EXHIBIT 10.70
PURCHASE AGREEMENT
among
ACMI Holdings, Inc.,
American Coin Merchandising, Inc., as Issuer
and
The Purchasers named herein
Dated as of April 15, 2003
Relating to:
$6.5 million Aggregate Principal Amount of
17% Senior Subordinated Notes due 2009
and
Warrants for 30,957 Shares of Common Stock of ACMI Holdings, Inc.
TABLE OF CONTENTS
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RECITALS ............................................................................... 1
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.01. Definitions ................................................................. 2
1.02. Computation of Time Periods ................................................. 20
1.03. Accounting Terms ............................................................ 20
SECTION 2
AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES
2.01. Authorization of Issue ...................................................... 20
2.02. Sale; Purchaser Fee; Warrants ............................................... 20
2.03. Closing ..................................................................... 21
SECTION 3
CONDITIONS TO CLOSING
3.01. Representations and Warranties .............................................. 21
3.02. Performance; No Default Under Other Agreements .............................. 21
3.03. Compliance Certificates ..................................................... 22
(a) Officers' Certificate ................................................ 22
(b) Secretary's Certificate .............................................. 22
3.04. Opinions of Counsel ......................................................... 22
3.05. Changes in Corporate Structure .............................................. 22
3.06. Financial Information; Capital Structure .................................... 22
3.07. Proceedings and Documents ................................................... 22
3.08. Purchase Permitted by Applicable Law, etc. .................................. 22
3.09. Transaction Documents in Force and Effect; Information ...................... 23
(a) Transaction Documents ................................................ 23
3.10. No Violation; No Legal Constraints; Consents, Authorizations and Filings,
etc. ........................................................................ 23
3.11. Consummation of the Transactions ............................................ 24
3.12. Minimum EBITDA .............................................................. 24
3.13. Warrants .................................................................... 24
3.14. Fees ........................................................................ 24
3.15. Due Diligence ............................................................... 24
3.16. Private Placement Numbers ................................................... 24
3.17. Simultaneous Purchase ....................................................... 24
3.18. Representations and Warranties .............................................. 25
3.19. Performance ................................................................. 25
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE CLOSING TIME ISSUERS
4.01. Due Incorporation; Power and Authority ...................................... 25
4.02. Capitalization .............................................................. 25
4.03. Subsidiaries ................................................................ 26
4.04. Due Authorization, Execution and Delivery ................................... 26
(a) Agreement ............................................................ 26
(b) Notes and Guarantees ................................................. 26
(c) Warrants ............................................................. 27
(d) Stockholders Agreement ............................................... 27
(e) Other Transaction Documents .......................................... 27
4.05. Non-Contravention; Authorizations and Approvals ............................. 27
4.06. Company Financial Statements; Company Reports ............................... 28
(a) Company Financial Statements ......................................... 28
(b) Company Reports ...................................................... 28
4.07. Absence of Undisclosed Liabilities or Events ................................ 29
4.08. No Actions or Proceedings ................................................... 29
4.09. Title to Properties ......................................................... 30
4.10. Intellectual Property Rights ................................................ 30
4.11. Taxes ....................................................................... 30
4.12. Employee Benefit Plans ...................................................... 31
4.13. Private Offering; No Integration or General Solicitation .................... 32
4.14. Status Under Certain Statutes ............................................... 32
4.15. Insurance ................................................................... 33
4.16. Use of Proceeds; Margin Regulations ......................................... 33
4.17. Existing Indebtedness; Future Liens ......................................... 33
4.18. Compliance with Laws; Permits; Environmental Matters ........................ 33
4.19. Solvency .................................................................... 34
4.20. Affiliate Transactions ...................................................... 34
4.21. Material Contracts .......................................................... 34
4.22. Brokerage Fees .............................................................. 34
4.23. Absence of Labor Dispute .................................................... 34
4.24. Additional Representations .................................................. 34
SECTION 5
REPRESENTATIONS OF THE PURCHASERS
5.01. Authorization; No Contravention ............................................. 35
5.02. Binding Effect .............................................................. 35
5.03. No Legal Bar ................................................................ 35
5.04. Governmental Authorization; Third Party Consent ............................. 35
5.05. Purchase for Investment ..................................................... 35
5.06. ERISA Matters ............................................................... 36
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SECTION 6
COVENANTS TO PROVIDE INFORMATION
6.01. Future Reports to Holders ................................................... 37
(a) Monthly Statements ................................................... 37
(b) Quarterly Statements ................................................. 38
(c) Annual Statements .................................................... 38
(d) Forecasts ............................................................ 39
(e) Telephonic Conference ................................................ 40
(f) Chief Financial Officer Certificates ................................. 40
(g) Auditors' Reports .................................................... 40
(h) Other Information .................................................... 40
(i) Notice of Default or Event of Default ................................ 40
(j) Additional Information to Holders of Other Indebtedness .............. 40
(k) Original Issue Discount Information .................................. 40
(l) Management Report .................................................... 41
(m) Litigation and Other Material Events ................................. 41
(n) Additional Matters ................................................... 41
SECTION 7
OTHER AFFIRMATIVE COVENANTS
7.01. Payment of Principal, Premium and Interest .................................. 41
7.02. Preservation of Corporate Existence and Franchises .......................... 42
7.03. Maintenance of Properties ................................................... 42
7.04. Taxes ....................................................................... 42
(a) Payment of Taxes ..................................................... 42
(b) Tax Returns .......................................................... 42
(c) Contest Provisions ................................................... 43
7.05. Books, Records and Access ................................................... 43
7.06. Compliance with Law ......................................................... 43
7.07. Insurance ................................................................... 43
7.08. Offer to Repurchase upon Change of Control .................................. 44
7.09. Offer to Purchase by Application of Excess Proceeds ......................... 45
7.10. Board Observer Rights and Frequency of Board Meetings ....................... 47
7.11. Further Assurances .......................................................... 48
7.12. Trust Subordinated Debt Documents ........................................... 48
7.13. ERISA Covenant .............................................................. 48
7.14. Mandatory Partial Redemption ................................................ 48
SECTION 8
NEGATIVE COVENANTS
8.01. Usury Laws .................................................................. 49
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8.02. Restricted Payments ......................................................... 49
8.03. Dividend and Other Payment Restrictions Affecting Subsidiaries .............. 50
8.04. Incurrence of Indebtedness .................................................. 51
8.05. Asset Sales ................................................................. 53
8.06. Transactions with Affiliates ................................................ 54
8.07. Limitation on Incurrence of Senior Subordinated Indebtedness ................ 55
8.08. Limitation on Liens ......................................................... 55
8.09. Payments for Consents ....................................................... 57
8.10. Merger or Consolidation ..................................................... 57
8.11. Successor Company Substituted ............................................... 57
8.12. Additional Guarantees ....................................................... 58
8.13. Conduct of Business ......................................................... 58
8.14. Public Disclosures .......................................................... 58
8.15. Investments ................................................................. 58
8.16. Amendments or Waivers of Certain Documents .................................. 60
8.17. Amendments to Charter Documents ............................................. 60
8.18. Operating Leases ............................................................ 60
8.19. Fiscal Year ................................................................. 61
8.20. Financial Covenants ......................................................... 61
8.20.1. Fixed Charge Coverage Ratio ....................................... 61
8.20.2. Interest Coverage Ratio ........................................... 61
8.20.3 Total Debt to EBITDA Ratio ........................................ 62
8.20.4. Capital Expenditures .............................................. 62
SECTION 9
INTEGRATION
9.01. No Integration .............................................................. 63
SECTION 10
THE NOTES
10.01. Form and Execution .......................................................... 63
10.02. Terms of the Notes .......................................................... 64
(a) Stated Maturity ...................................................... 64
(b) Interest ............................................................. 64
10.03. Denominations ............................................................... 64
10.04. Form of Legend for the Notes ................................................ 64
10.05. Payments and Computations ................................................... 65
10.06. Registration; Registration of Transfer and Exchange ......................... 65
(a) Security Register .................................................... 65
(b) Registration of Transfer ............................................. 65
(c) Exchange ............................................................. 65
(d) Effect of Registration of Transfer or Exchange ....................... 65
(e) Requirements; Charges ................................................ 65
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(f) Certain Limitations .................................................. 66
10.07. Transfer Restrictions ....................................................... 66
10.08. Mutilated, Destroyed, Lost and Stolen Notes ................................. 66
10.09. Persons Deemed Owners ....................................................... 67
10.10. Cancellation ................................................................ 67
SECTION 11
EVENTS OF DEFAULT
11.01. Events of Default ........................................................... 67
11.02. Remedies .................................................................... 69
11.03. Waiver of Past Defaults ..................................................... 70
SECTION 12
REDEMPTION
12.01. Right of Redemption ......................................................... 71
12.02. Partial Redemptions ......................................................... 71
12.03. Notice of Redemption ........................................................ 71
12.04. Notes Payable on Redemption Date ............................................ 71
12.05. Notes Redeemed in Part ...................................................... 72
SECTION 13
GUARANTEES
13.01. Guarantees .................................................................. 72
13.02. Execution and Delivery of Guarantees ........................................ 73
13.03. Guarantors May Consolidate, Etc. on Certain Terms ........................... 73
13.04. Releases of Guarantees ...................................................... 74
13.05. Limitation on Guarantor Liability ........................................... 74
SECTION 14
EXPENSES, INDEMNIFICATION AND
CONTRIBUTION, AND TERMINATION
14.01. Expenses .................................................................... 74
14.02. Indemnification ............................................................. 75
(a) Indemnification by the Issuers ........................................ 75
(b) Indemnification by the Purchasers ..................................... 75
(c) Notifications and Other Indemnification Procedures .................... 76
14.03. Contribution ................................................................ 77
14.04. Survival .................................................................... 77
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SECTION 15
MISCELLANEOUS
15.01. Notices ..................................................................... 77
15.02. Benefit of Agreement; Assignments and Participations ........................ 78
15.03. No Waiver; Remedies Cumulative .............................................. 78
15.04. Amendments, Waivers and Consents ............................................ 78
15.05. Counterparts ................................................................ 79
15.06. Reproduction ................................................................ 79
15.07. Headings .................................................................... 79
15.08. Governing Law; Submission to Jurisdiction; Venue ............................ 79
15.09. Severability ................................................................ 80
15.10. Entirety .................................................................... 80
15.11. Survival of Representations and Warranties .................................. 80
15.12. Calculation of Outstanding Notes ............................................ 80
15.13. Incorporation ............................................................... 80
15.14. Confidentiality ............................................................. 80
15.15. Disclosure of Certain Tax Matters ........................................... 81
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EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Guarantee
Exhibit C - Form of Warrant
Exhibit D - Form of Subordination Agreement
Exhibit E - Form of Stockholders Agreement
Exhibit 3.03(a) - Officers' Certificate
Exhibit 3.03(b) - Secretary's Certificate
Exhibit 3.04(i) - Form of Opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
Exhibit 3.04(ii) - Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
SCHEDULES
Schedule 4.02(a) - Holdings Common Stock
Schedule 4.02(b) - Company Common Stock
Schedule 4.03 - Subsidiaries
Schedule 4.06(a)-1 - Company Financial Statements
Schedule 4.06(a)-2 - Projections
Schedule 4.06(a)-3 - Pro Forma Balance Sheet
Schedule 4.07(a) - Absence of Undisclosed Liabilities
Schedule 4.07(b) - Change in Business
Schedule 4.08 - No Actions or Proceedings
Schedule 4.09 - Title to Properties
Schedule 4.10 - Intellectual Property Rights
Schedule 4.11 - Taxes
Schedule 4.17 - Existing Indebtedness
Schedule 4.18 - Compliance with Laws; Permits; Environmental Matters
Schedule 4.21 - Material Contracts
Schedule 4.22 - Brokerage Fees
Schedule 4.23 - Absence of Labor Dispute
Schedule 8.04 - Existing Indebtedness
Schedule 8.06 - Existing Affiliate Transactions
Schedule 8.08 - Existing Liens
Schedule 8.15 - Existing Investments
Schedule A - Information Relating to Purchasers
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of April 15, 2003, by and among ACMI
Holdings, Inc., a Delaware corporation ("Holdings"), American Coin
Merchandising, Inc., a Delaware corporation (the "Company"), and each of the
Purchasers named in Schedule A hereto (each, a "Purchaser" and, collectively,
the "Purchasers").
RECITALS
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, the Company has agreed to sell to the Purchasers and each
Purchaser severally has agreed to purchase from the Company, in the aggregate,
$6.5 million principal amount of the Company's Senior Subordinated Notes due
2009 in the form of Exhibit A hereto (the "Notes").
WHEREAS, the obligations of the Company under this Agreement and the
Notes will be guaranteed by the Guarantors, such guarantees to be in the form of
Exhibit B hereto (the "Guarantees").
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement Holdings has agreed to issue to the Purchasers warrants (the
"Warrants") initially exercisable for an aggregate of up to 30,957 shares of
common stock, par value $.01 per share, of Holdings (the "Holdings Common
Stock"), which Warrants will be in the form of Exhibit C hereto.
WHEREAS, the holders of Warrants from time to time will be entitled
to the benefits of the Second Amended and Restated Stockholders Agreement, dated
the date hereof (the "Stockholders Agreement"), by and among Holdings, the
Purchasers and the other stockholders of Holdings party thereto in the form of
Exhibit E hereto.
WHEREAS, holders of the Notes from time to time will be subject to
the provisions of the Subordination Agreement in the form of Exhibit D hereto to
the extent and in the manner provided for therein.
