding relating to the Company or any Subsidiary in any
court or before any Governmental Authority or arbitration board or
tribunal as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, is reasonably likely to
have a Material Adverse Effect, a notice specifying the nature and period
of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(h) Other Creditors -- promptly upon the request of any holder of
Notes, copies of any statement, report or certificate furnished to any
holder of Indebtedness of the Company or any Subsidiary to the extent that
the information contained in such statement, report or certificate has not
already been delivered to each holder of Notes;
(i) Requested Information -- with reasonable promptness, such other
data and information as from time to time may be reasonably requested,
including, without limitation, information required by 17 C.F.R.
ss.230.144A, as amended from time to time (provided that it is agreed and
understood that the Company does not have any obligation or intention to
register the Notes under the Securities Act).
8.2 Manager's Certificates.
Each set of financial statements delivered to each holder of Notes
pursuant to Section 8.1(a) or Section 8.1(b) shall be accompanied by a
certificate of a Senior Officer setting forth:
(a) Covenant Compliance -- the financial information (including
detailed calculations) required in order to establish whether the Company
was in compliance with the requirements of Section 7 (in each case where
such Section imposes numerical financial requirements) as of the end of
the period covered by the financial statements then being furnished
(including with respect to such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Section, and the
calculation of the amount, ratio or percentage then in existence); and
24
(b) Event of Default -- a statement that the signer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision or authority, a review of the transactions and conditions of
the Company and its subsidiaries from the beginning of the accounting
period covered by the income statements being delivered therewith to the
date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event existed
or exists, specifying the nature and period of existence thereof and what
action the Company shall have taken or proposes to take with respect
thereto.
8.3 Accountants' Certificates.
Each set of annual financial statements delivered pursuant to Section
8.1(b) shall be accompanied by a certificate of the accountants who certify such
financial statements, stating that they have reviewed this Agreement and stating
further, whether, in making their audit, such accountants have become aware of
any condition or event related to accounting and financial determinations and
matters, that, as of the date of such financial statements, constitutes a
Default or an Event of Default, and, if such accountants are aware that any such
condition or event then exists, specifying the nature and period of existence
thereof.
8.4 Inspection.
The Company shall permit the representatives of each Significant Holder,
at such holder's expense (or, if a Default or an Event of Default shall then
exist, at the expense of the Company), to visit and inspect any of the
Properties of the Company or any Subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers, directors, partners, employees and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss the finances and affairs of the Company and the Subsidiaries) all at
such reasonable times and as often as may be reasonably requested provided that
the Company will be provided at least three (3) Business Days written notice of
such visit, inspection, examination and discussions, and provided further that a
Senior Officer shall be permitted to be present at all such inspections, visits,
examination and discussions.
8.5 Confidentiality.
(a) Generally. Each holder of Notes shall treat Confidential
Information as confidential by such holder in accordance with the
procedures and standards that such holder generally applies to information
of a confidential nature, provided that it is understood that a holder of
Notes may disclose any such Confidential Information (in any form,
including copies of documents) to
(i) such holder's directors, trustees, officers, employees,
agents and professional consultants which have responsibilities with
respect to the management, ownership, monitoring, administering or
enforcing of such holder's investment in the Notes,
25
(ii) any other holder of any Note,
(iii) any Person to which such holder offers to sell such Note
or any part thereof or participation therein, provided that such
Person first agrees in writing for the benefit of the Company to be
subject to the requirements of this Section 8.5,
(iv) any federal or state regulatory authority having
jurisdiction over such holder, and the National Association of
Insurance Commissioners or any similar organization,
(v) Standard & Poor's, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc.,
▇▇▇▇▇'▇ Investor Services, Inc., or other nationally recognized
financial rating service, which is reviewing the credit rating of
any holder of Notes, and
(vi) any other Person to which such delivery or disclosure may
be necessary or appropriate in compliance with any law, rule,
regulation or order applicable to such holder, in response to any
subpoena or other legal process, in connection with any litigation
to which such holder is a party, or in order to protect such
holder's investment in such Note or enforce such holder's rights.
(b) "Confidential Information" Defined. The term "Confidential
Information" means, at any time, written information delivered to a holder
of Notes by or on behalf of the Company or any Subsidiary in connection
with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was adequately marked or
labeled or otherwise adequately identified when received by such holder as
being confidential information of the Company or such Subsidiary, and that
has not become
(i) publicly known other than by an act or omission by such
holder or a person acting on such holder's behalf, or
(ii) known to such holder from sources other than the Company
or a Subsidiary prior to the time of such disclosure.
9. EVENTS OF DEFAULT
9.1 Events of Default.
An "Event of Default" shall exist if any of the following occurs and is
continuing:
(a) Payments on the Notes --
(i) Principal or Make-Whole Amount Payments -- the Company
shall fail to make any payment of principal or Make-Whole Amount on
any Note on or before the date such payment is due;
(ii) Interest Payments -- the Company shall fail to make any
payment of interest on any Note on or before five (5) days after the
date such payment is due;
26
(b) Particular Covenant Defaults -- the Company or any Subsidiary
shall fail to perform or observe any covenant contained in Section 7, or
in Section 8.1(f);
(c) Other Defaults -- the Company or any Subsidiary shall fail to
comply with any other provision hereof, or of any other Financing
Document, and such failure continues for more than thirty (30) days after
such failure shall first become known to any Senior Officer;
(d) Warranties or Representations -- any warranty, representation or
other statement by or on behalf of the Company contained herein or any
warranty, representation or other statement by or on behalf of the Company
contained in any instrument furnished in compliance herewith or in
reference hereto or any other Financing Document shall have been false or
misleading in any material respect when made;
(e) Default on Indebtedness --
(i) the Company or any Restricted Subsidiary fails to make any
payment on any Indebtedness when due; or
(ii) any event shall occur or any condition shall exist in
respect of Indebtedness of the Company or any Restricted Subsidiary,
or under any agreement securing or relating to such Indebtedness,
that immediately or with any one or more of the passage of time or
the giving of notice:
(A) causes (or permits any one or more of the holders
thereof or a trustee therefor to cause) such Indebtedness, or
a portion thereof, to become due prior to its stated maturity
or prior to its regularly scheduled date or dates of payment;
or
(B) permits any one or more of the holders thereof or a
trustee therefor to require the Company or any Restricted
Subsidiary to repurchase such Indebtedness from the holders
thereof;
provided that the aggregate amount of all obligations in respect of all
such Indebtedness exceeds at such time Five Million Dollars ($5,000,000);
(f) Insolvency --
(i) Involuntary Bankruptcy Proceedings --
(A) a receiver, liquidator, custodian or trustee of the
Company or any Restricted Subsidiary, or of all or any
substantial part of the Property of either, is appointed by
court order or under the SIPA and such order remains in effect
for more than sixty (60) days; or an order for relief is
entered with respect to the Company or any Restricted
Subsidiary, or the Company or any Restricted Subsidiary is
adjudicated a bankrupt or insolvent;
27
(B) all or any substantial part of the Property of the
Company or any Restricted Subsidiary is sequestered by court
order and such order remains in effect for more than sixty
(60) days; or
(C) a petition is filed against the Company or any
Restricted Subsidiary under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter
in effect (including, without limitation, the SIPA), and is
not dismissed within sixty (60) days after such filing,
(ii) Voluntary Petitions -- the Company or any Restricted
Subsidiaryfiles a petition in voluntary bankruptcy or seeks relief
under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect, or consents to
the filing of any petition against it under any such law, or
(iii) Assignments for Benefit of Creditors, etc. -- the
Company or a Restricted Subsidiary makes an assignment for the
benefit of its creditors, or admits in writing its inability, or
fails, to pay its debts generally as they become due, or consents to
the appointment of a receiver, liquidator or trustee of the Company
or a Restricted Subsidiary or of all or a substantial part of its
Property;
(g) IJLC Defaults --
(i) SIPC Decree -- the making of an application by SIPC for a
decree adjudicating that customers of IJLC are in need of protection
under SIPA and the failure of IJLC to obtain the dismissal of such
application within thirty (30) days;
(ii) Net Capital --
(A) if IJLC is not operating pursuant to paragraph
(a)(1)(ii) of Rule 15c3-1, the Aggregate Indebtedness of IJLC
shall exceed one thousand five hundred percent (1500%) of Net
Capital of IJLC, or
(B) (I) if the Company is operating pursuant to
paragraph (a)(1)(ii) of Rule 15c3-1, Net Capital of IJLC
shall be less than two percent (2%) of Aggregate Debit
Items of IJLC, or
(II) if IJLC is registered as a futures commission
merchant, Net Capital of IJLC shall be less than four