WHEREAS, the Company intends to acquire (a) substantially all of the
assets of ▇▇▇▇ Vending Co., Inc., a New York corporation ("▇▇▇▇ Vending"), and
▇▇▇▇ Novelty Co., Inc., a New York corporation ("▇▇▇▇ Novelty") (the "▇▇▇▇
Acquisition"), by way of the acquisition of such assets by the Acquisition Sub,
a wholly-owned subsidiary of the Company, in accordance with the Asset Purchase
Agreement (as the same has been and may hereafter be amended, supplemented or
modified from time to time, the "▇▇▇▇ Asset Purchase Agreement") dated as of
March 14, 2003 by and among the Acquisition Sub, the Company, ▇▇▇▇ Vending, ▇▇▇▇
Novelty, The ▇▇▇▇▇ ▇▇▇▇ Revocable Trust and ▇▇▇▇▇ ▇▇▇▇ and (b) substantially all
of the assets of Gameplan, Inc., a New Jersey corporation ("Gameplan"), and
Pinball Wizard, Inc., a New Jersey corporation ("Pinball") (the "Gameplan
Acquisition"), in accordance with the terms of an asset purchase and sale
agreement (as the same thereafter be amended, supplemented or modified from time
to time, the "Gameplan Asset Purchase Agreement") by and among the Company,
Gameplan, Pinball and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to which the Gameplan Acquisition
is consummated.
WHEREAS, in connection with the ▇▇▇▇ Acquisition and Gameplan
Acquisition, (i) the Company will at the Closing Time (as defined below) enter
into an $82.0 million amended and restated senior secured credit facility (the
"Credit Facility") and (ii) Wellspring Capital Partners II
L.P., CIT Lending Services Corporation, Indosuez Capital Partners 2003, L.L.C.
and the Audax Investor Group will make, pursuant to subscription agreements,
dated as of the date hereof (the "Subscription Agreements"), equity investments
in Holdings of $10,750,001.00, $499,995.50, $1,500,003.50, and $249,993.50,
respectively (the "Equity Financing").
WHEREAS, each of the Company and Holdings has duly authorized the
creation and issuance of the Notes, the Guarantees and the Warrants, as
applicable, and the execution and delivery of this Agreement and the other
Transaction Documents to which it is a party.
WHEREAS, all things necessary to make this Agreement, the Notes, the
Holdings Guarantee, the Warrants and the Stockholders Agreement (each when
executed and delivered) valid and binding obligations of each applicable Issuer
in accordance with their respective terms have been done.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.01. Definitions. As used herein, the following terms shall have
the meanings specified herein unless the context otherwise requires:
"Accredited Investor" means any Person that is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act.
"Accrual Period" is defined in Section 7.14(a).
"Acquired Indebtedness" means Indebtedness of a Person existing at
the time such Person becomes a Restricted Subsidiary or is merged into or
consolidated with any other Person or which is assumed in connection with the
acquisition of assets from such Person and, in each case, not incurred by such
Person in connection with, or in anticipation or contemplation of, such Person
becoming a Restricted Subsidiary or such merger, consolidation or acquisition.
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of all or
substantially all of any business or division of a Person, (b) the acquisition
of in excess of 50% of the capital stock, partnership interests, membership
interests or equity of any Person, or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is already a Subsidiary).
"Acquisition Sub" means FVFN Acquisition Corp., a Delaware
corporation, that intends to change its name to ▇▇▇▇ Vending, Inc. following the
consummation of the ▇▇▇▇ Acquisition.
"Affiliate" of any Person means (a) any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
Person and (b) any officer or director of such Person. A Person shall be deemed
to be "controlled by" any other Person if such Person
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possesses, directly or indirectly, power to vote 10% or more of the securities
(on a fully diluted basis) having ordinary voting power for the election of
directors or managers or power to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise. Unless
expressly stated otherwise herein, no Purchaser or Noteholder shall be deemed an
Affiliate of Holdings, the Company or of any Subsidiary.
"agents" is defined in Section 15.15.
"Agreement" is defined in Section 15.04.
"AHYDO Amount" is defined in Section 7.14(a).
"AHYDO Warrants" means warrants in substantially the same form as
that of the Warrants provided that the AHYDO Warrants shall not be entitled to
the benefit of the anti-dilution provisions set forth in Sections 4(b) and 4(c)
of the Warrants.
"Annual Repurchase Amount" is defined in Section 8.02(b).
"Applicable Law" means all applicable laws, statutes, treaties,
rules, codes (including building codes), ordinances, regulations, certificates,
orders and licenses of, and interpretations by, any Governmental Authority and
judgments, decrees, injunctions, writs, permits, orders or like governmental
action of any Governmental Authority (including any Environmental Law and any
laws pertaining to health or safety) applicable to Holdings, the Company, any of
its Subsidiaries or any of their property or operations.
"Applicable Premium" means as of any date indicated below, a premium
to principal amount based on the percentage of the principal amount of Notes to
be redeemed as follows:
Period: Applicable Premium:
Issue Date - February 22, 2004 7%
February 23, 2004 - February 22, 2005 5%
February 23, 2005 - February 22, 2006 3%
February 23, 2006 - February 22, 2007 1%
February 23, 2007 and thereafter 0%
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, assignment, transfer, lease or other disposition (including (i) any
sale and lease-back transaction and (ii) as the result of any loss, destruction
or damage thereof or any actual or threatened condemnation, confiscation,
requisition, seizure or taking thereof), other than to the Company or any of its
Wholly-Owned Restricted Subsidiaries that is a Guarantor, whether in a single
transaction or series of related transactions, of (a) any Capital Stock of or
other equity interest in any Restricted Subsidiary; or (b) any other property or
assets of the Company or of any Restricted Subsidiary; provided that Asset Sales
do not include (i) Asset Sales in any Fiscal Year, the Net Cash Proceeds of
which do not in the aggregate exceed $500,000; (ii) the sale or other transfer
of inventory in the ordinary course of business; (iii) so long as no Event of
Default has occurred and is continuing, sales of obsolete or worn out property
in the ordinary course of business; (iv) dispositions of Cash Equivalent
Investments in the ordinary course of business; (v) the settlement of property,
casualty and condemnation claims relating to assets of the Company or a
Restricted Subsidiary; (vi) licenses and sublicenses of Intellectual Property
granted in the ordinary course of business; (vii) sales and leasebacks covering
property with an aggre-
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gate Fair Market Value during the term of this Agreement not exceeding $500,000;
(viii) subleases of properties which do not, in the aggregate, result in
sublease payments in excess of $250,000 per year; (ix) issuances of Capital
Stock that do not result in a Change of Control and that are not otherwise
prohibited by this Agreement; and (x) transfers of assets in connection with a
transaction undertaken pursuant to and which complies with the provisions of
Section 8.10, 8.15(xvi) or 13.03.
"Attributable Percentage" means the percentage of the equity
ownership of a Restricted Subsidiary or joint venture Investment that is
directly owned by the Company or a Wholly-Owned Restricted Subsidiary of the
Company.
"Audax" means Audax Mezzanine Fund, L.P.
"Audax Investor Group" means each of Audax, Audax Co-Invest, L.P.,
Audax Trust Co-Invest, L.P. and AFF Co-Invest, L.P.
"Audax Management" means Audax Management Company (NY), LLC, a
Delaware limited liability company.
"Audax VCOC" means any affiliated entity of Audax that acquires all
or any portion of the Securities or Warrant Shares and is intended to qualify as
a venture capital operating company under the Plan Asset Regulation.
"Audax VCOC Group" means Audax and each Audax VCOC.
"Available Asset Sale Proceeds" means, with respect to any Asset
Sale, the aggregate Net Cash Proceeds from such Asset Sale that have not been
applied in accordance with clause (a)(iii)(A) or (a)(iii)(B), and that have not
yet been the basis for an Excess Proceeds Offer in accordance with clause
(a)(iii)(C), of Section 8.05.
"Bankruptcy Law" means Title 11 of the United States Code or any
similar federal, state or foreign bankruptcy, insolvency, reorganization or
other law for the relief of debtors.
"Basic Documents" means, collectively, this Agreement, the Notes,
the Guarantees, the Warrants, the Subordination Agreement, the Stockholders
Agreement and all certificates, instruments, financial and other statements and
other documents made or delivered in connection herewith and therewith.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Business Day" means any day on which commercial banks are open for
commercial banking business in Chicago, Illinois and New York, New York.
"Capital Expenditures" means all expenditures which, in accordance
with GAAP, would be required to be capitalized and shown on the consolidated
balance sheet of the Company, but excluding (a) expenditures made in connection
with the replacement, substitution or restoration of assets to the extent
financed (i) from insurance proceeds (or other similar recoveries) paid on
account of the loss of or damage to the assets being replaced or restored or
(ii) with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced, (b) expenditures
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made in connection with Acquisitions permitted under Sections 8.15(a) (xvi) and
(xvii) and (c) for the 2003 Fiscal Year only, up to $1,200,000 of payments made
to acquire equipment under operating leases within 30 days after the Closing
Time.
"Capital Lease" means, with respect to any Person, any lease of (or
other agreement conveying the right to use) any real or personal property by
such Person that, in conformity with GAAP, is accounted for as a capital lease
on the balance sheet of such Person.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated and
whether or not voting) of corporate stock, partnership or limited liability
company interests or any other participation, right or other interest in the
nature of an equity interest in such Person including, without limitation,
Common Stock and Preferred Stock of such Person, or any option, warrant or other
security convertible into any of the foregoing, in each case, issued by such
Person.
"Cash Equivalent Investments" means, at any time, (a) any evidence
of Indebtedness, maturing not more than one year after such time, issued or
guaranteed by the United States Government or any agency thereof, (b) commercial
paper or corporate demand notes, in each case rated at least A-l by S&P or P-l
by ▇▇▇▇▇'▇ Investors Service, Inc., (c) any certificate of deposit (or time
deposit represented by a certificate of deposit) or banker's acceptance maturing
not more than one year after such time, or any overnight Federal Funds
transaction that is issued or sold by a commercial banking institution that is a
member of the Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500.0 million (d) any repurchase agreement
entered into with any commercial banking institution of the nature referred to
in clause (c) above which (i) is secured by a fully perfected security interest
in any obligation of the type described in any of clauses (a) through (c) above
and (ii) has a market value at the time such repurchase agreement is entered
into of not less than 100% of the repurchase obligation of such commercial
banking institution thereunder and (e) shares of money market, mutual or similar
funds which invest exclusively in assets satisfying the requirements of clauses
(a) through (d) of this definition.
A "Change of Control" of the Company will be deemed to have occurred
at such time as (a) the Sponsors and their Affiliates shall collectively cease
to, directly or indirectly, own and control at least (i) 50.1% of the
outstanding equity interests of Holdings or (ii) that percentage of the
outstanding voting equity interests of Holdings necessary at all times to elect
a majority of the Board of Directors (or similar governing body) of Holdings and
to direct the management policies and decisions of Holdings, (b) any Person or
"group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as
in effect at the Closing Time) other than the Sponsors or any of their
Affiliates shall have acquired a greater beneficial ownership in Holdings'
voting equity interests than that held collectively by the Sponsors and their
Affiliates, (c) a majority of Holdings' Board of Directors (or similar governing
body) shall cease to consist of the directors (or similar parties) of Holdings
at the Closing Time (after giving effect to the Transactions) and other
directors (or similar parties) whose nomination for election to Holdings' Board
of Directors (or similar governing bodies) is recommended by at least a majority
of the foregoing described directors (or similar parties), (d) Holdings shall
cease to directly own and control 100% of each class of the outstanding equity
interests of the Company, (e) the Company shall cease to, directly or
indirectly, own and control 100% of each class of the outstanding equity
interests of each Restricted Subsidiary, other than directors' qualifying
shares, or (f) any "Change of Control" shall occur under the Credit Agreement.
"Change of Control Offer" is defined in Section 7.08(b).
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"Change of Control Payment Date" is defined in Section 7.08(c).
"Change of Control Purchase Price" is defined in Section 7.08(b).
"Closing Time" is defined in Section 2.03.
"Closing Time Issuers" means the Company and Holdings.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, and created under the Exchange Act or, if at any time
after the execution of this Agreement such Commission is not existing and
performing the duties now assigned to it under the Exchange Act, the body
performing such duties at such time.
"Common Stock" of any Person means all Capital Stock of such Person
that is generally entitled to (i) vote in the election of directors of such
Person; or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.
"Company" shall have the meaning assigned in the preamble to this
Agreement and its successors and permitted assigns.
"Company Financial Statements" is defined in Section 4.06(a).
"Company Party" is defined in Section 4.04(e).
"Company Reports" is defined in Section 4.06(b).
"Computation Period" means each period of four consecutive Fiscal
Quarters ending on the last day of a Fiscal Quarter; provided, that for the
Computation Periods ending on each of June 30, 2003, September 30, 2003 and
December 31, 2003, the denominator for each of the Fixed Charge Coverage Ratio
and the Interest Coverage Ratio shall be calculated for the period from April 1,
2003 through and including the last day of such Computation Period and
annualized.
"Consolidated Net Income" means, with respect to the Company and the
Restricted Subsidiaries for any period, the consolidated net income (or loss) of
the Company and the Restricted Subsidiaries for such period, excluding any gains
from Dispositions, any extraordinary gains (or losses) and any gains (or losses)
from discontinued operations.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consultant Expenses" means actual out-of-pocket costs and expenses
incurred by the Company to its consultant in respect of the possible formation
of a Subsidiary of the Company under the laws of the People's Republic of China
to act as a buying office, warehouse and distribution center
-6-
for skill crane merchandise and directly related businesses, and related issues,
up to an aggregate maximum amount of $150,000.
"Contingent Obligation" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to or otherwise to
invest in a debtor, or otherwise to assure a creditor against loss) any
indebtedness, monetary obligation or other monetary liability of any other
Person (other than by endorsements of instruments in the course of collection),
or guarantees the payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's obligation in respect of any
Contingent Obligation shall (subject to any limitation set forth therein) be
deemed to be the principal amount of the debt, monetary obligation or other
monetary liability supported thereby.
"Contract" is defined in Section 4.05.
"Controlling Person" is defined in Section 14.02(a).
"Covered Plan" is defined in Section 5.06.
"Credit Agreement" means the Amended and Restated Credit Agreement
dated as of the date hereof relating to the Credit Facility as in effect at the
Closing Time, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted under Section
8.04) or adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.
"Credit Facility" is defined in the seventh recital to this
Agreement.