percent (4%) of the funds required to be segregated by
IJLC pursuant to the CEA and the regulations thereunder
(less the market value of commodity options purchased by
option customers on or subject to the rules of a
contract market, each such deduction not to exceed the
amount of funds in the option customer's account), if
greater than the amount required in the preceding clause
(I);
28
in each case for a period of fifteen (15) consecutive Business
Days commencing on the date IJLC first determines such fact,
or the Examining Authority or the SEC first determines and
notifies IJLC of such fact;
(iii) Revocation of Broker-Dealer Status -- the SEC shall
revoke the registration of IJLC as a broker-dealer; or
(iv) Suspension of Membership Status -- the Examining
Authority shall suspend (and not reinstate within ten (10) days) or
revoke IJLC's status as a member thereof; or
(h) Financing Documents --
(i) (A) any Financing Document shall cease to be in full force
and effect in whole or in part or shall be declared by a court
or Governmental Authority of competent jurisdiction to be
void, voidable or unenforceable in whole or in part against
the Company or any Subsidiary party thereto, in either case
for any reason whatsoever, and
(B) in the reasonable opinion of counsel to the Required
Holders, such cessation or declaration is not curable by
action of the Company or any Subsidiary;
(ii) (A) any Financing Document shall cease to be in full
force and effect or shall be declared by a court or
Governmental Authority of competent jurisdiction to be void,
voidable or unenforceable against the Company or any
Subsidiary party thereto,
(B) in the reasonable opinion of counsel to the Required
Holders, such cessation or declaration is curable by action of
the Company or any Subsidiary, and
(C) such cessation or declaration is not cured by the
Company or any Subsidiary within fifteen (15) days of a Senior
Officer becoming aware thereof;
(iii) any security interest granted to the Trustee pursuant to
the Pledge Agreement shall fail at any time to constitute a
perfected first priority security interest in or assignment of the
collateral described in the Pledge Agreement;
(iv) the validity or enforceability of any Financing Document
against the Company or any Subsidiary shall be contested by the
Company, any Subsidiary, or any Affiliate;
(v) any Restricted Subsidiary, or any subsidiary or affiliate
thereof, shall deny that such Restricted Subsidiary has any further
liability or obligation under any Subsidiary Guaranty; or
29
(i) Litigation --
(i) Liens arising from judicial attachments and judgments,
securing or relating to claims in an aggregate amount in excess of
Two Million Dollars ($2,000,000) shall have been filed or entered
against any one or more of the Company or IJLC or any Property of
any of them and shall not have been effectively stayed, vacated,
discharged, or bonded within sixty (60) days after the Company
receives notice thereof, or
(ii) Liens arising from judicial attachments and judgments,
securing or relating to claims shall have been filed or entered
against any one or more of the Restricted Subsidiaries (other than
IJLC) or any Property of any of them and shall not have been
effectively stayed, vacated, discharged, or bonded within sixty (60)
days after the Company receives notice thereof, provided that with
respect to any claim or claims entered against the same Persons or
Property,
(A) such claim or claims are in an aggregate amount in
excess of Two Million Dollars ($2,000,000), and
(B) the Fair Market Value of the assets of such Persons
and such Property, less the value of any consensual Liens that
are prior in right to the Lien securing such claim, is in
excess of Two Million Dollars ($2,000,000).
9.2 Default Remedies.
(a) Acceleration of Maturity of Notes.
(i) Acceleration on Event of Default.
(A) Automatic. If any Event of Default specified in
Section 9.1(f) shall exist, all of the Notes at the time
outstanding shall automatically become immediately due and
payable together with interest accrued thereon and, to the
extent permitted by law, the Make-Whole Amount at such time
with respect to the principal amount of such Notes, without
presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, and,
(B) Required Holders. If any Event of Default other than
those specified in Section 9.1(a) shall exist, the holder or
holders of more than fifty percent (50%) in principal amount
of the Notes then outstanding (exclusive of Notes then owned
by any one or more of the Company, any Subsidiary or any
Affiliate) may exercise any right, power or remedy permitted
to such holder or holders by law, and shall have, in
particular, without limiting the generality of the foregoing,
the right to declare the entire principal of, and all interest
accrued on, all the Notes then outstanding to be, and such
Notes shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived, and the
Company shall forthwith pay to the holder or holders of all
the Notes then outstanding the entire principal of, and
interest accrued on, the Notes and, to the extent permitted by
law, the Make-Whole Amount at such time with respect to such
principal amount of such Notes.
30
(ii) Acceleration on Payment Default. During the existence of
an Event of Default described in Section 9.1(a), and irrespective of
whether the Notes then outstanding shall have become due and payable
pursuant to Section 9.2(a)(i)(B), any holder of Notes who or which
shall have not consented to any waiver with respect to such Event of
Default may, at his or its option, by notice in writing to the
Company, declare the Notes then held by such holder to be, and such
Notes shall thereupon become, forthwith due and payable together
with all interest accrued thereon, without any presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived, and the Company shall forthwith pay to such holder
the entire principal of and interest accrued on such Notes and, to
the extent permitted by law, the Make-Whole Amount at such time with
respect to such principal amount of such Notes.
(b) Valuable Rights. The Company acknowledges, and the parties
hereto agree, that the right of each holder to maintain its investment in
the Notes free from repayment by the Company (except as herein
specifically provided for) is a valuable right and that the provision for
payment of a Make-Whole Amount by the Company in the event that the Notes
are prepaid or are accelerated as a result of an Event of Default is
intended to provide compensation for the deprivation of such right under
such circumstances.
(c) Other Remedies. During the existence of an Event of Default and
irrespective of whether the Notes then outstanding shall become due and
payable pursuant to Section 9.2(a), and irrespective of whether any holder
of Notes then outstanding shall otherwise have pursued or be pursuing any
other rights or remedies, any holder of Notes may proceed to protect and
enforce its rights hereunder and under such Notes by exercising such
remedies as are available to such holder in respect thereof under
applicable law, either by suit in equity or by action at law, or both,
whether for specific performance of any agreement contained herein or in
aid of the exercise of any power granted herein, provided that the
maturity of such holder's Notes may be accelerated only in accordance with
Section 9.2(a).
(d) Nonwaiver; Remedies Cumulative. No course of dealing on the part
of any holder of Notes nor any delay or failure on the part of any holder
of Notes to exercise any right shall operate as a waiver of such right or
otherwise prejudice such holder's rights, powers and remedies. All rights
and remedies of each holder of Notes hereunder and under applicable law
are cumulative to, and not exclusive of, any other rights or remedies any
such holder of Notes would otherwise have.
9.3 Annulment of Acceleration of Notes.
If a declaration is made pursuant to Section 9.2(a)(i)(B), then and in
every such case, the holders of more than fifty percent (50%) in aggregate
principal amount of the Notes then outstanding (exclusive of Notes then owned by
any one or more of the Company, any Subsidiaries and any Affiliates) may, by
written instrument filed with the Company, rescind and annul such declaration,
and the consequences thereof, provided that at the time such declaration is
annulled and rescinded:
(a) no judgment or decree shall have been entered for the payment of
any moneys due on or pursuant hereto or the Notes;
31
(b) all arrears of interest upon all of the Notes and all of the
other sums payable hereunder and under the Notes (except any principal of,
or interest or Make-Whole Amount on, the Notes which shall have become due
and payable by reason of such declaration under Section 9.2(a)(i)(B))
shall have been duly paid; and
(c) each and every other Default and Event of Default shall have
been waived pursuant to Section 12.5 or otherwise made good or cured;
and provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
10. INTERPRETATION OF THIS AGREEMENT
10.1 Terms Defined.
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section following such term:
Affiliate -- means, at any time, a Person (other than a Wholly-Owned
Subsidiary)
(a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Company,
(b) that beneficially owns or holds ten percent (10%) or more of the
Voting Equity Interest of the Company,
(c) ten percent (10%) or more of the Voting Equity Interest (or in
the case of a Person which is not a corporation, ten percent (10%) or more
of the equity interest) of which is beneficially owned or held by the
Company or a Subsidiary, or
(d) who is an officer or member of the Board of Directors, or their
equivalent, of the Company,
at such time. As used in this definition,
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.
Aggregate Debit Items -- means "aggregate debit items" as computed in
accordance with Exhibit A to 17 C.F.R. ss.240.15c3-3 as amended from time to
time, and any successor rule or regulation of the SEC regulating the same
subject matter.
Aggregate Indebtedness -- means "aggregate indebtedness" as defined by
Rule 15c3-1.
Agreement, this -- means this agreement, as it may be amended and restated
from time to time.
32
Allowed Intermediary -- Section 5.5(c).
Asset Disposition -- means any Transfer except:
(a) any
(i) Transfer from a Restricted Subsidiary to the Company or a
Wholly-Owned Subsidiary; or
(ii) Transfer from the Company to a Wholly-Owned Subsidiary,
so long as immediately before and immediately after the consummation of
any such Transfer and after giving effect thereto, no Default or Event of
Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only property that is either inventory held for sale or
equipment, fixtures, supplies or materials no longer required in the
operation of the business of the Company or any of its Subsidiaries or
that is obsolete.
As used in this definition,
Transfer -- means, with respect to any Person, any transaction in
which such Person sells, conveys, transfers or leases (as lessor) any of
its Property, including, without limitation, Restricted Subsidiary Stock.
Business Day -- means, at any time, a day other than a Saturday, a Sunday,
or a day on which the bank designated (by the holder of such Note) to receive
(for such holder's account) payments on such Note is required by law (other than
a general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.
Board of Directors -- at any time means the board of directors of the
Company or any committee thereof which, in the instance, shall have the lawful
power to exercise the power and authority of such board of directors.
Broker-Dealer -- Section 5.5(b)(i)(B).
Capital Lease -- means, at any time, a lease with respect to which the
lessee is required to recognize the acquisition of an asset and the incurrence
of a liability at such time in accordance with GAAP.
CapTrust -- means CapTrust Financial Advisors, LLC, a North Carolina
Limited Liability Company and its successors and assigns.
CEA -- means the Commodity Exchange Act, together with all rules and
regulations promulgated pursuant thereto, as amended from time to time.
CFTC -- means the Commodity Futures Trading Commission and any successor
organization discharging the regulatory functions of the Commodity Futures
Trading Commission.
33
Change in Control -- means the occurrence of either of the following
events:
(a) the acquisition (whether directly or indirectly, and whether
effected by purchase, merger, consolidation, or otherwise, and regardless
of whether such transaction complies with Section 7.5(a)) of beneficial
ownership of common stock of the Company by a 13d Person if, after giving
effect to such acquisition, such 13d Person holds more than thirty percent
(30%) of any class of common stock of the Company outstanding at such
time; or
(b) for a period of thirty (30) consecutive days, beneficial
ownership of eighty percent (80%) or more of any class of common stock of
the Company is held by Persons other than Acceptable Persons.
As used in this definition,
13d Person -- means any person (as such term is used in section
13(d)(3) and section 14(d)(2) of the Securities Exchange Act as in effect
on the First Closing Date), or related persons constituting a group (as
such terms are used in rule 13d-5 under the Securities Exchange Act as in
effect on the First Closing Date), if such person, or any one or more
members of such group, was not an Acceptable Person at such time.
Acceptable Person -- means, at any time, a natural person who is at such
time, and has been during the then ended period of two-hundred seventy (270)
days, engaged in full-time employment by the Company or a Subsidiary (which has
been a Subsidiary during such period) on a continuous basis or any employee
stock ownership plan sponsored by the Company, or a member of the Family, or a
Family Trust, of such natural person.
Family -- means, with respect to any natural person, the heirs,
legatees, descendants and blood relatives to the third degree of
consanguinity of such natural person.
Family Trusts -- means, with respect to any natural person, any
trusts for the exclusive benefit of such natural person and the spouse and
lineal descendants of such natural person.
Change in Control Date -- means, at any time in respect of a Change in
Control, if prior to such Change in Control, the date upon which the Company
reasonably believes such Change in Control will occur, and if such Change in
Control has occurred, the date on which such Change in Control occurred.
Change in Control Notice Event -- the execution of any definitive written
agreement which, when fully performed by the parties thereto, would result in a
Change in Control, provided that the existence of customary closing conditions
shall not render an otherwise definitive written agreement non-definitive.
Change in Control Payment Date -- Section 4.6(b).
Company -- has the meaning specified in the introductory sentence hereof.
Competitor -- Section 5.5(b).
34
Consolidated Assets -- means, at any time, the aggregate amount of assets
of the Company and the Restricted Subsidiaries, determined on a consolidated
basis at such time.
Consolidated Funded Debt -- means, at any time, an amount equal to the
amount of Funded Debt of the Company and the Restricted Subsidiaries, determined
on a consolidated basis at such time, provided that during the five (5) Business
Day period starting on the First Closing Date, the Convertible Debt shall not be
included in the determination of Consolidated Funded Debt.
Consolidated Net Earnings -- means, with respect to any period, an amount
equal to the amount of net earnings of the Company and the Restricted
Subsidiaries for such period, determined on a consolidated basis (after giving
effect to, without limitation, income taxes, income or loss from discontinued
operations and income or loss from extraordinary items) but excluding, to the
extent included in the determination of such Consolidated Net Earnings, without
duplication:
(a) the earnings of any Restricted Subsidiary accrued prior to the
date it became a Restricted Subsidiary;
(b) the earnings of any Person, substantially all the assets of
which have been acquired in any manner by the Company or a Restricted
Subsidiary, realized by such other Person prior to the date of such
acquisition;
(c) the net earnings of any Person (other than a Subsidiary) in
which the Company or any Restricted Subsidiary shall have an ownership
interest unless such net earnings shall have actually been received by the
Company or such Restricted Subsidiary in the form of cash distributions;
(d) any portion of the net earnings of any Subsidiary which is not a
Restricted Subsidiary that for any reason is unavailable for payment of
dividends to the Company or any Restricted Subsidiary;
(e) the earnings of any Person to which assets of the Company shall
have been sold, transferred or disposed of, or into which the Company
shall have merged, prior to the date of such transaction;and
(f) any portion of the net earnings of the Company or any Restricted
Subsidiary that cannot be freely converted into United States dollars.
Consolidated Priority Debt -- means, at any time, without duplication, the
sum of Consolidated Subsidiary Funded Debt plus Consolidated Secured
Indebtedness (excluding the Notes), minus the Voluntary Deferred Compensation
Obligation, determined at such time. As used in this definition,
Consolidated Secured Indebtedness -- means, at any time, an amount
equal to the amount of Funded Debt secured by a Lien on the Property of
the Company or any Restricted Subsidiary, determined on a consolidated
basis at such time.
Consolidated Subsidiary Funded Debt -- means, at any time, an amount
equal to the amount of Funded Debt of the Restricted Subsidiaries,
determined on a combined basis at such time and excluding Funded Debt
owing to the Company.
35
Voluntary Deferred Compensation Amount -- means, at any time, an
amount equal to the lesser of
(a) Two Million Four Hundred Thousand Dollars ($2,400,000) or
(b) the amount of the obligations of the Company and the
Restricted Subsidiaries in respect of each of their voluntary
deferred compensation plans to the extent that such obligations
constitute Consolidated Funded Debt determined at such time.
Consolidated Tangible Net Worth -- means, at any time,
(a) Consolidated Net Worth minus
(b) (i) Consolidated Intangible Assets plus
(ii) the Excess CapTrust Investment, plus
(iii) the Excess Equity Method Amount,
determined at such time. As used in this definition,
Consolidated Net Worth -- means, at any time, an amount equal to
shareholders' equity of the Company and the Restricted Subsidiaries,
determined on a consolidated basis at such time.
Consolidated Intangible Assets -- means, at any time, the aggregate
amount of good will, trademarks, trade names, service marks, brand-names,
copyrights, patents and unamortized debt discount and expense,
organizational expenses, the excess of the equity in any Subsidiary over
the cost of the investment in such Subsidiary and all other Property which
would be considered to be intangible under GAAP of the Company and the
Restricted Subsidiaries, determined on a consolidated basis at such time.
Excess CapTrust Investment -- means, at any time, the aggregate
amount of the Investment of the Company and the Restricted Subsidiaries in
CapTrust in excess of Five Million Dollars ($5,000,000). The Investment of
the Company and the Restricted Subsidiaries in CapTrust shall be valued at
cost less any dividends or distributions paid in cash in respect thereof
to the Company or the Restricted Subsidiaries other than IJL Holdings.
Excess Equity Method Amount -- means, at any time, the greater of
(a) Zero Dollars ($0), or
(b) (i) the amount of the investment in all Persons accounted
for by the equity method as shown in the consolidated balance
sheet of the Company and the Restricted Subsidiaries, minus
(ii) the cost of such investments to the Company and the
Restricted Subsidiaries
36
determined at such time.
Convertible Debt -- means the Company's 7 3/4% Subordinated Convertible
Debentures due March 11, 2011.
Default -- means an event or condition the occurrence of which would, with
the lapse of time or the giving of notice or both, become an Event of Default.
Disposition Value -- means, at any time, with respect to any Property
(a) in the case of Property that does not constitute Restricted
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by the Company, and
(b) in the case of Property that constitutes Restricted Subsidiary
Stock, an amount equal to that percentage of book value of the assets of
the Subsidiary that issued such stock as is equal to the percentage that
the book value of such Restricted Subsidiary Stock represents of the book
value of all of the outstanding capital stock of such Subsidiary
determined at the time of the disposition thereof, in good faith by the
Company.
DSRO -- means the designated self-regulatory organization of the Company
pursuant to a plan filed with the CFTC pursuant to section 1.52 of the
regulations of the CFTC (17 C.F.R. ss.1.52).