"Custodian" means any custodian, receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"default interest" is defined in Exhibit A.
"Disclosure Schedule" means all numbered Schedules to this
Agreement.
"Disqualified Capital Stock" means any Capital Stock of a Person or
a Subsidiary thereof which, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable at the option of the
holder), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
maturity date of the Notes, for cash or securities constituting Indebtedness.
Without limitation of the foregoing, Disqualified Capital Stock will be deemed
to include any Preferred Stock of a Person or a Restricted Subsidiary of such
Person, with re-
-7-
spect to either of which, under the terms of such Preferred Stock, by agreement
or otherwise, such Person or Subsidiary is obligated to pay current dividends or
distributions in cash during the period prior to the maturity date of the Notes;
provided, however, that Preferred Stock of a Person or any Subsidiary thereof
that is issued with the benefit of provisions requiring a change of control
offer to be made for such Preferred Stock in the event of a change of control of
such Person or Subsidiary, which provisions have substantially the same effect
as the provisions described under Section 7.08, will not be deemed to be
Disqualified Capital Stock solely by virtue of such provisions.
"Disposition" means, as to any asset or right of the Company or any
Restricted Subsidiary, (a) any sale, lease, assignment or other transfer for
value thereof (other than to the Company or any Restricted Subsidiary), (b) any
loss, destruction or damage thereof or (c) any actual or threatened
condemnation, confiscation, requisition, seizure or taking thereof, in each case
excluding (i) assets subject to a Disposition which are replaced within 180 days
with assets performing the same or a similar function, (ii) Dispositions in any
Fiscal Year, the Net Cash Proceeds of which do not in the aggregate exceed
$500,000, (iii) sales and leasebacks permitted pursuant to clause (vii) of the
definition of Asset Sale and (iv) the sale or other transfer of inventory in the
ordinary course of business.
"EBITDA" means, for any period, Consolidated Net Income for such
period plus, to the extent deducted for such period in determining such
Consolidated Net Income, Interest Expense, income tax expense, depreciation,
amortization, other non-cash charges, management, consulting and similar fees to
the extent permitted pursuant to Section 8.02(b)(iii)(1), transaction fees and
expenses relating to this Agreement and the Transactions, to the extent expensed
on or after February 11, 2002, and, with respect only to (i) periods that
include portions of the 2002 Fiscal Year, Consultant Expenses incurred during
portions of the 2002 Fiscal Year included in such period and (ii) periods that
include portions of the 2003 Fiscal Year, (a) up to $200,000 of expenses
relating to the closure of the Company's Kent, Washington facility, (b)
aggregate rental, insurance and utility expenses for new distribution centers
opened by the Company during the 2003 Fiscal Year, for the period commencing on
January 1, 2003 and ending on the termination date of the Kent, Washington
lease, but in any event not after September 30, 2003 and (c) payments made under
operating leases in respect of equipment purchased within 30 days of the Closing
Time by the Company with proceeds of the Credit Facility, which amount of EBITDA
shall be adjusted, without duplication with the calculation of Pro Forma EBITDA,
by identifiable and verifiable actual or pro forma one-time nonrecurring items,
such as excess owner compensation, severance and one-time transaction-related
expenses related to any Acquisition or joint venture Investments permitted to be
made under Section 8.15 hereof, in each case to the extent approved by the
Required Holders, which approval shall not be unreasonably withheld; provided
that, notwithstanding anything to the contrary contained herein, for each of the
calendar months listed below, EBITDA shall be deemed to be the amount set forth
below opposite such month:
Calendar Month EBITDA EBITDA
(if the Gameplan Acquisition (if the Gameplan Acquisition
is not consummated) is consummated)
January 2002 $2,030,520 $2,187,430
February 2002 $2,342,585 $2,499,495
March 2002 $2,642,129 $2,799,039
April 2002 $2,413,058 $2,569,968
May 2002 $2,230,207 $2,387,117
-8-
June 2002 $2,423,841 $2,580,751
July 2002 $3,289,458 $3,446,368
August 2002 $3,067,278 $3,224,188
September 2002 $2,397,039 $2,553,949
October 2002 $2,503,415 $2,660,325
November 2002 $2,566,584 $2,723,764
December 2002 $3,458,867 $3,615,777
"Enforceability Exceptions" means, with respect to any specified
obligation, any limitations on the enforceability of such obligation due to
bankruptcy, insolvency, reorganization, moratorium, and other similar laws of
general applicability relating to or affecting creditors' rights or general
equity principles (other than, in any such case, any Federal or state laws
relating to fraudulent transfers).
"Environmental Claims" means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
liability or responsibility for violation of any Environmental Law, or for
release or injury to the environment or any Person or property.
"Environmental Laws" means all present or future federal, state or
local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any governmental
authority, in each case relating to any matter arising out of or relating to
health and safety, or pollution or protection of the environment or workplace,
including any of the foregoing relating to the presence, use, production,
generating, handling, transport, treatment, storage, disposal, distribution,
discharge, release, control or cleanup of any Hazardous Substance.
"Equity Financing" is defined in the seventh recital to this
Agreement.
"Equity Investee" is defined in Section 4.03.
"ERISA" is defined in Section 4.12(a).
"ERISA Affiliate" is defined in Section 4.12(b).
"Event of Default" is defined in Section 11.01.
"Excess Proceeds Offer" is defined in Section 7.09(a).
"Excess Proceeds Offer Payment Date" is defined in Section 7.09(b).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission thereunder.
"Existing Notes" means the aggregate principal amount of the
Company's Senior Subordinated Notes due 2009 sold pursuant to a Purchase
Agreement dated as of February 11, 2002, by and among Holdings, the Company and
each of the other parties named therein.
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"Existing Warrant Shares" means the shares of Holdings Common Stock
issuable upon exercise of an Existing Warrant.
"Existing Warrants" means the Warrants issued to each of Audax
Mezzanine Fund, L.P., Audax Co-Invest, L.P., Audax Trust Co-Invest, L.P., The
Royal Bank of Scotland, plc, New York Branch, Upper Colombia Capital Company,
LLC, State Street Bank and Trust Company and Wilton Private Equity Fund, LLC on
February 11, 2002.
"Fair Market Value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length, free market transaction,
for cash, between a willing seller and a willing and able buyer, neither of whom
is under undue pressure or compulsion to complete the transaction. Fair Market
Value will be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a board resolution of
such Board of Directors.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of the Company and its
Restricted Subsidiaries, which period shall be the 12-month period ending on
December 31 of each year.
"Fixed Charge Coverage Ratio" means, for any Computation Period, the
ratio of (a) the total for such period of (i) EBITDA minus (ii) machine
placement fees paid in cash to customers during such Computation Period minus
(iii) all Capital Expenditures during such Computation Period minus (iv) cash
taxes paid during such Computation Period minus (v) recurring management,
consulting and similar fees paid during such Computation Period to (b) the sum
for such Computation Period of (i) Interest Expense paid in cash during the
Computation Period plus (ii) required payments of Indebtedness (other than
revolving credit borrowings under any Credit Agreement) during the Computation
Period.
"▇▇▇▇ Acquisition" is defined in the sixth recital to this
Agreement.
"▇▇▇▇ Asset Purchase Agreement" is defined in the sixth recital to
this Agreement.
"▇▇▇▇ Novelty" is defined in the sixth recital to this Agreement.
"▇▇▇▇ Vending" is defined in the sixth recital to this Agreement.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary that
is incorporated in a jurisdiction other than the United States or a State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in effect in
the United States of America, as set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the U.S. accounting profession), which are
applicable to the circumstances as of the date of determination.
"Gameplan" is defined in the sixth recital to this Agreement.
"Gameplan Acquisition" is defined in the sixth recital to this
Agreement.
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"Gameplan Asset Purchase Agreement" is defined in the sixth recital
to this Agreement.
"Governmental Authority" means (a) the government of the United
States or any State or other political subdivision thereof, (b) any government
or political subdivision of any other jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary or (c) any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to, any such government.
"guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A guarantee shall include,
without limitation, any agreement to maintain or preserve any other Person's
financial condition or to cause any other Person to achieve certain levels of
operating results.
"Guarantees" is defined in the second recital to this Agreement.
"Guarantors" means Holdings and each of the Company's Subsidiaries
listed as guarantors to this Agreement and any other Restricted Subsidiary which
is a guarantor of the Notes, including any Person that executes or is required
after the Closing Time to execute a Guarantee pursuant to Section 8.12, until a
successor replaces such party pursuant to the applicable provisions of this
Agreement and, thereafter, shall mean such successor.
"Hazardous Substances" means hazardous waste, hazardous substance,
pollutant, contaminant, toxic substance, oil, hazardous material, chemical or
other substance regulated by any Environmental Law.
"Hedging Obligations" means, with respect to any Person, any
liability of such Person under any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.
"Holder" means any Noteholder or any Warrantholder.
"Holdings" means ACMI Holdings, Inc., a Delaware corporation.
"Holdings Common Stock" is defined in the third recital to this
Agreement.
"Holdings Guarantee" means the Guarantee by Holdings of the
obligations of the Company with respect to the Notes.
"incur" means, with respect to any Indebtedness or other obligation
of any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
-11-
(and "incurrence," "incurred," "incurrable" and "incurring" will have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness will
not be deemed an incurrence of such Indebtedness.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness of such Person (i) for borrowed money, whether or not evidenced by
bonds, debentures, notes or similar instruments, or (ii) evidenced by a bond,
debenture, note or similar instrument, (b) the amount of all obligations of such
Person as lessee under Capital Leases which have been or should be recorded as
liabilities on a balance sheet of such Person in accordance with GAAP, (c) all
obligations of such Person to pay the deferred purchase price of property or
services (excluding trade accounts payable in the ordinary course of business),
(d) the lesser of (i) all indebtedness secured by a Lien on the property of such
Person, whether or not such indebtedness shall have been assumed by such Person
or (ii) the value of such property securing such indebtedness, if such Person is
not liable in respect of such indebtedness, (e) all obligations, contingent or
otherwise, with respect to the face amount of all letters of credit (whether or
not drawn) and banker's acceptances issued for the account of such Person, (f)
all Hedging Obligations of such Person, (g) all Contingent Obligations of such
Person, (h) all Indebtedness of any partnership of which such Person is a
general partner and (i) the amount of all obligations of such Person under any
synthetic lease transaction, where such obligations are considered borrowed
money indebtedness for tax purposes but the transaction is classified as an
operating lease in accordance with GAAP.
"Indemnified Person" is defined in Section 14.02(c).
"INHAM" is defined in Section 5.06(e).
"Initial AHYDO Warrants" is defined in Section 7.14(b).
"Intellectual Property" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, (c) all copyrightable
works, all copyrights and all applications, registrations and renewals in
connection therewith, (d) all broadcast rights, (e) all mask works and all
applications, registrations and renewals in connection therewith, (f) all
know-how, trade secrets and confidential business information, whether
patentable or unpatentable and whether or not reduced to practice (including
ideas, research and development, know-how, formulas, compositions and
manufacturing and production process and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (g) all computer
software (including data and related documentation), (h) all other proprietary
rights, (i) all copies and tangible embodiments thereof (in whatever form or
medium) and (j) all licenses and agreements in connection therewith.
"interest" in respect of any Note shall include the interest payable
thereon including any additional interest amounts payable in the case of overdue
payments.
"Interest Coverage Ratio" means, for any Computation Period, the
ratio of (a) EBITDA for such Computation Period, to (b) Interest Expense paid in
cash during such Computation Period.
-12-
"Interest Expense" means for any period the consolidated interest
expense of the Company and the Restricted Subsidiaries for such period
(including all imputed interest on Capital Leases and including all interest
paid by the Company in respect of the Trust Subordinated Debt).
"Interest Payment Date" is defined in Exhibit A.
"Investments" means (a) the purchase of any debt or equity security
of any Person, (b) the making of any loan or advance to any Person, (c) becoming
obligated with respect to a Contingent Obligation in respect of obligations of
any Person (other than travel and similar advances to employees in the ordinary
course of business) or (d) the making of an Acquisition.
"Issuer Indemnified Person" is defined in Section 14.02(b).
"Issuers" means, collectively, the Company and each Guarantor.
"Kiddie World" means Kiddie World of America, Inc., a Missouri
corporation.
"Kiddie World Acquisition" means the acquisition by the Company of
certain of the assets of Kiddie World pursuant to a certain Asset Purchase and
Sale Agreement dated September 2, 2002 and related agreements, instruments and
documents.
"Kiddie World Debt" means the Company's Indebtedness to Kiddie World
in the principal amount of $1,125,000, evidenced by the Kiddie World Debt
Documents.
"Kiddie World Debt Documents" means, collectively, the certain Note
dated September 3, 2002 executed by the Company in favor of Kiddie World and all
other agreements, instruments and documents evidencing, securing or otherwise
relating to the Kiddie World Debt.
"Knowledge" or any derivative thereof means to the actual knowledge
of the Chief Executive Officer and the Chief Financial Officer or the two
highest ranked executive officers of any Issuer, as applicable, after reasonable
inquiry of the individuals whom such Persons would ordinarily consult with when,
investigating the type of matter to which the representation or warranty relates
in the ordinary course of performing their duties and obligations.
"Lien" means, with respect to any Person, any interest granted by
such Person in any real or personal property, asset or other right owned or
being purchased or acquired by such Person which secures payment or performance
of any obligation and shall include any mortgage, lien, encumbrance, charge or
other security interest of any kind, whether arising by contract, as a matter of
law, by judicial process or otherwise.
"Madison" means Madison Capital Funding LLC, as agent for lenders
under the Credit Facility.
"Material Adverse Effect" means a material adverse effect on (a) the
business, management, operations, affairs, condition (financial or otherwise),
assets, property or results of operations of the Company and its Subsidiaries
taken as a whole, (b) the ability of Holdings or the Company or any Subsidiary
to perform any of its material obligations under any of the Basic Documents, or
(c) the validity or enforceability of any Basic Document.