Environmental Protection Law -- means any law, statute or regulation
enacted by any Governmental Authority in connection with or relating to the
protection or regulation of the environment, including, without limitation,
those laws, statutes and regulations regulating the disposal, removal,
production, storing, refining, handling, transferring, processing or
transporting of hazardous or toxic substances, and any orders, decrees or
judgments issued by any court of competent jurisdiction in connection with any
of the foregoing.
ERISA -- means the Employee Retirement Income Security Act of 1974,
together with all rules and regulations promulgated pursuant thereto, as amended
from time to time.
ERISA Affiliate -- means any corporation or trade or business that
(i) is a member of the same controlled group of corporations (within
the meaning of section 414(b) of the IRC) as the Company, or
(ii) is under common control (within the meaning of section 414(c)
of the IRC) with the Company.
Event of Default -- Section 9.1.
Examining Authority -- has the meaning assigned to it by Rule 15c3-1.
Excess Net Capital -- means, at any time, the lesser of
(a) NYSE Net Capital minus NYSE Required Net Capital, or
(b) SEC Net Capital minus SEC Required Net Capital,
37
at such time.
Fair Market Value -- means, at any time with respect to any Property, the
sale value of such Property that would be realized in an arm's-length sale at
such time between an informed and willing buyer, and an informed and willing
seller, under no compulsion to buy or sell, respectively.
Financing Documents -- means this Agreement, the Notes, the Pledge
Agreement, the Subsidiary Guarantees, and each document, instrument or agreement
executed by or enforceable against any one or more of the Company and the
Subsidiaries in connection with any of such agreements, notes and instruments,
as each may be amended from time to time.
First Closing -- Section 1.2(b).
First Closing Date -- Section 1.2(b).
FOCUS Report -- means a Financial and Operational Combined Uniform Single
Report of IJLC required to be filed on a monthly or quarterly basis, as the case
may be, with the SEC or the NYSE, or, if IJLC is registered as a futures
commission merchant, with the CFTC, or any report that is required in lieu of
such report.
Funded Debt -- means, with respect to any Person, without duplication,
(a) all Indebtedness of such Person excluding Short-Term Ordinary
Course Debt of such Person and Subordinated Debt of such Person, and
(b) all Sale-Leaseback Obligations of such Person.
GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States.
Governmental Authority -- means
(a) the government of
(i) the United States of America and any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
Guaranty -- means with respect to any Person (for the purposes of this
definition, the "Guarantor") any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection)
of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person (the "Primary Obligor") in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by the Guarantor:
38
(a) to purchase such indebtedness or obligation or any Property or
assets constituting security therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such indebtedness or
obligation, or
(ii) to maintain working capital or other balance sheet
condition or any income statement condition of the Primary Obligor
or otherwise to advance or make available funds for the purchase or
payment of such indebtedness or obligation;
(c) to lease Property or to purchase Securities or other Property or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of the Primary Obligor to make
payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the indebtedness or obligation
of the Primary Obligor against loss in respect thereof.
For purposes of computing the amount of any Guaranty, in connection with any
computation of indebtedness or other liability, it shall be assumed that the
indebtedness or other liabilities that are the subject of such Guaranty are
direct obligations of the issuer of such Guaranty.
IJL Holdings -- means IJL Holdings, Inc., a North Carolina corporation,
and its successors and assigns.
IJL Financial -- means IJL Financial, Inc., a North Carolina corporation,
and its successors and assigns.
IJLC -- means Interstate/▇▇▇▇▇▇▇ ▇▇▇▇ Corporation., a North Carolina
corporation, and its successors and assigns.
Indebtedness -- with respect to any Person means, at any time, without
duplication:
(a) its liabilities for borrowed money (whether or not evidenced by
a Security) and the book value of mandatorily redeemable preferred stock;
(b) any liabilities for borrowed money secured by any Lien existing
on Property owned by such Person (whether or not such liabilities have
been assumed) provided that in the case of non-recourse liabilities, the
amount of such liability shall equal the Fair Market Value of the Property
securing such liability;
(c) any obligations in respect of any Capital Lease of such Person;
39
(d) the present value of all payments due under any arrangement for
retention of title or any conditional sale agreement (other than a Capital
Lease) discounted at the implicit rate, if known, with respect thereto or,
if unknown, at 8% per annum;
(e) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such property); and
(f) any Guaranty of such Person of any obligation or liability of
another Person.
Notwithstanding the foregoing, an amount equal to the lesser of Three Million
Four Hundred Thousand Dollars ($3,400,000) or the amount of the JLSS Deferred
Compensation Obligation shall not be Indebtedness. As used in this definition,
JLSS Deferred Compensation Obligation -- means obligations of one or more
of the Company and IJLC incurred in connection with the acquisition by the
Company of JLSS in the nature of deferred compensation obligations owing to
certain present and/or former employees of JLSS.
Indenture -- Section A.21(a).
Intercompany Debt Documents -- Section A.20(b).
Intercompany Loan Agreement -- Section A.20(b).
Intercompany Note -- Section A.20(b).
Interstate Group -- means that certain unincorporated business segment of
IJLC that offers securities trade execution services and provides independent
research to institutional investors nationwide.
Investments -- has the meaning specified in the definition of "Restricted
Investment" in this Section 10.1.
IRC -- means the Internal Revenue Code of 1986, together with all rules
and regulations promulgated pursuant thereto, as amended from time to time.
IRS -- means the Internal Revenue Service and any successor agency.
JLSS -- means The Johnson, Lane, Space, ▇▇▇▇▇ Corporation, a Georgia
corporation.
Lien -- means any interest in Property securing an obligation owed to, or
a claim asserted by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes, and the filing of any financing statement under the
Uniform Commercial Code of any jurisdiction, or an agreement to give in the
future any of the foregoing. The term "Lien" includes reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances with respect to real property
and includes, with respect to stock, stockholder agreements, voting trust
agreements, buy-back agreements and all similar arrangements. For the purposes
hereof, the Company and each Subsidiary is deemed to be the owner of any
Property that it shall have acquired or holds subject to a conditional sale
agreement, Capital Lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes, and such retention or vesting is deemed a Lien. The term "Lien" does
not include negative pledge clauses in agreements relating to the borrowing of
money.
40
Make-Whole Amount -- means, with respect to any date (the "Payment Date")
and any principal amount of Notes required for any reason to be paid prior to
the regularly scheduled maturity thereof on such Payment Date,
(a) if the Reinvestment Rate determined in respect of such principal
amount and such Payment Date equals or exceeds nine and seven-tenths
percent (9.7%), then Zero Dollars ($0), or
(b) if the Reinvestment Rate determined in respect of such principal
amount and such Payment Date is less than nine and seven-tenths percent
(9.7%), then an amount equal to the remainder of
(i) the sum of the present values of the then remaining
scheduled payments of principal and interest (minus, in the case of
the first of such interest payments, the amount of interest accrued
on such principal amount since the scheduled interest payment date
immediately preceding such Payment Date) that would be payable in
respect of such principal amount but for such prepayment, minus
(ii) such principal amount.
In determining such present values, a discount rate equal to the Reinvestment
Rate divided by two (2), and a semi-annual discount period comprised of six (6)
months of thirty (30) days each, shall be used. As used in this definition:
Reinvestment Rate -- means, with respect to any Payment Date and any
principal amount of Notes required for any reason to be paid prior to the
regularly scheduled maturity thereof on such Payment Date, the sum of
(a) one and fifty one-hundredths percent (1.50%), plus
(b) (i) the per annum yield reported on the Bloomberg
Financial Markets System (page USD) (or, if not available, any
other nationally recognized trading screen reporting on-line
intraday trading in United States government Securities) at
10:00 a.m. (New York time) on the second (2nd) Business Day
preceding such Payment Date for United States government
Securities having a maturity (rounded to the nearest month)
corresponding to the Weighted Average Life to Maturity of the
principal of the Notes being so prepaid, or in the event that
no such nationally recognized trading screen reporting on-line
trading in United States government Securities is available,
(ii) the arithmetic mean of the yields under the
respective headings "This Week" and "Last Week" published in
the Statistical Release under the caption "Treasury Constant
Maturities" for the maturity (rounded to the nearest month)
corresponding to the Weighted Average Life to Maturity of the
principal of the Notes being so prepaid; for the purposes of
calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the second (2nd) Business Day
preceding the Payment Date shall be used.
41
For purposes of clause (b) of the preceding sentence, if no maturity
determined in accordance therewith exactly corresponds to the Weighted
Average Life to Maturity of the principal amount of the Notes being so
prepaid, the yields for the two (2) maturities most closely corresponding
to such Weighted Average Life to Maturity (one (1) with a longer maturity
and one (1) with a shorter maturity, if available) shall be calculated
pursuant to the immediately preceding clause (b) and the Reinvestment Rate
shall be interpolated or extrapolated from such yields on a straight-line
basis.
Remaining Dollar-Years -- means, with respect to any date and any
principal amount of indebtedness being paid prior to the regularly
scheduled maturity thereof for any reason on such date, the result
obtained by
(a) multiplying, in the case of each required payment of
principal (including payment at maturity) that would be payable in
respect of such principal amount being so prepaid but for such
prepayment,
(i) an amount equal to such required payment of
principal, by
(ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between the date of such
prepayment and the date such required principal payment would
be due if such prepayment had not occurred, and
(b) calculating the sum, with respect to each of such required
payments of principal, of each of the products obtained in the
preceding subsection (a).
Statistical Release -- means, at any time, the then most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve System and
which establishes yields on actively traded U.S. government Securities
adjusted to constant maturities or, if such statistical release is not
published at the time of any determination hereunder, then such other
reasonably comparable index which shall be so designated by the Required
Holders.
Weighted Average Life to Maturity -- means, with respect to any date
and any principal amount of indebtedness being paid on such date, the
number of years obtained by dividing the Remaining Dollar-Years of such
principal amount, determined on such date, by such principal amount.
Margin Security -- means "margin security" within the meaning of
Regulation G, Regulation T, and Regulation X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II, as amended from time to time.
Material Adverse Effect -- means a material adverse effect on
42
(a) the business operations, financial condition, Properties or
business prospects of the Company and the Restricted Subsidiaries, in the
aggregate,
(b) the ability of the Company and the Restricted Subsidiaries to
perform their respective obligations set forth in the Financing Documents,
or
(c) the validity or enforceability of any of the Financing
Documents.
Merger Transaction -- Section 7.5(a).
Multiemployer Plan -- means any multiemployer plan (as defined in section
3(37) of ERISA) in respect of which the Company or any ERISA Affiliate is an
"employer" (as such term is defined in section 3 of ERISA).
Multiple Employer Pension Plan -- means any employee benefit plan within
the meaning of section 3(3) of ERISA (other than a Multiemployer Plan), subject
to Title IV of ERISA, to which the Company or any ERISA Affiliate and an
employer (as such term is defined in section 3 of ERISA) other than an ERISA
Affiliate or the Company contribute.
NASD -- means the National Association of Securities Dealers, Inc., and
any successor organization discharging the regulatory functions of the National
Association of Securities Dealers, Inc.
Net Capital -- means "net capital," as defined by Rule 15c3-1.
Notes -- Section 1.1.
NYSE -- means the New York Stock Exchange, Inc., or if IJLC is terminated
as a member of the NYSE, then "NYSE" shall mean the Examining Authority at such
time.
NYSE Net Capital -- means, at any time, the "net capital" of IJLC at such
time, computed in accordance with Rule 325 of the NYSE, or any later enacted
rule of the NYSE that supersedes such Rule 325.
NYSE Required Net Capital -- means, at any time, the minimum amount to
which NYSE Net Capital must be equal at such time in order to permit IJLC to
"expand its business" as defined by and pursuant to Rule 326(a) of the NYSE, or
any later enacted rule of the NYSE that supersedes such Rule 326(a).
PBGC -- means the Pension Benefit Guaranty Corporation and any successor
corporation or governmental agency.
Pension Plan -- means, at any time, any "employee pension benefit plan"
(as such term is defined in section 3 of ERISA) maintained at such time by the
Company or any ERISA Affiliate for employees of the Company or such ERISA
Affiliate, excluding any Multiemployer Plan, but including, without limitation,
any Multiple Employer Pension Plan.
Person -- means an individual, partnership, corporation, limited liability
company, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
43
Pledge Agreement -- Section A.21(b).
Pledge Letter Agreement -- Section A.16(a).
Property -- means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
Purchaser -- means a Person listed as a purchaser of Notes on Annex 1
hereto.
Required Holders -- means, at any time, the holders of more than fifty
percent (50%) in principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by any one or more of the Company, any
Subsidiary, any Affiliate, and any officer, director or partner of any thereof).
Restricted Investments -- means at any time all Investments, made in cash
or by delivery of Property, by any one or more of the Company and the
Subsidiaries (x) in any Person, whether by acquisition of stock, indebtedness or
other obligation or Security, or by loan, Guaranty, advance or capital
contribution, or otherwise, or (y) in any Property (items (x) and (y) herein
called "Investments"), except the following:
(a) Investments in any other Person which is a Restricted
Subsidiary, or concurrently with such investment becomes a Restricted
Subsidiary;
(b) real property, office equipment and leasehold improvements used
in the ordinary course of business of the Company and the Restricted
Subsidiaries and not held for investment or sale;
(c) clearing and other deposits, and receivables from
brokers-dealers and customers, in each case arising in the ordinary course
of business of the Company and the Restricted Subsidiaries;
(d) securities held for sale or investment in the ordinary course of
business of the Company and the Restricted Subsidiaries;
(e) Repurchase Agreements of IJLC entered into in the ordinary
course of business;
(f) securities purchased pursuant to the requirements of federal and
state regulations applicable to the Company's and the Restricted
Subsidiaries' businesses as broker-dealers and futures commission
merchants;
(g) memberships in stock exchanges and commodity exchanges; and
(h) loans provided to brokers or other professional employees as an
inducement to employment, provided that
(i) no such loan at any time has a remaining term in excess of
five (5) years, and
(ii) the aggregate outstanding amount of all such loans does
not at any time exceed Five Million Dollars ($5,000,000).
44
Investments shall be valued at cost less any net return of capital through the
sale or liquidation thereof or other return of capital thereon. As used in this
definition,
Credit Qualified Customer -- means individuals and
institutions whose financial condition satisfies IJLC internal lending
standards and guidelines, consistent with its historical practices, in
connection with repurchase agreements with individuals and institutions,
provided that such individuals shall in addition be individuals with whom
IJLC may enter into a repurchase agreement without maintaining a margin
pursuant to Rule 15c3-1(c)(2)(xii)/01, and.
Repurchase Agreement -- means any written agreement of IJLC
(a) that provides for
(i) the transfer of one or more fixed-income Securities
by Credit Qualified Customer (each a "Transferor") against a
transfer of funds (the "Transfer Price") by IJLC to such
Transferor, and
(ii) a simultaneous agreement by IJLC in connection with
such transfer of funds, to transfer to such Transferor the
same or substantially similar fixed-income Securities for a
price not less than the Transfer Price plus a reasonable
return thereon within ninety (90) days,
(b) in respect of which IJLC shall have the right, whether by
contract or pursuant to applicable law, to liquidate such repurchase
agreement upon the occurrence of any default thereunder, and
(c) in connection with which IJLC, shall take physical
possession of the fixed-income Securities so transferred to IJLC,
or, in the case of any uncertificated fixed-income Securities so
transferred, shall have taken all action required by applicable law
or regulations to perfect its Lien therein,
provided that at no time will the aggregate amount of the Transfer Prices
of Repurchase Agreements outstanding with any one Credit Qualified
Customer exceed the net worth of such customer.
Restricted Payment -- means, with respect to any Person
(a) any dividend or other distribution, direct or indirect, on
account of any shares of capital stock, or membership interest, of such
Person now or hereafter outstanding, whether in cash or Property, except a
dividend payable solely in shares of stock of any such Person that is a
corporation;
(b) any redemption, retirement, purchase or other acquisition,
direct or indirect, of any shares of stock of any such Person now or
hereafter outstanding, or of any warrants, rights, or options to acquire
any shares of such stock, provided, that
(i) the repurchase or redemption of common stock of the
Company at a cost to the Company of up to Nine Million Dollars
($9,000,000), plus
45
(ii) the repurchase of a number of shares of common stock up
to the number of shares of common stock issued in connection with
the calling of the Convertible Debt, in addition to the repurchases
and redemptions made pursuant to the immediately preceding clause
(i),
if effected within one hundred eighty (180) days after the First Closing,
shall not be a Restricted Payment; and
(c) any payment of principal of Subordinated Debt other than
payments of principal of the Convertible Debt.
Restricted Subsidiary -- means any Subsidiary except
(a) JLSS and those Persons that qualify as subsidiaries of JLSS in
accordance with GAAP as of the First Closing Date and that are listed on
Part 10.1 of Annex 3, and
(b) ISC Realty Corporation, a North Carolina corporation,
provided that no limited partnership or limited liability company shall be a
Restricted Subsidiary unless such Person qualifies as a consolidated subsidiary
of the Company in accordance with GAAP.
Restricted Subsidiary Stock -- Section 7.5(c).
Rule 15c3-1 -- means 17 C.F.R. ss.240.15c3-1 as amended from time to time,
and any successor rule or regulation of the SEC regulating the same subject
matter.