-13-
"Material Contracts" means (i) a contract or agreement that has been
filed (or is required to be filed) by the Company as an exhibit to a Report on
Form 10-K under the Exchange Act, (ii) is a location contract that generates, or
is reasonably expected to generate, aggregate revenues for the Company and its
Subsidiaries in excess of $1,000,000 on an annualized basis, (iii) is a contract
other than a location contract that requires by its terms payments by the
Company (excluding payments already paid) in excess of $100,000 or (iv) any
agreements, contracts or arrangements between Holdings, on the one hand, and any
third parties, on the other, that are material to the business, management,
operations, affairs, condition (financial or otherwise), properties, assets or
results of operations of Holdings.
"Maturity", when used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise (including in connection with any offer to purchase
that this Agreement requires the Company to make).
"Minimum Denomination" means (i) except as provided in clauses (ii)
and (iii) below, $1.0 million; provided that if any Purchaser is purchasing
under this Agreement less than $1.0 million principal amount of Notes, the
"Minimum Denomination" of such Purchaser's Note (and any successor Note) shall
be the original principal amount of such Note, (ii) subject to clause (iii)
below, with respect to any PIK Note issued to any Noteholder, the principal
amount of such PIK Note and (iii) with respect to any Note redeemed in part
pursuant to any of Section 7.08, 7.09, 7.14 or Paragraph 3 of the Notes, the
principal amount of the Note represented by the unredeemed portion of such Note.
"Net Cash Proceeds" means (a) with respect to any Asset Sale, the
aggregate cash proceeds (including cash proceeds received pursuant to policies
of insurance and by way of deferred payment of principal pursuant to a note,
installment receivable or otherwise, but only as and when received) received by
the Company or any Restricted Subsidiary pursuant to such Asset Sale net of (i)
the direct costs relating to such Asset Sale (including sales commissions and
legal, accounting and investment banking fees), (ii) taxes paid or reasonably
estimated by the Company to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), (iii) amounts required to be applied to the repayment of any
Indebtedness secured by a Lien on the asset subject to such Asset Sale and (iv)
with respect to any Asset Sale described in clause (ii) of the first
parenthetical in the definition of Asset Sale, all money actually applied within
180 days to repair, replace or reconstruct damaged property or property affected
by loss, destruction, damage, condemnation, confiscation, requisition, seizure
or taking, all of the costs and expenses reasonably incurred in connection with
the collection of such proceeds, award or other payments, and any amounts
retained by or paid to parties having superior rights to such proceeds, awards
or other payments and (b) with respect to any issuance of equity securities, the
aggregate cash proceeds received by the Company pursuant to such issuance, net
of the direct costs relating to such issuance (including sales and underwriter's
commission).
"Noteholder" means a Person in whose name a Note is registered on
the Security Register.
"Notes" is defined in the first recital to this Agreement and,
unless the context shall otherwise require at the Closing Time, shall also
include any PIK Notes issued as in-kind interest on outstanding Notes in
accordance with the terms of this Agreement and the Notes.
"Offer Amount" is defined in Section 7.09(b).
-14-
"Officer" means, with respect to any Person, the President, Chief
Executive Officer or the Chief Financial Officer of such Person.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers of such Person; provided, however, that every
Officers' Certificate with respect to compliance with a covenant or condition
provided for in this Agreement shall include a statement that the Officers
making or giving such Officers' Certificate have read such covenant or condition
and any definitions or other provisions contained in this Agreement relating
thereto.
"Operating Lease" means any lease of (or other agreement conveying
the right to use) any real or personal property by the Company or any Restricted
Subsidiary, as lessee, other than any Capital Lease.
"Pension Plan" is defined in Section 4.12(b).
"Permits" means all licenses, permits, certificates of need,
approvals and authorizations from all Governmental Authorities required to
lawfully conduct a business as presently conducted.
"Permitted Business" is defined in Section 8.13.
"Permitted Indebtedness" is defined in Section 8.04.
"Permitted Liens" is defined in Section 8.08.
"Person" means any natural person, corporation, partnership, trust,
limited liability company, association, governmental authority or unit, or any
other entity, whether acting in an individual, fiduciary or other capacity.
"PIK Note" is defined in Exhibit A.
"PIK Redemption Amount" is defined in Section 7.14(a).
"Pinball" is defined in the sixth recital to this Agreement.
"Plan" is defined in Section 4.12(a).
"Plan Asset Regulation" is defined in Section 7.10(e).
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"Pro Forma EBITDA" means, with respect to any Restricted Subsidiary,
business or division acquired in an Acquisition or joint venture Investment
permitted to be made under Section 8.15 hereof, the Attributable Percentage of
EBITDA for such Restricted Subsidiary, business, division or joint venture for
the portion of the most recent twelve (12) month period that fell prior to the
con-
-15-
summation of such Acquisition or Investment and for which financial statements
are made available to the Noteholders at the time of determination thereof,
adjusted by identifiable and verifiable actual or pro forma one-time
nonrecurring items, such as excess owner compensation, severance and one-time
transaction-related expenses of the acquired business, in each case calculated
by the Company and approved by the Required Holders, which approval shall not be
unreasonably withheld.
"property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"PUHCA" is defined in Section 4.14.
"Purchase Price" is defined in Section 2.02(a).
"Purchaser Indemnified Person" is defined in Section 14.02(a).
"Purchasers" is defined in the preamble to this Agreement.
"Qualified IPO" means an initial public offering of Common Stock of
Holdings pursuant to an effective registration statement the net proceeds (after
deducting underwriting discounts and commissions and offering expenses payable
by Holdings) of which are contributed to the common equity capital of the
Company and which yields gross proceeds which equal at least $25.0 million.
"Redemption Date", when used with respect to any Note to be
redeemed, means the date fixed for such redemption by or pursuant to this
Agreement.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Agreement.
"Regular Record Date" is defined in Section 10.05.
"Required Holders" means Noteholders holding more than 50% of the
aggregate principal amount of outstanding Notes.
"Restricted Payment" is defined in Section 8.02(a).
"Restricted Subsidiary" means each Subsidiary of the Company other
than those classified by the Company as Unrestricted Subsidiaries.
"Rule 144" means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Securities" means any of the Notes and the Warrants.
"Securities Act" mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder.
"Security" means any of the Notes or the Warrants.
"Security Register" has the meaning given to such term in Section
10.06(a).
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"Senarc" means Senarc, Inc., a Texas corporation.
"Senarc Debt" means the Company's Indebtedness to Senarc in the
original principal amount of $614,625, evidenced by the Senarc Debt Documents.
"Senarc Debt Documents" means, collectively, the certain
Subordinated Promissory Note dated March 30, 2001 executed by the Company in
favor of Senarc, and all other agreements, instruments and documents evidencing,
securing or otherwise relating to the Senarc Debt.
"Senior Debt" has the meaning provided to such term in the
Subordination Agreement.
"Senior Indebtedness" means all Indebtedness of the Company and the
Restricted Subsidiaries other than (i) Indebtedness which is pari passu in right
of payment to the Notes or the Guarantees, as applicable, (ii) Subordinated
Indebtedness and (iii) intercompany Indebtedness permitted under Section
8.04(iii) and Section 8.04(iv).
"Services and Fee Agreement" means the Services and Fee Agreement
dated February 11, 2002 among the Company and the Sponsors.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect
on the date hereof.
"Solvent" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of such Person's assets is
greater than the amount of its liabilities (including contingent and
unliquidated liabilities) as such value is established and liabilities
evaluated, (b) the present fair saleable value of such Person's assets is not
less than the amount that will be required to pay the probable liability on such
Person's debts as they become absolute and matured, (c) such Person is able to
pay its debts and other liabilities, contingent obligations, unliquidated
liabilities and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature, and (e) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person's property would constitute unreasonably small capital. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed as the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"S&P" means Standard & Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Sponsors" means, collectively, Wellspring Capital Partners II,
L.P., a Delaware limited partnership, and Knightsbridge Holdings, LLC, a
Delaware limited partnership, d/b/a ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company.
"Stated Maturity" means, with respect to any Note or any installment
of interest thereon, the dates specified in such Note as the fixed date on which
the principal of such Note or such installment of interest is due and payable,
and when used with respect to any other Indebtedness,
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means the date specified in the instrument governing such Indebtedness as the
fixed date on which the principal of such Indebtedness or any installment of
interest is due and payable.
"Stockholders Agreement" is defined in the fourth recital to this
Agreement.
"Subordinated Indebtedness" means (a) the Trust Subordinated Debt,
(b) the Kiddie World Debt and (c) any other Indebtedness of the Company that is
subordinated in right of payment to the Notes or the Guarantees, as applicable.
"Subordination Agreement" means the Subordination and Intercreditor
Agreement dated the date hereof, by and among the Purchasers, the Company,
Holdings and Madison.
"Subscription Agreements" is defined in the seventh recital to this
Agreement.
"Subsequent AHYDO Warrants" is defined in Section 7.14(b).
"Subsidiary" means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
owns, directly or indirectly, such number of outstanding shares or other equity
interests as to have more than 50% of the ordinary voting power for the election
of directors or other managers of such corporation, partnership, limited
liability company or other entity. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of the
Company. For clarification, the Trust shall not be considered a Subsidiary of
the Company for purposes of this Agreement.
"Successor Company" is defined in Section 8.10.
"Tax Returns" means all reports and returns required to be filed
with respect to the Taxes of the Company and its Subsidiaries (or for purposes
of Section 7.04, its Restricted Subsidiaries), including, without limitation,
consolidated federal income tax returns of the Company and its Subsidiaries (or
for purposes of Section 7.04, its Restricted Subsidiaries).
"Taxes" means all federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes imposed on
the income, properties or operations of the Company and its Subsidiaries (or for
purposes of Section 7.04, its Restricted Subsidiaries), together with any
interest, additions or penalties with respect thereto and any interest in
respect of such additions or penalties.
"Total Debt" means all Indebtedness of the Company and the
Restricted Subsidiaries, determined on a consolidated basis, excluding (a)
Indebtedness of the Company to Restricted Subsidiaries and Indebtedness of
Restricted Subsidiaries to the Company or to other Restricted Subsidiaries and
(b) the Trust Subordinated Debt.
"Total Debt to EBITDA Ratio" means, as of the last day of any Fiscal
Quarter, the ratio of (a) Total Debt as of such day to (b) the total of (i)
EBITDA for the Computation Period ending on such day and (ii) Pro Forma EBITDA
for the portion of such Computation Period that is prior to the consummation of
any applicable Acquisitions.
"Transaction Documents" means, collectively, (a) the Basic
Documents, (b) the Credit Agreement and all documents, instruments and
agreements made or delivered in connection therewith,
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(c) the Trust Subordinated Debt Documents and the Trust Preferred Documents, (d)
the Services and Fee Agreement, (e) the Kiddie World Debt Documents, (f) the
Subscription Agreements, (g) the ▇▇▇▇ Asset Purchase Agreement and all
documents, instruments and agreements made or delivered in connection therewith
and (h) the Gameplan Asset Purchase Agreement and all documents, instruments and
agreements made or delivered in connection therewith if the acquisition
contemplated by the Gameplan Asset Purchase Agreement and such other documents,
instruments and agreements is consummated.
"Transactions" means the transactions provided for in, or
contemplated by, the Transaction Documents.
"Trust" means American Coin Merchandising Trust I, a statutory
business trust created under the laws of the state of Delaware.
"Trust Agreement" means the certain Amended and Restated Trust
Agreement dated as of September 22, 1998 among the Company, Wilmington Trust
Company, as Property Trustee and Delaware Trustee, and the Administrative
Trustees named therein.
"Trust Preferred Documents" means, collectively, the Trust
Agreement, the Trust Preferred Securities issued pursuant thereto, the Trust
Preferred Guarantee and all other agreements, instruments and documents
evidencing or otherwise relating thereto.
"Trust Preferred Guarantee" means the Guarantee Agreement among the
Company, as Guarantor, and Wilmington Trust Company, as Trustee, in connection
with the Trust Preferred Securities.
"Trust Preferred Securities" means the Ascending Rate Cumulative
Trust Preferred Securities issued by Trust pursuant to the Trust Agreement and
the other Trust Preferred Documents.
"Trust Subordinated Debentures" means the Junior Subordinated
Deferrable Interest Debentures issued by the Company to the Trust in connection
with the Trust Subordinated Debt.
"Trust Subordinated Debt" means the Company's Indebtedness to Trust
in the aggregate outstanding principal amount of $17.0 million, evidenced by the
Trust Subordinated Debt Documents.
"Trust Subordinated Debt Documents" means, collectively, the certain
Junior Subordinated Indenture dated as of September 28, 1998 between the Company
and Wilmington Trust Company, as Trustee, the Trust Subordinated Debentures
issued pursuant thereto, and all other agreements, instruments and documents
evidencing or otherwise relating to the Trust Subordinated Debt.
"Unrestricted Subsidiary" means each Subsidiary of the Company as to
which the Company has notified the Noteholders in writing, on or prior to the
date of formation or Acquisition by the Company or another Subsidiary of such
Subsidiary, that the Company has elected to designate such Subsidiary as an
Unrestricted Subsidiary for purposes of this Agreement, and as to which the
Company has not subsequently notified the Noteholders in writing to change such
designation to that of a Restricted Subsidiary. Without the consent of the
Required Holders, no Restricted Subsidiary may at any time be redesignated as an
Unrestricted Subsidiary. As of the Closing Time, the Company shall have no
Unrestricted Subsidiaries other than ACMI Canada, Inc.
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"Warrant Shares" means the shares of Holdings Common Stock issuable
upon exercise of a Warrant.
"Warrantholder" means a Person in whose name a Warrant is
registered.
"Warrants" is defined in the third recital to this Agreement.
"Warrantshareholder" means a Person in whose name a Warrant Share is
registered.
"Wholly-Owned Restricted Subsidiary" means, as to the Company,
another Person all of the equity interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Company
and/or another Wholly-Owned Restricted Subsidiary of the Company.