Sale-Leaseback Obligation -- means the amount of the obligation that would
be recognized in connection with any Sale-Leaseback Transaction as a liability
on the books of the lessee assuming, for purposes of calculation, that such
transaction met the requirements of GAAP for the recognition and capitalization
of such liability.
Sale-Leaseback Transaction -- means any transaction or series of related
transactions in which the Company or a Subsidiary sells or transfers, or has
sold or transferred, any of its Property to any Person (other than to the
Company or to a Subsidiary) and concurrently with such sale or transfer, or
within one hundred twenty (120) days of such sale or transfer, rents or leases
such transferred Property or substantially similar Property from any Person
pursuant to one or more leases.
Scheduled Principal Payment -- Section 4.2.
Scheduled Principal Payment Amount -- Section 4.2.
SEC -- means the Securities and Exchange Commission and any successor
organization discharging the regulatory functions of the Securities and Exchange
Commission.
SEC Net Capital -- means, at any time, the "net capital" of IJLC at such
time, computed in accordance with Rule 15c3-1.
46
SEC Required Net Capital -- means, at any time, the minimum amount to
which SEC Net Capital must be equal at such time pursuant to Rule 15c3-1 to
remain in compliance with all provisions thereof applicable to IJLC, including
the provisions thereof imposing restrictions on IJLC obligation to pay its
obligations under the Subsidiary Guarantee as such obligations come due.
Second Closing -- Section 1.3(a)(i).
Second Closing Date -- Section 1.2(b).
Securities Act -- means the Securities Act of 1933, together with all
rules and regulations promulgated pursuant thereto, as amended from time to
time.
Securities Exchange Act -- means the Securities Exchange Act of 1934,
together with all rules and regulations promulgated pursuant thereto, as amended
from time to time.
Security -- means "security" as defined by section 2(1) of the Securities
Act.
Senior Officer -- means any one of the president, the chief executive
officer, the chief operating officer and the chief financial officer of the
Company.
Short-Term Ordinary Course Debt -- means on any date, Indebtedness
incurred by the Company or any Subsidiary in respect of free credit balances and
similar payables, day loans, Street Loans, Secured Letters of Credit, Clearing
House Letters of Credit, Tax Credit Letters of Credit, unsecured letters of
credit, lines of credit payable on demand, and other obligations to and for
customers, brokers, banks and others incurred in the ordinary course of business
of the Company (or the business of any Subsidiary the obligations of which have
been guaranteed by the Company as provided in Appendix C to Rule 15c3-1) as an
investment banker, futures commission merchant, broker-dealer or financial
services institution, and which obligations mature not more than thirty (30)
days from such date (except that Short-Term Ordinary Course Debt shall include
commercial paper which matures not more than sixty (60) days from such date). As
used in this definition,
Secured Letters of Credit -- means, on any date, a letter of credit
in respect of which IJLC is the account party, and which is fully
collateralized by Securities owned by IJLC and which expires not more than
thirty (30) days after such date.
Clearing House Letters of Credit -- means, on any date, letters of
credit deposited with any one or more of exchanges, depositories and
clearing corporations in the ordinary course of business of IJLC in
respect of securities clearing transactions, provided that each such
letter of credit shall expire not more than three hundred sixty-six (366)
days after such date.
Tax Credit Letters of Credit -- means, on any date, letters of
credit obtained in respect of interim financing associated with investment
banking deals involving real estate tax credits, provided that the
aggregate face amount of such letters of credit shall not at any time
exceed Two Million Dollars ($2,000,000) and provided further that each
such letter of credit shall expire not more than three hundred sixty-six
(366) days after such date.
Street Loans -- means short-term borrowings made by IJLC for the
purposes of purchasing or carrying Securities for IJLC or for customers of
IJLC, including, without limitation, repurchase and reverse repurchase
agreements.
47
Significant Holder -- means, at any time, any holder of Notes which
holds, in the aggregate, at least five percent (5%) of the principal
amount of the Notes then outstanding.
SIPA -- means Securities Investor Protection Act of 1970, together
with all rules and regulations promulgated pursuant thereto, as amended
from time to time.
SIPC -- means the Securities Investor Protection Corporation and any
successor organization discharging the functions of the Securities
Investor Protection Corporation.
Sovereign Capital Management -- means Sovereign Capital Management,
Inc., a North Carolina corporation.
Subordinated Debt -- means
(a) any obligation for money borrowed of the Company that is
subordinated in right of payment and right of priority to the Notes, and
(b) any obligation for money borrowed of any Restricted Subsidiary
that is subordinated in right of payment and right of priority to the
Subsidiary Guarantees.
Subsidiary -- means, at any time, a corporation, general partnership,
limited partnership, limited liability company or other business entity, of
which the Company owns, directly or indirectly, more than fifty percent (50%) of
each class of Voting Equity Interest provided that no limited partnership or
limited liability company shall be a Subsidiary unless such Person qualifies as
a consolidated subsidiary of the Company in accordance with GAAP.
Subsidiary Guarantee -- Section A.20(a).
Substantial Part of the Property of the Interstate Group -- means, when
used with respect to Property of the Interstate Group that has been the subject
of an Asset Disposition, Property
(a) the Disposition Value of which together with the Disposition
Value of all other Property of the Interstate Group subject to an Asset
Disposition on or after the First Closing Date, would equal or exceed ten
percent (10%) of Consolidated Assets, determined as of the end of the then
most recently completed fiscal year of the Company, and
(b) that, when aggregated with all other Property of the Interstate
Group subject to an Asset Disposition on or after the First Closing Date,
contributed at least ten percent (10%) of Consolidated Net Earnings
determined in respect of the period commencing on the First Closing Date
and ending on the date of the last of such Asset Dispositions (the
determination of such contribution to be based on the aggregation of the
respective percentage contribution of each item of such Property to
Consolidated Net Earnings during such period).
Surviving Person -- Section 7.5(a)(i)(A).
Total Capitalization -- means, at any time, without duplication, the
aggregate amount of Consolidated Funded Debt, Consolidated Subordinated Debt and
Consolidated Tangible Net Worth Capital, determined at such time. As used in
this definition,
48
Consolidated Subordinated Debt -- means, at any time, the aggregate
amount of Subordinated Debt, determined on a consolidated basis at such
time.
Total Debt -- means, at any time, the aggregate amount of all Indebtedness
(other than Short-Term Ordinary Course Debt) plus Sale-Leaseback Obligations of
the Company and the Restricted Subsidiaries, determined on a consolidated basis
at such time.
Trustee -- has the meaning specified in the Indenture.
Voting Equity Interest -- means,
(a) in the case of a corporation, capital stock of any class or
classes of a corporation the holders of which are ordinarily, in the
absence of contingencies, entitled to elect corporate directors (or
Persons performing similar functions),
(b) in the case of a general partnership, a general partnership
interest,
(c) in the case of a limited partnership, any one or more of a
general partnership interest and a limited partnership interest,
(d) in the case of a limited liability company, a membership
interest, and
(e) in the case of any other business entity, any class of equity or
beneficial interest which
(i) ordinarily, in the absence of contingencies, is entitled
to elect a majority of Persons carrying out or supervising the
carrying out of the management of such business entity, or
(ii) grants to the holder thereof the right to carry out or
supervise the carrying out of the management of such business
entity.
Wholly-Owned Subsidiary -- means, at any time, a Restricted Subsidiary in
respect of which one hundred percent (100%) of each class of Voting Equity
Interest of such Subsidiary and one hundred percent (100%) of all other equity
interest of such Restricted Subsidiary is legally and beneficially owned by the
Company and any one or more other Wholly-Owned Subsidiaries.
49
10.2 Accounting Principles.
(a) Generally. Unless otherwise provided herein, all financial
statements delivered in connection herewith will be prepared in accordance
with GAAP as in effect on the date of, or during the period covered by,
such financial statements. Where the character or amount of any asset or
liability or item of income or expense, or any consolidation or other
accounting computation is required to be made for any purpose hereunder,
it shall be done in accordance with GAAP as in effect on the date of, or
at the end of the period covered by, the financial statements from which
such asset, liability, item of income, or item of expense, is derived, or,
in the case of any such computation, as in effect on the date as of which
such computation is required to be determined, provided, that if any term
defined herein includes or excludes amounts, items or concepts that would
not be included in or excluded from such term if such term was defined
with reference solely to GAAP, such term will be deemed to include or
exclude such amounts, items or concepts as set forth herein.
(b) Consolidation. Whenever accounting amounts of a group of Persons
are to be determined "on a consolidated basis" it shall mean that, as to
balance sheet amounts to be determined as of a specific time, the amount
that would appear on a consolidated balance sheet of such Persons prepared
as of such time, and as to income statement amounts to be determined for a
specific period, the amount that would appear on a consolidated income
statement of such Persons prepared in respect of such period, in each case
with all transactions among such Persons eliminated, and prepared in
accordance with GAAP except as otherwise required hereby.