1.02. Computation of Time Periods. For purposes of computation of
periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
1.03. Accounting Terms. Accounting terms used but not otherwise
defined herein shall have the meanings provided, and be construed in accordance
with, GAAP.
SECTION 2
AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES
2.01. Authorization of Issue. (i) The Company has authorized the
issue and sale of $6.5 million aggregate principal amount of the Notes, each
Note to be in the form of Exhibit A hereto, (ii) Holdings has authorized the
issuance and transfer of Warrants to purchase an aggregate of 30,957 shares of
Common Stock of Holdings, each Warrant to be in the form of Exhibit C hereto,
and (iii) each Guarantor has authorized the issue of its Guarantee of the Notes,
each such Guarantee to be in the form of Exhibit B hereto.
2.02. Sale; Purchaser Fee; Warrants.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Purchaser, and each Purchaser severally and not jointly
agrees to purchase from the Company, the aggregate principal amount of Notes set
forth in Schedule A opposite the name of such Purchaser at 100% of the principal
amount thereof (the "Purchase Price").
(b) The Company shall pay to each Purchaser a purchase fee equal to
one and one-half percent (1.5%) of the aggregate Purchase Price paid to the
Company by such Purchaser for all Notes purchased by such Purchaser as set forth
on Schedule A hereto. Payment of such purchase fee shall occur at the time of
issuance and sale of the Notes to such Purchaser. The Company hereby authorizes
such Purchaser to withhold from the aggregate Purchase Price to be paid by such
Purchaser an amount equal to such purchase fee. Once paid, such purchase fee
shall not be refundable.
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(c) At the Closing Time, Holdings shall deliver to each Purchaser
the Warrants exercisable for the number of shares of Common Stock of Holdings
set forth opposite the name of such Purchaser on Schedule A hereto. The Closing
Time Issuers and the Purchasers agree that no additional consideration shall be
payable upon delivery of any Warrants to the Purchasers.
(d) For purposes of the Code and the related Treasury regulations,
the Company and the Purchasers agree that the Purchase Price per $1,000
principal amount of Note shall be allocated to (i) such principal amount of Note
to the extent of $974.36 and (ii) each portion of a Warrant exercisable for
4.76262 shares of Holdings Common Stock to the extent of $25.64. The Company and
the Purchasers agree that there is a reasonable basis for this allocation.
2.03. Closing. The purchase and sale of Securities pursuant to this
Agreement shall occur at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 9:00 a.m., New York City
time, on April 15, 2003, or such other time as shall be agreed upon by the
Purchasers and the Company (such time and date of payment and delivery being
herein called the "Closing Time"). At the Closing Time, the Company will deliver
to each Purchaser certificates for the Securities to be purchased by such
Purchaser at the Closing Time, dated the Closing Time and registered in the name
of such Purchaser or its nominee, against payment by such Purchaser to the
Company or to its order by wire transfer of immediately available funds in the
amount of the Purchase Price to be paid by such Purchaser therefor to such bank
account or accounts as the Company may request in writing at least two Business
Days prior to the Closing Time.
SECTION 3
CONDITIONS TO CLOSING
Each Purchaser's several obligation to purchase and pay for the
Notes to be purchased by it at the Closing Time is subject to the satisfaction
or waiver by each Purchaser prior to or at the Closing Time of each of the
conditions specified below in this Section 3:
3.01. Representations and Warranties. Each of the representations
and warranties of the Closing Time Issuers in this Agreement shall be true and
correct when made and at and as of the Closing Time as if made on and as of the
Closing Time (unless expressly stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and correct as of
such earlier date).
3.02. Performance; No Default Under Other Agreements. The Closing
Time Issuers and each of their respective Subsidiaries, to the extent parties
hereto or thereto, shall have performed and complied in all material respects
with all agreements and conditions contained in this Agreement and each of the
other Transaction Documents required to be performed or complied with by any of
them prior to or at the Closing Time, and after giving effect to the issue and
sale of the Securities and the other Transactions (and the application of the
proceeds thereof as contemplated by Section 4.16 hereof and the other
Transaction Documents) required to be performed or complied with by any of them
prior to or at the Closing Time no Default or Event of Default shall have
occurred and be continuing and no default or event of default shall have
occurred and be continuing under any of the other Transaction Documents.
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3.03. Compliance Certificates.
(a) Officers' Certificate. Each of the Closing Time Issuers shall
have delivered to the Purchasers an Officers' Certificate, dated the Closing
Time, in the form of Exhibit 3.03(a) hereto, certifying that the conditions
specified in Sections 3.01, 3.02, 3.05, 3.06 and 3.09 through 3.14, inclusive,
have been fulfilled.
(b) Secretary's Certificate. Each of the Closing Time Issuers shall
have delivered to the Purchasers a certificate in the form of Exhibit 3.03(b)
hereto certifying as to such Issuer's certificate of incorporation, bylaws and
resolutions attached thereto, the incumbency and signatures of certain officers
of such Issuer, and other corporate proceedings of such Issuer relating to the
authorization, execution and delivery of the Securities, as applicable to such
Issuer, this Agreement and the other Basic Documents to which such Issuer is a
party.
3.04. Opinions of Counsel. Such Purchaser shall have received
favorable opinions in form and substance satisfactory to it, dated the Closing
Time, from (i) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP, counsel for the Issuers,
substantially in the form set forth in Exhibit 3.04(i) and as to such other
matters as such Purchaser may reasonably request, and (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, the Purchasers' special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 3.04(ii).
3.05. Changes in Corporate Structure. None of the Issuers or any of
their respective Subsidiaries shall have changed its respective jurisdiction of
incorporation or been a party to any merger or consolidation or succeeded to all
or any substantial part of the liabilities of any other Person at any time
following December 31, 2002 and there shall have occurred no event which
constitutes a Change of Control of the Company and the Company shall not have
entered into any agreement or understanding which, if consummated, would
constitute a Change of Control of the Company, in each case other than as
contemplated by the Transaction Documents.
3.06. Financial Information; Capital Structure. Each Purchaser shall
have received a pro forma consolidated balance sheet for the Company and its
Subsidiaries as of the Closing Time after giving effect to the Transactions as
contemplated pursuant to Section 4.06(a), including the issuance of the
Securities and the use of the proceeds thereof, which has been certified by the
Chief Financial Officer of the Company and which is in form and substance
satisfactory to such Purchaser. The pro forma consolidated capital structure of
the Company, after giving effect to the Transactions (including all adjustments
permitted by Regulation S-X under the Securities Act), shall be consistent in
all material respects with the projections provided to such Purchaser prior to
the Closing Time and the capital structure contemplated herein.
3.07. Proceedings and Documents. All corporate and other proceedings
in connection with the Transactions and all documents and instruments incident
to such transactions and the terms thereof, shall be reasonably satisfactory to
such Purchaser and the Purchasers' special counsel, and such Purchaser and the
Purchasers' special counsel shall have received all such counterpart originals
or certified or other copies of such documents as it or they may reasonably
request.
3.08. Purchase Permitted by Applicable Law, etc. At the Closing
Time, each Purchaser's purchase of the Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which it is subject, (b) not violate any
Applicable Law (including, without limitation, Regulation U, T or X of the Board
of Governors of the Federal Reserve System) and (c) not subject such Purchaser
to
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any tax, penalty or liability under or pursuant to any Applicable Law, which
Applicable Law was not in effect on the date hereof.
3.09. Transaction Documents in Force and Effect; Information.
(a) Transaction Documents. The Purchasers shall have received true
and correct copies of all Basic Documents and all material Transaction Documents
in existence as of the Closing Time and known to the Company and (i) such
documents (A) shall have been duly executed and delivered by the parties
thereto, (B) shall be in form and substance reasonably satisfactory to each
Purchaser and (C) shall be valid and legally binding obligations of the parties
thereto enforceable against each of them in accordance with their respective
terms, subject to the Enforceability Exceptions, and (ii) there shall have been
no material amendments, alterations, modifications or waivers of any provision
thereof since the date of this Agreement.
(b) Accuracy of Information. All information furnished by the
Issuers and their respective representatives to the Purchasers on or prior to
the Closing Time with respect to the business, management, operations, affairs,
condition (financial or otherwise), assets, property or results of operations of
the Issuers and their respective Subsidiaries shall, to the Knowledge of the
Company, be accurate and complete in all material respects and shall not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements are made
(it being recognized by the Purchasers that any projections and forecasts
provided by the Company are based on good faith estimates and assumptions
believed by the Company to be reasonable as of the date of the applicable
projections or assumptions and that actual results during the period or periods
covered by any such projections and forecasts may differ from projected or
forecasted results).
3.10. No Violation; No Legal Constraints; Consents, Authorizations
and Filings, etc.
(a) The consummation by the Issuers and their respective
Subsidiaries of the Transactions shall not contravene, violate or conflict with
any Applicable Law, except for violations which, individually or in the
aggregate, do not and would not have a Material Adverse Effect.
(b) Except as set forth on Schedule 4.21, all consents,
authorizations and filings, if any, required in connection with the execution,
delivery and performance by each of the Issuers and their respective
Subsidiaries of the Transaction Documents to which it is a party shall have been
obtained or made and shall be in full force and effect, except for such
consents, authorizations and filings the failure to obtain or make which,
individually or in the aggregate, does not and would not have a Material Adverse
Effect.
(c) There shall be no inquiry, injunction, restraining order,
action, suit or proceeding pending or entered or any statute or rule proposed,
enacted or promulgated by any Governmental Authority or any other Person which,
(i) individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect or which seeks to enjoin or seek damages against
the Company or any of its Subsidiaries or any Purchaser as a result of the
Transactions, including the issuance of the Securities, or (ii) relates to any
of the Transactions and has or will have a material adverse effect on any
Purchaser or (iii) alleges liability on the part of any Purchaser in connection
with this Agreement, any other Transaction Documents or the Transactions or any
of the other transactions contemplated hereby or thereby or (iv) would bar the
issuance of the Securities or the use of the
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proceeds thereof in accordance with the terms of this Agreement and the
other Transaction Documents.
3.11. Consummation of the Transactions.
(a) Prior to or at the Closing Time, the Credit Facility shall
provide for (i) revolving credit borrowings of $12.0 million, of which up to
$1.0 million will be outstanding at the Closing Time and (ii) term loan
borrowings of $70.0 million, of which $63.5 million shall be outstanding at the
Closing Time.
(b) At the Closing Time, the Company shall have received not less
than $13.0 million in cash from the Equity Financing.
(c) The ▇▇▇▇ Acquisition shall be consummated concurrently with the
issuance and sale by the Company of the Notes hereunder, in each case in
accordance with the terms of the applicable Transaction Documents (without any
amendment thereto or waiver thereunder unless consented to by each Purchaser)
and in accordance with Applicable Law.
3.12. Minimum EBITDA. Each Purchaser shall be satisfied that
consolidated EBITDA, determined on a pro forma basis as of February 28, 2003,
for the latest twelve month period ending on such date, but including the
incurrence of Indebtedness under the Credit Agreement and the consummation of
the Transactions, shall equal at least $30.5 million and the Company shall
provide support for such calculation of a nature that is satisfactory to each
Purchaser.
3.13. Warrants. At or prior to the Closing Time, the Warrants, in
the form contemplated by this Agreement, shall have been issued and delivered by
the Company to the Purchasers.
3.14. Fees. The Company shall have paid all fees, costs and expenses
(including, without limitation, legal fees and expenses and the fees and
expenses of appraisers, consultants and other advisors) and other compensation
due and payable to each Purchaser at the Closing Time to the extent due.
3.15. Due Diligence. At the Closing Time, the Purchasers shall have
completed their legal, tax and environmental due diligence review of the Company
and its Subsidiaries and other matters relevant to the Transactions and such due
diligence review shall have been completed to the satisfaction of the Purchasers
in their sole discretion.
3.16. Private Placement Numbers. At or prior to the Closing Time,
the Company shall have requested and received from S&P a private placement
number for each of the Notes, the Warrants and the Holdings Common Stock.
3.17. Simultaneous Purchase.
(a) Each of the Purchasers will simultaneously purchase the
Securities to be purchased by such Purchaser.
(b) The Company's obligation to issue and deliver the Notes to be
purchased by the Purchasers, and Holdings' obligation to execute and deliver the
Warrants and the Holdings Guar-
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▇▇▇▇▇, at the Closing Time is subject to the satisfaction or waiver by each such
Issuer prior to or at the Closing Time of each of the conditions specified below
in this Section 3(b).
3.18. Representations and Warranties. Each of the representations
and warranties of the Purchasers in this Agreement shall be true and correct
when made and at and as of the Closing Time as if made on and as of the Closing
Time (unless expressly stated to relate to a specific earlier date, in which
case such representations and warranties shall be true and correct as of such
earlier date).
3.19. Performance. The Purchasers shall have performed and complied
in all material respects with all agreements and conditions contained in this
Agreement required to be performed or complied with by any of them prior to or
at the Closing Time.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE CLOSING TIME ISSUERS
Each of the Closing Time Issuers, acting jointly and severally,
represents and warrants to each Purchaser as of the date hereof and as of the
Closing Time that:
4.01. Due Incorporation; Power and Authority. Each of Holdings and
the Company and each of its Subsidiaries (a) is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, (b) is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, other than any failures to so qualify or to be in
good standing which, individually or in the aggregate, have not had and would
not reasonably be expected to have a Material Adverse Effect, (c) has all
requisite corporate power and authority to own, lease and operate its properties
and to conduct its businesses as they are currently conducted, and (d) has all
requisite corporate power and authority to enter into and perform its
obligations under each of the Transaction Documents to which it is a party.