10.3 Section Headings and Table of Contents and Construction.
(a) Section Headings and Table of Contents, etc. The titles of the
Sections and the Table of Contents appear as a matter of convenience only,
do not constitute a part hereof and shall not affect the construction
hereof. The words "herein," "hereof," "hereunder" and "hereto" refer to
this Agreement as a whole and not to any particular Section or other
subdivision.
(b) Construction. Each covenant contained herein shall be construed
(absent an express contrary provision herein) as being independent of each
other covenant contained herein, and compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
10.4 Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
11. PURCHASER REPRESENTATIONS
11.1 Purchase of Notes.
You represent that
50
(a) you are purchasing the Notes for investment for your own
account, for a separate account (as such term is used in Rule 144A, 17
C.F.R. ss.230.144A), for the account of another for which you have sole
investment discretion, or for a trust of which you are the trustee, and
(b) you are not purchasing the Notes with a view to or for sale in
connection with any distribution thereof within the meaning of the
Securities Act;
provided, that this representation shall not be deemed to prejudice your
right to
(i) sell or otherwise dispose of all or any part of the Notes in
compliance with the Securities Act or the rules and regulations
thereunder; and
(ii) have control over the disposition of all of your assets to the
fullest extent permitted or required by any applicable law.
11.2 ERISA.
You represent, with respect to the funds with which you are acquiring the
Notes, and solely for purpose of determining whether such purchase is a
"prohibited transaction" (as provided for in section 406 of ERISA or section
4975 of the IRC), that all of such funds are from or are attributable to one or
more of:
(a) General Account -- your "insurance company general account" as
defined in Department of Labor Prohibited Transaction Exemption 95-60 (60
FR 35925, July 12, 1995) and in respect thereof you represent that there
is no "employee benefit plan" (as defined in section 3(3) of ERISA and
section 4975(e)(1) of the IRC, treating as a single plan all plans
maintained by the same employer or employee organization or affiliate
thereof) with respect to which the amount of the general account reserves
and liabilities of all contracts held by or on behalf of such plan exceed
ten percent (10%) of the total reserves and liabilities of such general
account (exclusive of separate account liabilities) plus surplus, as set
forth in the NAIC Annual Statement filed with your state of domicile;
(b) Separate Account -- a "separate account" (as defined in section
3 of ERISA),
(i) 10% Pooled Separate Account -- in respect of which all
requirements for an exemption under Department of Labor Prohibited
Transaction Class Exemption 90-1 are met with respect to the use of
such funds to purchase the Notes,
(ii) Identified Plan Assets -- that is comprised of employee
benefit plans identified by you in writing and with respect to which
the Company hereby warrants and represents that, as of the Closing
Date, neither the Company nor any ERISA Affiliate is a "party in
interest" (as defined in section 3 of ERISA) or a "disqualified
person" (as defined in section 4975 of the IRC) with respect to any
plan so identified, or
(iii) Guaranteed Separate Account -- that is maintained solely
in connection with fixed contractual obligations of an insurance
company, under which any amounts payable, or credited, to any
employee benefit plan having an interest in such account and to any
participant or beneficiary of such plan (including an annuitant) are
not affected in any manner by the investment performance of the
separate account (as provided by 29 C.F.R. ss.2510.3-101(h)(1)
(iii));
51
(c) Qualified Professional Asset Manager -- an "investment fund"
managed by a "qualified professional asset manager" (as such terms are
defined in Part V of Department of Labor Prohibited Transaction Class
Exemption 84-14) with respect to which the requirements of such exemption
have been satisfied, provided that in making this representation, it is
assumed that the conditions set forth in Part I(a), Part I(d) and Part
I(e) of such Exemption have been satisfied;
(d) Excluded Plan -- an employee benefit plan that is excluded from
the provisions of section 406(a) of ERISA by virtue of section 4(b) of
ERISA; or
(e) Exempt Funds -- a separate investment account that is not
subject to ERISA and no funds of which come from assets of an "employee
benefit plan" or a "plan" or any other entity that is deemed to hold
assets of an "employee benefit plan" or a "plan," ("employee benefit plan"
is defined in section 3 of ERISA, and "plan" is defined in section
4975(e)(1) of the IRC).
12. MISCELLANEOUS
12.1 Communications.
(a) Method; Address. All communications hereunder or under the Notes
shall be in writing and shall be delivered either by nationwide overnight
courier or by facsimile transmission (confirmed by delivery by nationwide
overnight courier sent on the day of the sending of such facsimile
transmission). Communications to the Company shall be addressed as set
forth on Annex 2, or at such other address of which the Company shall have
notified each holder of Notes. Communications to the holders of the Notes
shall be addressed as set forth on Annex 1 by such holder, or at such
other address of which such holder shall have notified the Company (and
the Company shall record such address in the register for the registration
and transfer of Notes maintained pursuant to Section 5.1).
(b) When Given. Any communication addressed and delivered as herein
provided shall be deemed to be received when actually delivered to the
address of the addressee (whether or not delivery is accepted) or received
by the telecopy machine of the recipient. Any communication not so
addressed and delivered shall be ineffective.
12.2 Reproduction of Documents.
This Agreement and all documents of whatever nature relating hereto may be
reproduced by any holder of Notes or the Company by any reasonable means. 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 by such holder of Notes
or the Company in the regular course of business). Nothing in this Section 12.2
shall prohibit the Company or any holder of Notes from contesting the accuracy
or validity of any such reproduction.
52
12.3 Survival.
All warranties, representations, certifications and covenants made by the
Company herein or in any certificate or other instrument delivered by it or on
its behalf hereunder at or prior to the Second Closing shall be considered to
have been relied upon by you and shall survive the delivery to you of the Notes
regardless of any investigation made by the Purchaser. All statements in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to the terms hereof shall constitute warranties and representations by
the Company hereunder. All payment obligations of the Company hereunder
(including, without limitation, reimbursement obligations in respect of costs,
expenses and fees of or incurred by the holders of the Notes) shall survive the
payment of the Notes and the termination hereof.
12.4 Successors and Assigns.
This Agreement and the Notes shall inure to the benefit of and be binding
upon and enforceable by the Company and the holders, from time to time, of the
Notes, provided that the identity of the holders of the Notes shall be
determined solely by reference to the register for the registration and transfer
of Notes maintained pursuant to Section 5.1.
12.5 Amendment and Waiver.
(a) Requirements. This Agreement may be amended, and the observance
of any term hereof may be waived, with (and only with) the written consent
of the Company and the Required Holders (and, if required by applicable
law or regulation, the NYSE); provided that no such amendment or waiver of
any of the provisions of Section 1 through Section 3, inclusive, or any
defined term to the extent used therein, shall be effective as to any
holder of Notes unless consented to by such holder in writing; and
provided further that no such amendment or waiver shall, without the
written consent of the holders of all Notes (exclusive of Notes held by
the Company, any Subsidiary or any Affiliate) at the time outstanding,
(i) change the amount or time of any payment of principal or
Make-Whole Amount or the rate or time of payment of interest;
(ii) amend or waive the provisions of Section 9.1(a), Section
9.2 or Section 9.3 or amend or waive any defined term to the extent
used therein,
(iii) amend or waive the definition of "Required Holders," or
(iv) amend or waive this Section 12.5 or amend or waive any
defined term to the extent used herein.
(b) Solicitation of Noteholders.
(i) Solicitation. The Company shall not solicit, request or
negotiate for or with respect to any proposed waiver or amendment of
any of the provisions hereof or the Notes unless each holder of the
Notes (irrespective of the amount of Notes then owned by it) shall
be informed thereof by the Company with sufficient information to
enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver or consent
effected pursuant to the provisions of this Section 12.5 shall be
delivered by the Company to each holder of outstanding Notes
forthwith following the date on which the same shall have been
executed and delivered by all holders of outstanding Notes required
to consent or agree to such waiver or consent.
53
(ii) Payment. The Company shall not, directly or indirectly,
pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, or grant any
security, to any holder of Notes as consideration for, or as an
inducement to the entering into, by any holder of Notes of any
waiver or amendment of any of the terms and provisions hereof unless
such remuneration shall have been offered, or security shall have
been offered, on the same terms, ratably to the holders of all Notes
then outstanding.
(iii) Scope of Consent. Any consent made pursuant to this
Section 12.5 by a holder of Notes that has transferred or has agreed
to transfer its Notes to the Company, any Subsidiary or any
Affiliate and has provided or has agreed to provide such written
consent as a condition to such transfer shall be void and of no
force and effect except solely as to such holder, and any amendments
effected or waivers granted or to be effected or granted that would
not have been or would not be so effected or granted but for such
consent (and the consents of all other holders of Notes that were
acquired under the same or similar conditions) shall be void and of
no force and effect, retroactive to the date such amendment or
waiver initially took or takes effect, except solely as to such
holder or holders.