4.02. Capitalization. As of the date of this Agreement after giving
effect to the Transactions occurring as of the Closing Time, the authorized
Capital Stock of Holdings under its Certificate of Incorporation consists solely
of 6,000,000 shares of Holdings Common Stock, of which 4,912,867 shares are
issued and outstanding. As of the date of this Agreement after giving effect to
the Transactions occurring as of the Closing Time, Schedule 4.02(a) sets forth
all the issued and outstanding Capital Stock of Holdings, and no shares of
Holdings Common Stock were subject to issuance pursuant to any Holdings' 401(k)
savings plans. All the issued and outstanding shares of Holdings Common Stock
(including all shares of Holdings Common Stock to be issued upon exercise of the
Warrants and other outstanding warrants) have been duly authorized and are (or
in the case of Holdings Common Stock issued upon exercise of the Warrants and
other outstanding warrants, will be) validly issued, fully paid and
nonassessable and are (or in the case of Holdings Common Stock issued upon
exercise of the Warrants and other outstanding warrants, will be) free of
preemptive rights. Holdings has duly reserved a sufficient number of shares of
Holdings Common Stock for issuance upon exercise of the Warrants and other
outstanding warrants at the initial exercise rate thereof. As of the date of
this Agreement after giving effect to the Transactions occurring as of the
Closing Time, the authorized Capital Stock of the Company under its Certificate
of Incorporation consists solely of 1,000 shares of Company Common Stock, all of
which shares are issued and outstanding,
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and owned of record by Holdings. As of the date of this Agreement after giving
effect to the Transactions occurring as of the Closing Time, Schedule 4.02(b)
sets forth all issued and outstanding Capital Stock of the Company and no shares
of Company Common Stock are subject to issuance pursuant to the Company's 401(k)
savings plans. All the issued and outstanding shares of Company Common Stock
have been duly authorized and are validly issued, fully paid and nonassessable
and are free of preemptive rights. Except as set forth on Schedule 4.02, in the
Transaction Documents or pursuant to the exercise of outstanding options: (i)
there are no securities of Holdings or any of its Subsidiaries that are
convertible into or exchangeable for shares of any Capital Stock of Holdings or
any of its Subsidiaries, and no options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate Holdings or any of its Subsidiaries to issue, transfer or sell any
shares of Capital Stock of, or other interests in, Holdings or any of its
Subsidiaries; (ii) there are no outstanding obligations of Holdings or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Capital Stock of Holdings or any of its Subsidiaries and neither Holdings nor
any of its Subsidiaries has any awards or options outstanding under any stock
option plans or agreements or any other outstanding stock-related awards; (iii)
there are no voting trusts or other agreements or understandings to which
Holdings or any of its Subsidiaries is a party with respect to the holding,
voting or disposing of Capital Stock of Holdings or any of its Subsidiaries; and
(iv) as of the date hereof after giving effect to the Transactions, neither
Holdings nor any of its Subsidiaries has any outstanding bonds, debentures,
notes or other obligations or other securities (other than the Holdings Common
Stock) that entitle the holders thereof to vote with the stockholders of
Holdings or any of its Subsidiaries on any matter or which are convertible into
or exercisable for securities having such a right to vote.
4.03. Subsidiaries. Schedule 4.03 correctly states as of the Closing
Time (a) the name of each of the Company's Subsidiaries and any other Person
whose Capital Stock is owned, directly or indirectly, by the Company (each, an
"Equity Investee"), (b) the name of each holder of each class of outstanding
Capital Stock or other securities of the Company or any of its Subsidiaries or
any Equity Investee and the nature and number of such securities held by such
holder, and (c) the number of authorized, issued and treasury shares of each
Subsidiary of the Company and each Equity Investee. The Company does not own or
control, directly or indirectly, any Capital Stock or other interest or
investment (whether equity or debt) in any Person other than the Capital Stock
of its Subsidiaries and Equity Investees listed on Schedule 4.03. Each issued
and outstanding share of Capital Stock of each Subsidiary and Equity Investee of
the Company (a) has been duly authorized and validly issued and is fully paid
and nonassessable and free of preemptive rights and (b) except for any Capital
Stock of any Equity Investee not owned directly or indirectly by the Company as
shown on Schedule 4.03, is owned by the Company, directly or through
Subsidiaries, free and clear of any Lien other than the Liens established under
the Credit Agreement.
4.04. Due Authorization, Execution and Delivery.
(a) Agreement. This Agreement has been duly authorized, executed and
delivered by each Closing Time Issuer and constitutes a valid and legally
binding obligation of each Closing Time Issuer, enforceable against such Issuer
in accordance with its terms, subject to the Enforceability Exceptions.
(b) Notes and Guarantees. The Notes to be purchased by each
Purchaser from the Company are in the form contemplated by this Agreement, have
been duly authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Company at the Closing Time as provided herein, will
have been duly executed, issued and delivered by the Company, and will
constitute valid and legally binding obligations of the Company, enforceable
against it in accordance with
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their terms, subject to the Enforceability Exceptions. The Holdings Guarantee is
in the form contemplated by this Agreement, has been duly authorized for
execution and delivery pursuant to this Agreement by Holdings and, when
delivered by Holdings at the Closing Time as provided for herein, will have been
duly executed and delivered and will constitute a valid and legally binding
obligation of Holdings, enforceable against Holdings in accordance with its
terms, subject to the Enforceability Exceptions.
(c) Warrants. The Warrants to be delivered to each Purchaser by
Holdings are in the form contemplated by this Agreement, have been duly
authorized for issuance pursuant to this Agreement and, when issued and
delivered by Holdings at the Closing Time, will have been duly executed, issued
and delivered by Holdings, and will constitute valid and legally binding
obligations of Holdings, enforceable against it in accordance with their terms,
subject to the Enforceability Exceptions.
(d) Stockholders Agreement. The Stockholders Agreement has been duly
authorized, executed and delivered by Holdings and constitutes a valid and
legally binding obligation of Holdings, enforceable against Holdings in
accordance with its terms, subject to the Enforceability Exceptions.
(e) Other Transaction Documents. Each Transaction Document (other
than those referred to in paragraphs (a) through (d) of this Section 4.04) to
which any Issuer or any of its respective Subsidiaries is a party (each such
party, a "Company Party") (i) has been duly authorized, executed and delivered
by each Company Party and (ii) constitutes a valid and legally binding
obligation of each Company Party, enforceable against such Company Party in
accordance with its terms, subject to the Enforceability Exceptions.
4.05. Non-Contravention; Authorizations and Approvals. Neither
Holdings, the Company nor any of its Subsidiaries is (i) in violation of its
certificate of incorporation or bylaws (or comparable constituent or governing
documents) or (ii) except as set forth on Schedule 4.21 in default (or, with the
giving of notice, lapse of time or both, would be in default) under any note,
bond, mortgage, indenture, deed of trust, loan or credit agreement, license,
franchise, Permit, lease, contract or other agreement, instrument, commitment or
obligation to which Holdings, the Company or any of its Subsidiaries is a party
or by which Holdings, the Company or any of its Subsidiaries or any of their
respective properties or assets is bound (including, without limitation, the
Credit Agreement), or under which Holdings, the Company or any of its
Subsidiaries or any of their respective properties or assets is entitled to a
benefit (each, a "Contract"), except for any such defaults that, individually or
in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect. None of (a) the execution and delivery by Holdings, the
Company or any of its Subsidiaries of any of the Transaction Documents to which
it is a party, (b) the performance by any of them of their respective
obligations thereunder, (c) the consummation of the transactions contemplated
thereby or (d) the issuance and delivery of the Securities hereunder will: (i)
violate, conflict with or result in a breach of any provisions of the
certificate of incorporation or bylaws (or comparable constituent or governing
documents) of Holdings, the Company or any of its Subsidiaries; (ii) violate,
conflict with, result in a breach of any provision of, constitute a default (or
an event which, with notice, lapse of time or both, would constitute a default)
under, result in the termination or in a right of termination of, accelerate the
performance required by or benefit obtainable under, result in the triggering of
any payment or other obligations (including any repurchase or repayment
obligations) pursuant to, result in the creation of any Lien upon any of the
properties of Holdings, the Company or any of its Subsidiaries under, or result
in their being declared void, voidable, subject to withdrawal or without further
binding effect, any
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of the terms, conditions or provisions of any Contract, except for any such
violations, conflicts, breaches, defaults, accelerations, terminations or other
matters which, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect; (iii) require any
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority, except for those consents, approvals,
authorizations, declarations, filings or registrations which have been obtained
or made or the failure to obtain or make which, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect; or (iv) violate any Applicable Laws applicable to Holdings, the
Company, any of its Subsidiaries or any of their respective properties or
assets, except for violations which, individually or in the aggregate, have not
had and would not reasonably be expected to have a Material Adverse Effect.
4.06. Company Financial Statements; Company Reports.
(a) Company Financial Statements. The Company has delivered, or made
available, to each Purchaser (collectively, the "Company Financial Statements")
(i) complete and correct copies of the audited consolidated balance sheets of
the Company and its Subsidiaries as of December 31, 2002 and 2001 and the
related audited consolidated statements of operations, stockholders' equity and
cash flows for the years then ended, including the footnotes thereto, certified
by the Company's independent certified public accountants, and (ii) a complete
and correct copy of the unaudited consolidated balance sheets of the Company and
its Subsidiaries as of February 28, 2003 and the related unaudited consolidated
statements of operations, stockholders' equity and cash flows for the two months
then ended. Each of the consolidated balance sheets contained in the Company
Financial Statements fairly presents, in all material respects, the consolidated
financial position of the Company and its Subsidiaries as of its date and each
of the consolidated statements of operations, stockholders' equity and cash
flows included in the Company Financial Statements fairly presents, in all
material respects, the consolidated results of operations and income, retained
earnings and stockholders' equity or cash flows, as the case may be, of the
Company and its Subsidiaries for the periods to which they relate (subject, in
the case of any unaudited interim financial statements, to the absence of
footnotes and to normal year-end adjustments), in each case in accordance with
GAAP applied on a consistent basis during the periods involved, except as noted
therein. True and correct copies of the Company financial statements are
attached hereto as Schedule 4.06(a)-1.
As at the Closing Time, the consolidated financial projections
(including an operating budget and a cash flow budget) of the Company for the 8
year period commencing January 1, 2003 delivered to Purchasers on or prior to
the Closing Time (i) were prepared by the Company in good faith and (ii) were
prepared in accordance with assumptions which the Company believes to be
reasonable, and the accompanying consolidated pro forma balance sheet of the
Company as at February 28, 2003, adjusted to give effect to the consummation of
the Transactions and the financings contemplated hereby as if such transactions
had occurred on such date, in consistent in all material respects with such
projections. A complete and correct copy of each of such financial projections
and pro forma balance sheet is attached hereto on Schedule 4.06(a)-2 and -3
respectively.
(b) Company Reports. The Company has delivered, or made available,
to each Purchaser each registration statement, report or information statement
prepared by the Company since December 31, 2000, including (i) the Company's
Annual Report on Form 10-K for the year ended December 31, 2002 and (ii) the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30 and September 30, 2002, each in the form (including exhibits, annexes and any
amendments thereto) filed with the Commission (collectively, including any such
reports filed subsequent to the date hereof and as amended, the "Company
Reports"). As of their respective dates (or, if
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amended, as of the date of such amendment), as of the date hereof and as of the
Closing Time, the Company Reports did not, and any Company Reports filed with
the Commission subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presents, or will fairly
present, the consolidated financial position of the Company and its Subsidiaries
as of its date and each of the consolidated statements of operations,
stockholders' equity or cash flows included in or incorporated by reference into
the Company Reports (including any related notes and schedules) fairly presents,
or will fairly present, the results of operations and income, retained earnings
and stockholders' equity or cash flows, as the case may be, of the Company and
its Subsidiaries for the periods to which they relate (subject, in the case of
unaudited statements, to the absence of footnotes and to normal year-end audit
adjustments), in each case in accordance with GAAP consistently applied during
the periods involved, except as may be noted therein.
4.07. Absence of Undisclosed Liabilities or Events.
(a) Except as set forth in Schedule 4.07(a) or the pro forma balance
sheet referred to in Section 4.06(a), neither the Company nor any of its
Restricted Subsidiaries has any liabilities, whether accrued, contingent or
otherwise, except for (i) liabilities in the respective amounts reflected or
reserved against in the consolidated balance sheet as of February 28, 2003
included in the Company Financial Statements or disclosed in the Company
Reports, (ii) borrowings under the Company's existing revolving credit facility
in the ordinary course of business or disclosed in the Company Reports, (iii)
liabilities arising under or contemplated by the Transaction Documents, or (iv)
liabilities and obligations incurred in the ordinary course of business since
February 28, 2003 which, individually or in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.07(b), (i) since February 28,
2003 there has been no change in the business, management, operations, affairs,
condition (financial or otherwise), assets, property or results of operations of
the Company or its Subsidiaries except for changes that, individually or in the
aggregate, have not had or would not reasonably be expected to have a Material
Adverse Effect and (ii) there are no facts Known to the Company (other than
general economic conditions not specific to the industry of the Company) that
have had or would reasonably be expected to have a Material Adverse Effect that
have not been set forth herein or in the Disclosure Schedule.
(c) Holdings is a holding company that has conducted no activities
other than those incidental to the holding of the Capital Stock of the Company
and has no material assets or liabilities other than those incidental thereto.
4.08. No Actions or Proceedings. Except as set forth in Schedule
4.08, there are no legal or governmental actions, suits or proceedings pending
or, to the best of each Issuer's Knowledge, threatened against or affecting the
Company, any of its Restricted Subsidiaries, any of their respective directors
or officers (in their capacities as such) or any of their respective properties
or assets which, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect or to prohibit, delay or
materially restrict the consummation of any of the Transactions or the other
transactions contemplated by this Agreement and the other Transaction Documents.
To the Knowledge of each Issuer, no Governmental Authority has notified the
Company or any of its Subsidiaries of an intention to conduct any audit,
investigation or other review with respect to the Com-
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pany or any of its Subsidiaries, except for those investigations or reviews
which, individually or in the aggregate, have not had or would not reasonably be
expected to have a Material Adverse Effect.
4.09. Title to Properties. Except as set forth in Schedule 4.09,
each of the Company and its Subsidiaries has (a) good and marketable title to
and fee simple ownership of, or a valid and subsisting leasehold interest in,
all of its real property, and (b) good title to, or a valid and subsisting
leasehold interest in, all of its equipment and other personal property, in each
case of clauses (a) and (b) above free and clear of all Liens, except Permitted
Liens. Each of the Company and its Subsidiaries have paid or discharged, or
reserved for, all lawful claims which, if unpaid, might become a Lien (other
than a Permitted Lien) against any property or assets of the Company or any of
its Subsidiaries.
4.10. Intellectual Property Rights. Except as set forth in Schedule
4.10, each of the Company and its Subsidiaries owns or possesses all
Intellectual Property reasonably necessary to conduct its businesses as now
conducted, except where the expiration or loss of any of such Intellectual
Property, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. To the Knowledge of each Issuer, (a) there is no
infringement of, or conflict with, such Intellectual Property by any third party
and (b) the conduct of their businesses as currently conducted do not infringe
or conflict with any Intellectual Property of any third party, in each case of
clauses (a) and (b) above other than any such infringements or conflicts which,
individually or in the aggregate, have not had or would not reasonably be
expected to have a Material Adverse Effect.
4.11. Taxes. Except as set forth in Schedule 4.11:
(a) all Tax Returns that are required to be filed at or before the
Closing Time by or with respect the Company or any of its Subsidiaries,
have been or will be timely filed at or before the Closing Time or if not
then filed shall have been the subject of a validly obtained extension of
time to file, and all such Tax Returns are or will be true and complete in
all material respects;
(b) all Taxes shown to be due on the Tax Returns referred to in
clause (a) have been or will be timely paid in full except for those Taxes
which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books and for any such failures which would not
reasonably be expected to have a Material Adverse Effect;
(c) adequate provision has been made for the payment of Taxes which
have accrued through the date hereof but which are not yet due and payable
for which the Company or any of its Subsidiaries may be liable for payment
after the Closing Time;
(d) except as set forth on Schedule 4.11, no examination or audit of
any Tax Return is ongoing. No legal proceeding relating to such Tax
Returns is pending or, to the Knowledge of the Company, is being
threatened by any relevant taxing authority against the Company or any
Subsidiary in respect of any material Tax. There are no material
unsatisfied liabilities for Taxes with respect to any notice of deficiency
or similar document received by the Company or any Restricted Subsidiary
with respect to any material Tax (other than liabilities for Taxes
asserted under any such notice of deficiency or similar documents which
are being contested in good faith and with respect to which adequate
reserves for payment have been established in accordance with GAAP);
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(e) no waivers of statutes of limitation have been given by or
requested with respect to any Taxes of the Company or any of its
Subsidiaries;
(f) none of the Company or any of its Subsidiaries will be required,
as a result of (i) a change in accounting method to include any adjustment
under Section 481 (c) of the Code (or any similar provision of state,
local or foreign law) in taxable income for any Tax period ending at or
after the Closing Time, or (ii) any "closing agreement" as described in
Section 7121 of the Code (or any similar provision of state, local or
foreign Tax law), to include any item of income in or exclude any item of
deduction from any Tax period ending at or after the Closing Time;
(g) there are no Liens on any of the assets of the Company or any of
its Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any material Tax except for liens for current Taxes not
yet due and payable;
(h) neither the Company nor any of its Subsidiaries has ever
previously been a member of an affiliated, combined, consolidated or
unitary Tax group for purposes of filing any Tax Return except the group
of which the Company is the common parent;
(i) neither the Company nor any of its Subsidiaries or any
predecessors to any of such entities has made any consent under Section
341 of the Code with respect to the Company or any such Subsidiary; and
(j) all interest on debt issued by the Company pursuant to this
Agreement (including original issue discount if any) will be deductible in
full, as such interest accrues, by the Company for federal income tax
purposes.
4.12. Employee Benefit Plans.
(a) There has been no failure by any employee benefit plan, within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which is maintained by the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries contributes
(each a "Plan") to comply with the applicable requirements of ERISA and the Code
other than any such failures that, individually or in the aggregate, have not
had and would not reasonably be expected to have a Material Adverse Effect.
There is no material pending or, to the Knowledge of any Issuer threatened,
litigation relating to the Plans. Neither the Company nor any of Subsidiaries
has engaged in a transaction with respect to any Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject the
Company or any of its Subsidiaries to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA other than those that, individually
or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect.
(b) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by the Company or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan," within the
meaning of Section 4001 (a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). Neither the Company, any of its Subsidiaries nor an
ERISA Affiliate has contributed to a "multiemployer plan," within the meaning of
Section 3(37) of ERISA, at any time on or after Septem-
-31-
ber 26, 1980. No notice of a "reportable event," within the meaning of Section
4043 of ERISA, for which the 30-day reporting requirement has not been waived
has been required to be filed for any Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(c) Neither any Pension Plan nor any single-employer plan of an
ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA and no
ERISA Affiliate has an outstanding funding waiver. Neither the Company nor any
of its Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401 (a)(29) of the Code.
(d) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities," within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Plan's most recent actuarial valuation),
did not exceed the then current value of the assets of such Plan, and there has
been no material change in the financial condition of such Plan since the last
day of the most recent plan year.
(e) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Plan, except as
required by applicable law. The Company or the Subsidiaries, as applicable, may
amend or terminate any such Plan at any time without incurring any liability
thereunder.
4.13. Private Offering; No Integration or General Solicitation.
(a) Subject to compliance by the Purchasers with the representations
and warranties set forth in Section 5, it is not necessary, in connection with
the offer, sale and delivery of the Securities (or, if issued at the Closing
Time, the Warrant Shares issuable upon exercise of the Warrants) to the
Purchasers in the manner contemplated by this Agreement and the Warrants, as
applicable, to register the Securities or the Warrant Shares under the
Securities Act.
(b) No Issuer has, directly or indirectly, offered, sold or
solicited any offer to buy and will not, directly or indirectly, offer, sell or
solicit any offer to buy, any security of a type or in a manner which would be
integrated with the sale of the Securities and require the Securities or the
Warrant Shares (assuming the Warrant Shares were issued at the Closing Time) to
be registered under the Securities Act. No Issuer, its Affiliates or any person
acting on its or any of their behalf (other than the Purchasers, as to whom the
Issuers make no representation or warranty) has engaged or will engage in any
form of general solicitation or general advertising (within the meaning of Rule
502(c) under the Securities Act) in connection with the offering of the
Securities.
4.14. Status Under Certain Statutes. None of Holdings, the Company
or any of its Subsidiaries is or, after receipt of payment for the Securities
and the consummation of the other transactions contemplated by the Transaction
Documents, will be (a) subject to regulation under the Public Utility Holding
Company Act of 1935, as amended ("PUHCA"), the Federal Power Act or the
Interstate Commerce Act, each as amended, (b) an "investment company" registered
or required to be registered under the Investment Company Act of 1940, as
amended, or controlled by such a company, or (c) a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary" of a "holding company," within the meaning of
PUHCA.
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4.15. Insurance. Each of the Company and its Subsidiaries are
insured by financially sound institutions with policies in such amounts and with
such deductibles and covering such risks as are generally deemed adequate for
their businesses including, but not limited to, policies covering real and
personal property owned or leased by the Company and its Subsidiaries against
theft, damage, destruction and acts of vandalism.
4.16. Use of Proceeds; Margin Regulations. The Company shall apply
the proceeds from the sale of the Securities solely to fund the Transactions and
to pay related closing costs and expenses. No part of the proceeds from the sale
of the Securities hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning of Regulation
U. Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company has no
present intention that margin stock will constitute more than 5% of the value of
such assets. As used in this Section, the terms "margin stock" and "purpose of
buying or carrying" shall have the meanings assigned to them in Regulation U.
4.17. Existing Indebtedness; Future Liens. Schedule 4.17 sets forth
a complete and correct list of all Indebtedness of each Issuer and its
Subsidiaries that will be outstanding at the Closing Time immediately after the
consummation of the Transactions except for Indebtedness arising under this
Agreement, the Notes and the Guarantees, and any such Indebtedness not so
scheduled which, in the aggregate, does not exceed $50,000. No Issuer or any
Subsidiary of an Issuer is in default, and no waiver of default is currently in
effect, in the payment of the principal of or interest on any such Indebtedness
and no event or condition exists with respect to any such Indebtedness that
would permit (or that with notice, lapse of time or both, would permit) any
Person to cause such Indebtedness to become due and payable before its Stated
Maturity or before its regularly scheduled dates of payment except with respect
to any such defaults which would not individually, or in the aggregate, have a
Material Adverse Effect. No Issuer or any of its Subsidiaries has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property or assets, whether now owned or hereafter
acquired, to be subject to a Lien that would be prohibited by this Agreement if
incurred after the issuance of Notes.
4.18. Compliance with Laws; Permits; Environmental Matters. Except
as provided in Schedule 4.18, (a) each of the Company and its Subsidiaries has
complied, and is in compliance in all material respects with, all Applicable
Laws and has all Permits material to, and necessary in, the conduct of its
business as currently conducted and all such Permits are in full force and
effect, (b) no violations have been recorded in respect of any such Permits, and
no proceeding is pending or, to the Knowledge of the Issuers, threatened to
revoke or limit any Permit, except for violations and proceedings which,
individually or in the aggregate, have not and would not reasonably be expected
to have a Material Adverse Effect, (c) the on going operations of the Company
and each Subsidiary comply in all respects with all Environmental Laws, except
such non-compliance which could not (if enforced in accordance with Applicable
Law) reasonably be expected to result in a Material Adverse Effect, (d) the
Company and each Subsidiary have obtained, and maintained in good standing, all
licenses, permits, authorizations and registrations required under any
Environmental Law and necessary for their respective ordinary course operations,
and the Company and each Subsidiary are in compliance with all material terms
and conditions thereof, except where the failure to do so could not reasonably
be expected to result in material liability to the Company or any Subsidiary and
could not reasonably be expected to result in a Material Adverse Effect, (e) to
the best of the Company's Knowledge, none of the Company, any Subsidiary or any
of their respective properties or operations is subject to any outstanding
written order from or agreement with any Federal, state or local governmental
authority, nor subject to any judicial or docketed administrative proceeding,
respecting any Environmental Law, En-
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vironmental Claim or Hazardous Substance, except to the extent that the same
would not reasonably be expected to result in a Material Adverse Effect, (f)
there are no Hazardous Substances or other conditions or circumstances existing
with respect to any property, or arising from operations prior to the Closing
Time, of the Company or any Subsidiary that would reasonably be expected to
result in a Material Adverse Effect and (g) neither the Company nor any
Subsidiary has any underground storage tanks that are not properly registered or
permitted under applicable Environmental Laws or that are leaking or disposing
of Hazardous Substances.
4.19. Solvency. The Company and its Subsidiaries are, and after
giving effect to the Transactions will be, Solvent.
4.20. Affiliate Transactions. Except as set forth in the Company's
Reports filed with the Commission, since the date of the Company's last proxy
statement filed with the Commission, no event has occurred that would be
required to be reported by the Company pursuant to Item 404 of Regulation S-K
promulgated by the Commission.
4.21. Material Contracts. Except as described on Schedule 4.21, as
of the Closing Time (a) each Material Contract is in full force and effect and
no defaults enforceable against the Company or any of its Subsidiaries currently
exist thereunder, and (b) neither the Company nor any of its Subsidiaries has
received any written notice or other communication regarding any actual or
possible violation or breach of, or default under, any Material Contract, except
in each such case of clauses (a) and (b) for defaults, violations or breaches
that have not had and would not reasonably be expected to have a Material
Adverse Effect.
4.22. Brokerage Fees. Except as disclosed in Schedule 4.22, neither
the Company nor any of its Subsidiaries has paid, or is obligated to pay, to any
Person any brokerage or finder's fees in connection with the transactions
contemplated hereby or by any other Transaction Documents.
4.23. Absence of Labor Dispute. Except as disclosed on Schedule
4.23, as of the Closing Time, no labor dispute with the employees of the Company
or any of its Subsidiaries exists or, to the Knowledge of the Issuers, is
imminent, and no Issuer is aware of any existing or imminent labor disturbance
by the employees, principal suppliers, manufacturers, customers or contractors
of the Company or any of its Subsidiaries, which, in any case, would reasonably
be expected to have a Material Adverse Effect.
4.24. Additional Representations.
(a) Each Closing Time Issuer represents and warrants to each
Purchaser that, based on the representations of Purchasers in Section 5.06, it
is not a "party in interest" (within the meaning of Section 3(14) of ERISA) or a
"disqualified person" (within the meaning of Section 4975(e)(2) of the Code)
with respect to any Purchaser (or any employee benefit plan the assets of which
are held by a Purchaser).
(b) The Company has not distributed the stock of any corporation in
a transaction satisfying the requirements of Section 355 of the Code since April
16, 1997, and the stock of the Company has not been distributed in a transaction
satisfying the requirements of Section 355 of the Code since April 16, 1997.
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SECTION 5
REPRESENTATIONS OF THE PURCHASERS
Each Purchaser severally and not jointly represents and warrants to
the Closing Time Issuers as of the date hereof and as of the Closing Time as
follows:
5.01. Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement: (a) is within its power and
authority and has been duly authorized by all necessary action; (b) does not
contravene the terms of such Purchaser's organizational documents or any
amendment thereof; and (c) will not violate, conflict with or result in any
breach or contravention of any of such Purchaser's material contractual
obligations, including, but not limited to, any provision of any security issued
by such Purchaser or of any material agreement, undertaking, contract,
indenture, mortgage, deed or trust or other instrument or arrangement (whether
in writing or otherwise) to which such Purchaser is a party or by which it or
any of its property is bound, or any order or decree directly relating to such
Purchaser.
5.02. Binding Effect. This Agreement has been duly executed and
delivered by it and this Agreement constitutes such Purchaser's valid and
legally binding obligation, enforceable against such Purchaser in accordance
with its terms, subject to the Enforceability Exceptions.
5.03. No Legal Bar. The execution, delivery and performance of this
Agreement by it will not violate any provision of Applicable Law.