(c) Binding Effect. Except as provided in Section 12.5(b), any
amendment or waiver consented to as provided in this Section 12.5 shall
apply equally to all holders of Notes and shall be binding upon them and
upon each future holder of any Note and upon the Company whether or not
such Note shall have been marked to indicate such amendment or waiver. No
such amendment or waiver shall extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon.
54
12.6 Consent to Jurisdiction.
(a) Consent to Jurisdiction. THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE FINANCING DOCUMENTS OR ANY ACTION OR PROCEEDING TO
EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER
THE FINANCING DOCUMENTS BROUGHT BY ANY HOLDER OF A NOTE AGAINST THE
COMPANY OR ANY OF ITS PROPERTY, MAY BE BROUGHT BY SUCH HOLDER OF A NOTE IN
ANY FEDERAL DISTRICT COURT LOCATED IN NEW YORK CITY, NEW YORK OR ANY NEW
YORK STATE COURT SITTING IN NEW YORK CITY, NEW YORK, AS SUCH HOLDER OF A
NOTE MAY IN ITS SOLE DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE COMPANY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO
THE NON-EXCLUSIVE IN PERSONAM JURISDICTION OF EACH SUCH COURT, AND THE
COMPANY IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT IN ANY PROCEEDING
BEFORE ANY TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY
CLAIM THAT IT IS NOT SUBJECT TO THE IN PERSONAM JURISDICTION OF ANY SUCH
COURT. IN ADDITION, THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THE FINANCING DOCUMENTS BROUGHT IN ANY SUCH COURT, AND HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OR RIGHT OF
ANY HOLDER OF A NOTE TO OBTAIN JURISDICTION OVER THE COMPANY IN SUCH OTHER
JURISDICTION AS MAY BE PERMITTED BY APPLICABLE LAW.
(b) Service of Process. THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT PROCESS SERVED EITHER PERSONALLY OR BY
REGISTERED MAIL SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE
SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THE FINANCING DOCUMENTS OR ANY ACTION OR PROCEEDING TO EXECUTE
OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER THE
FINANCING DOCUMENTS BROUGHT BY ANY HOLDER OF A NOTE AGAINST THE COMPANY OR
ANY OF ITS PROPERTY. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY
PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES
POSTAL SERVICE OR ANY COMMERCIAL DELIVERY SERVICE. NOTHING HEREIN SHALL IN
ANY WAY BE DEEMED TO LIMIT THE ABILITY OR RIGHT OF ANY HOLDER OF A NOTE TO
SERVE ANY WRITS, PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY
APPLICABLE LAW.
55
12.7 Expenses.
(a) Closing Expenses. Whether or not the Notes are sold, the Company
shall pay, at the First Closing and the Second Closing (if the Notes are
sold, and otherwise upon receipt of any statement or invoice therefor),
all reasonable fees, expenses and costs relating thereto incurred by you
relating hereto, including, without limitation, the statement presented at
the First Closing and the Second Closing by your special counsel for fees
and disbursements incurred in connection herewith, each additional
statement for fees and disbursements (promptly upon receipt thereof) of
your special counsel rendered after the First Closing and the Second
Closing in connection with the issuance of the Notes, and all expenses
incurred by you on your behalf or the Company's behalf in complying with
each of the conditions to closing set forth in Section 3.
(b) Amendments and Waivers. The Company shall pay when billed the
reasonable costs and expenses (including reasonable attorneys' fees for
one (1) firm of attorneys representing all of the holders of the Notes)
incurred by the holders of the Notes in connection with the consideration,
negotiation, preparation or execution of any amendments, waivers,
consents, standstill agreements and other similar agreements with respect
hereto (whether or not any such amendments, waivers, consents, standstill
agreements or other similar agreements are executed).
(c) Restructuring and Workout, Inspections. At any time when the
Company and the holders of Notes are conducting restructuring or workout
negotiations in respect hereof, or a Default or Event of Default exists,
the Company shall pay when billed the reasonable costs and expenses
(including reasonable attorneys' fees of one (1) firm of attorneys
representing all of the holders of the Notes and the fees of professional
advisors) incurred by the holders of the Notes in connection with the
assessment, analysis or enforcement of any rights or remedies that are or
may be available to the holders of Notes and in connection with
inspections made pursuant to Section 8.4 (provided that at all other times
inspections will be at the expense of the inspecting holder of Notes).
(d) Collection. If the Company shall fail to pay when due any
principal of, or Make-Whole Amount or interest on, any Note, the Company
shall pay to each holder of Notes, to the extent permitted by law, such
amounts as shall be sufficient to cover the costs and expenses, including
but not limited to reasonable attorneys' fees, incurred by such holder in
collecting any sums due on such Notes.
12.8 Entire Agreement.
This Agreement constitutes the final written expression of all of the
terms hereof and is a complete and exclusive statement of those terms, except
that this Section does not affect any document or agreement executed and
delivered in connection with and in respect of the First Closing.
12.9 Execution in Counterpart.
This Agreement may be executed in one or more counterparts and shall be
effective when at least one counterpart shall have been executed by each party
hereto, and each set of counterparts which, collectively, show execution by each
party hereto shall constitute one duplicate original.
56
[Remainder of Page Intentionally Blank. Next page is signature page.]
57
If this Agreement is satisfactory to you, please so indicate by signing
the acceptance at the foot of a counterpart hereof and returning such
counterpart to the Company, whereupon this Agreement shall become binding
between us in accordance with its terms.
Very truly yours,
INTERSTATE/▇▇▇▇▇▇▇ ▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & Chief Executive
Officer
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
58
Form of Note
INTERSTATE/▇▇▇▇▇▇▇ LANE, INC.
SENIOR SECURED NOTE DUE APRIL 15, 2007
Solely for purposes of Section 1275 of the Internal Revenue Code of 1986, it is
the opinion of the Company that: the issue price of this instrument is: Fifteen
Million Four Hundred Eleven Thousand Eight Hundred Forty-Three Dollars
($15,411,843): the amount of original issue discounts is: Five Hundred
Eighty-Eight Thousand One Hundred Fifty-Seven Dollars ($588,157); the issue date
is April 17, 1997; the yield to maturity is: 9.7%.
No. R-1 PPN: 460892 A*3
$16,000,000 April 17, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇, Inc. (the "Company"), a Delaware corporation, for
value received, hereby promises to pay to NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY or registered assigns the principal sum of SIXTEEN MILLION DOLLARS
($16,000,000) on April 15, 2007 and to pay interest computed on the basis of a
360-day year of twelve 30-day months) on the unpaid principal balance thereof
from the date of this Note at the rate of eighty and ninety-five one-hundredths
percent (8.95%) per annum, semi-annually on April 15 and October 15 in each
year, commencing on the later of October 15, 1997 or the payment date next
succeeding the date hereof, until the principal amount hereof shall become due
and payable; and to pay on demand interest on any overdue principal amount
hereof shall become due and payable; and to pay on demand interest on any
overdue principal and make-Whole Amount, if any, and (to extent permitted by
applicable law) on any overdue installment of interest, at a rate per annum
equal to the lesser of (a) the highest rate allowed by applicable law or (b) the
greater of (i) two percent in excess of the stated rate or (ii) the rate of
interest publicly announced by ▇▇▇▇▇▇ Guaranty Trust Company of New York in New
York City from time to time as its prime rate.
Payments of principal, Make-Whole Amount, if any, and interest shall be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Purchase Agreement
(defined below).
This Note is one of an issue of Notes of the Company issued in an
aggregate principal amount limited to Twenty-One Million Dollars ($21,000,000)
pursuant to the Company's Note Purchase Agreement (the "Note Purchase
Agreement"), dated as of April 15, 1997, with the purchasers listed on Annex 1
thereto, and is entitled to the benefits thereof. Capitalized terms used herein
and not otherwise defined herein have the meanings specified in the Note
Purchase Agreement. As provided in the Note Purchase Agreement, this Note is
subject to prepayment, in whole or in part, in certain cases without a
Make-Whole Amount and in other cases with a Make-Whole Amount. The Company
agrees to make required prepayments on account of such Notes in accordance with
the provision of the Note Purchase Agreement.
This Note is a registered Note and is transferable only by surrender
thereof at the principal office of the Company as specified in the Note Purchase
Agreement, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of this Note or his attorney duly authorized
in writing.
Under certain circumstances, as specified in the Note Purchase Agreement,
the principal of this Note (together with any applicable Make-Whole Amount) may
be declared due and payable in the manner and with the effect provided in the
Note Purchase Agreement.
The terms of this Note and the Note Purchase Agreements are subject to
that certain Trust Indenture, dated as of April 15, 1997 among the Company and
the other parties signatory thereto.
THIS NOTE AND THE NOTE PURCHASE AGREEMENT ARE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
INTERSTATE /▇▇▇▇▇▇▇ ▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name:▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President and
Chief Financial Officer