5.04. Governmental Authorization; Third Party Consent. The
execution, delivery and performance by such Purchaser of this Agreement does not
require any consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Authority, except for those consents,
approvals, authorizations, declarations, filings or registrations which have
been obtained or made.
5.05. Purchase for Investment.
(a) Such Purchaser is acquiring the Securities for its own account,
for investment and not with a view to any distribution thereof within the
meaning of the Securities Act.
(b) Such Purchaser understands that (i) the Securities have not been
registered under the Securities Act and are being issued by the Closing Time
Issuers in transactions exempt from the registration requirements of the
Securities Act and (ii) the Securities may not be offered or sold except
pursuant to an effective registration statement under the Securities Act or
pursuant to an applicable exemption from registration under the Securities Act.
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 promulgated under the Securities Act depends
on the satisfaction of various conditions, and that, if applicable, Rule 144 may
afford the basis for sales only in limited amounts.
(d) Such Purchaser did not employ any broker or finder in connection
with the transactions contemplated in this Agreement.
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(e) Such Purchaser is an Accredited Investor.
5.06. ERISA Matters. It is not acquiring the Securities for or on
behalf of any pension or welfare plan (as defined in Section 3 of ERISA) or plan
(as defined in Section 4975 of the Code) (collectively, a "Covered Plan"),
except:
(a) to the extent such purchase is made by or on behalf of a bank
collective investment fund maintained by such Purchaser in which no
Covered Plan (together with any other Covered Plans maintained by the same
employer or employee organization) has an interest in excess of 10% of the
total assets in such collective investment fund and the conditions of
Section III of Prohibited Transaction Class Exemption 91-38 issued by the
Department of Labor are satisfied;
(b) to the extent such purchase is made by or on behalf of an
insurance company pooled separate account maintained by such Purchaser in
which no Covered Plan (together with any other Covered Plans maintained by
the same employer or employee organization) has an interest in excess of
10% of the total assets in such pooled separate account and the conditions
of Section III of Prohibited Transaction Class Exemption 90-1 issued by
the Department of Labor are satisfied;
(c) to the extent such purchase is made on behalf of a Covered Plan
by (i) an investment adviser registered under the Investment Advisers Act
of 1940, as amended, that has, as of the last day of its most recent
fiscal year, total client assets under its management and control in
excess of $50,000,000 and had shareholders' or partners' equity in excess
of $750,000, as shown in its most recent balance sheet prepared in
accordance with generally accepted accounting principles, (ii) a bank as
defined in Section 202(a)(2) of the Investment Advisers Act of 1940, as
amended, that has the power to manage, acquire or dispose of assets of a
Covered Plan, with equity capital in excess of $1,000,000 as of the last
day of its most recent fiscal year, (iii) an insurance company which is
qualified under the laws of more than one State to manage, acquire or
dispose of any assets of a Covered Plan, which insurance company has, as
of the last day of its most recent fiscal year, net worth in excess of
$1,000,000 and which is subject to supervision and examination by a State
authority having supervision over insurance companies, or (iv) a savings
and loan association, the accounts of which are insured by the Federal
Deposit Insurance Corporation, that has made application for and been
granted trust powers to manage, acquire or dispose of assets of a Covered
Plan by a State or Federal authority having supervision over savings and
loan associations, which savings and loan association has, as of the last
day of its most recent fiscal year, equity capital or net worth in excess
of $1,000,000 and, in any case, such investment adviser, bank, insurance
company or savings and loan is otherwise a "qualified professional asset
manager," as such term is used in Prohibited Transaction Class Exception
84-14 issued by the Department of Labor, with respect to such Covered
Plan, and the assets of such Covered Plan managed by such investment
advisor, bank, insurance company or savings and loan, when combined with
the assets of other Covered Plans established or maintained by the same
employer (or affiliate thereof, as defined in such exemption) or employee
organization and managed by such investment adviser, bank, insurance
company or savings and loan, do not represent more than 20% of the total
client assets managed by such investment adviser, bank, insurance company
or savings and loan, and the conditions of Part I of such exemption are
otherwise satisfied;
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(d) to the extent such purchase is made by or on behalf of an
insurance company with assets in its insurance company general account, if
no Covered Plan (together with any other Covered Plans maintained by the
same employer or employee organization) has an interest in the general
account, the amount of reserves and liabilities for which exceed 10% of
the total reserves and liabilities of the general account plus surplus,
determined as set forth in Prohibited Transaction Class Exemption 95-60
issued by the Department of Labor, and the conditions of such exemption
are otherwise satisfied;
(e) to the extent such purchase is made on behalf of a Covered Plan
by an "in-house asset manager" (the "INHAM") as defined in Part IV of
Prohibited Transaction Class Exemption 96-23 issued by the Department of
Labor, Plans maintained by affiliates of the INHAM and/or the INHAM have
aggregate assets in excess of $250 million, and the conditions of Part I
of such exemption are otherwise satisfied; and
(f) to the extent such Covered Plan is a governmental plan (as
defined in Section 3 of ERISA) or a plan described in Section 4(b)(4) of
ERISA which, in either case, is not subject to the provisions of Title I
of ERISA or Section 4975 of the Code;
SECTION 6
COVENANTS TO PROVIDE INFORMATION
Each Closing Time Issuer covenants and agrees with each Purchaser
that for so long as any Securities are outstanding:
6.01. Future Reports to Holders.
(a) Monthly Statements. As soon as available but in any event within
thirty (30) days after the end of each month, the Company shall deliver to each
Noteholder duplicate copies of:
(i) consolidated and consolidating balance sheets of the Company and
its Restricted Subsidiaries as at the end of such month, and
(ii) consolidated and consolidating statements of earnings and cash
flows of the Company and its Restricted Subsidiaries for such month and
for the portion of the fiscal year ending with such month, in each case
setting forth in comparative form the figures for the corresponding
periods in the prior Fiscal Year and the corresponding figures from the
consolidated plan and financial forecast for the current Fiscal Year
delivered pursuant to Section 6.01(d), all in reasonable detail, prepared
in accordance with GAAP applicable to periodic financial statements
generally, and fairly presenting, in all material respects, the financial
position of the Persons being reported on and their results of operations
and cash flows, subject to the absence of footnotes and to changes
resulting from normal year-end adjustments, and accompanied by a
certificate of the Chief Financial Officer of the Company to the foregoing
effect.
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(b) Quarterly Statements. As soon as available, but in any event
within forty-five (45) days after the end of each Fiscal Quarter, the Company
shall deliver to each Holder and each Warrantshareholder duplicate copies of:
(i) consolidated and consolidating balance sheets of the Company and
its Restricted Subsidiaries as at the end of such Fiscal Quarter, and
(ii) consolidated and consolidating statements of earnings and cash
flows of the Company and its Restricted Subsidiaries, for such Fiscal
Quarter and for the portion of the Fiscal Year ending with such Fiscal
Quarter,
in each case setting forth in comparative form the figures for the corresponding
periods in the prior Fiscal Year and the corresponding figures from the
consolidated plan and financial forecast for the current Fiscal Year delivered
pursuant to Section 6.01(d), all in reasonable detail, prepared in accordance
with GAAP applicable to periodic financial statements generally, and fairly
presenting, in all material respects, the financial position of the Persons
being reported on and their results of operations and cash flows, subject to the
absence of footnotes and to changes resulting from normal year-end adjustments,
and accompanied by a (x) certificate of the Chief Financial Officer of the
Company to the foregoing effect and (y) a narrative report describing in
reasonable detail the operations and financial condition of the Company and its
Restricted Subsidiaries prepared for such quarter and for the period from the
beginning of the then current fiscal year to the end of such quarter; provided,
however, that if the Company is then subject to the reporting requirements under
Section 13 or Section 15(d) of the Exchange Act, the delivery by the Company to
each Holder and Warrantshareholder of a Quarterly Report on Form 10-Q or any
successor form within the time periods above described shall satisfy the
requirements of this Section 6.01(b). The consolidating balance sheet and
statements of earnings and cash flows required by this paragraph may be in the
form contained in the notes to the financial statements included in the
Company's previously filed Form 10-Q.
(c) Annual Statements. As soon as available, but in any event within
ninety (90) days after the end of each Fiscal Year of Holdings and the Company,
Holdings and the Company shall deliver to each Holder and Warrantshareholder
duplicate copies of:
(i) consolidated and consolidating balance sheets of each of
Holdings and the Company and their respective Restricted Subsidiaries as
at the end of such Fiscal Year, and
(ii) consolidated and consolidating statements of earnings and cash
flows of each of Holdings and the Company and their respective Restricted
Subsidiaries for such Fiscal Year,
in each case setting forth in comparative form the figures for the prior Fiscal
Year and the corresponding figures from the consolidated plan and financial
forecast for the current Fiscal Year delivered pursuant to Section 6.01(d), all
in reasonable detail, prepared in accordance with GAAP, fairly presenting, in
all material respects, the financial position of the Persons being reported on
and their results of operations and cash flows, and accompanied by:
(A) an opinion thereon of independent certified public accountants
of recognized national standing, which opinion (i) shall state that such
financial statements (other than consolidating statements) present fairly,
in all material respects, the financial position of the Persons being
reported upon and their results of operations and cash flows and have been
pre-
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pared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements (other than
consolidating statements) has been made in accordance with generally
accepted auditing standards in the United States, and that such audit
provides a reasonable basis for such opinion in the circumstances, and
(ii) shall not contain a "going concern" or like qualification, or any
exception or other qualification arising out of the scope of the audit,
(B) unless the internal policies of the accountants prohibit the
delivery thereof (as evidenced in writing to the Company), a debt
compliance letter of such accountants in a form reasonably acceptable to
such accountants stating that they have reviewed this Agreement and, if
applicable, stating further that based upon their work performed in
connection with their examination of such financial statements, nothing
came to their attention that caused them to believe that the Company or
any of its Restricted Subsidiaries was not in compliance with any
provision of Section 8.02, 8.04, 8.18 or 8.20 insofar as such provision
relates to accounting matters and, if the accountants shall have become
aware of any such non-compliance, the letter will describe such
non-compliance in reasonable detail,
(C) a certificate of the Chief Financial Officer of Holdings or the
Company, as applicable, stating that such financial statements have been
prepared in accordance with GAAP applicable to periodic financial
statements generally and fairly present, in all material respects, the
financial position of the Persons being reported on and their results of
operations and cash flows, and
(D) a narrative report describing in reasonable detail the
operations and financial condition of Holdings or the Company, as
applicable, and their respective Restricted Subsidiaries prepared for such
year;
provided, however, that if Holdings or the Company, as applicable, is then
subject to the reporting requirements under Section 13 or Section 15(d) of the
Exchange Act, the delivery by Holdings or the Company, as applicable, to such
Holder and Warrantshareholder of an Annual Report on Form 10-K or any successor
form within the time periods above described shall satisfy the requirements of
this Section 6.01(c) and Section 6.01(g). The consolidating balance sheet and
statements of earnings and cash flows required by this paragraph may be in the
form contained in the notes to the financial statements included in Company's
previously filed Form 10-K.
If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the monthly, quarterly and annual financial
information required by Sections 6.01(a), (b) and (c) and any forecast provided
under Section 6.01(d) will include a reasonably detailed presentation, either on
the face of the financial statements or in the footnotes thereto, of the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Company.
(d) Forecasts. As soon as practicable but in any event no later than
40 days following the first day of each Fiscal Year, Holdings and the Company
shall deliver to each Noteholder a forecast for each of the next succeeding
twelve months of the consolidated balance sheet and the consolidated statements
of earnings and cash flows of Holdings and the Company and each of their
respective Restricted Subsidiaries and the consolidating balance sheet and the
consolidating statements of earnings and cash flows of each of Holdings and the
Company and each of their respective Restricted Subsidiaries, together with an
outline of the major assumptions upon which the forecast is based.
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(e) Telephonic Conference. Upon request by the Required Holders made
within 10 Business Days after the delivery of the financial statements referred
to in Sections 6.01(a), (b), (c) and (d) above, the Chief Financial Officer of
the Company shall participate in a telephonic conference with the Noteholders to
occur during normal business hours within five Business Days of receipt by the
Company of such request.
(f) Chief Financial Officer Certificates. Concurrently with the
delivery of the financial statements referred to in subsections (b) and (c) of
this Section 6.01, the Company shall deliver to each Noteholder an Officers'
Certificate (of which one of the signatories shall be the Chief Financial
Officer of the Company) (i) stating that such Officer has obtained no knowledge
of any Default or Event of Default except as specified in such Officers'
Certificate, and (ii) containing a computation of each of the financial ratios
and restrictions in Section 8.20 of this Agreement.
(g) Auditors' Reports. Promptly upon receipt thereof, the Company
shall deliver to (i) each Holder and Warrantshareholder entitled to receive
financial statements pursuant to Section 6.01(c) copies of all final audit
reports submitted to the Company or to any of its Subsidiaries by independent
certified public accountants in connection with each annual, interim or special
audit of the books of the Company or any of its Subsidiaries made by such
accountants, and (ii) each Noteholder any final comment letter submitted by such
accountants to management in connection with their annual audit.
(h) Other Information. Promptly upon their becoming available, the
Company shall deliver to each Noteholder copies of all financial statements,
reports, notices and proxy statements sent to its securityholders or made
available generally by the Company or any of its Restricted Subsidiaries and all
regular and periodic reports and all registration statements and final
prospectuses, if any, filed by the Company or any of its Restricted Subsidiaries
with any securities exchange or with the Commission or any Governmental
Authority succeeding to any of its functions and, promptly upon request, such
additional financial and other information as such Noteholder may from time to
time reasonably request.
(i) Notice of Default or Event of Default. Promptly, but in any
event within three Business Days, after any Officer of the Company becomes aware
of the existence of any Default or Event of Default or that any Person has given
any notice or taken any other action with respect to a claimed Default or Event
of Default, the Company shall deliver to each Noteholder a written notice
thereof specifying the nature and existence thereof and what action the Company
is taking or proposes to take with respect thereto.
(j) Additional Information to Holders of Other Indebtedness.
Simultaneously with the furnishing of such information to any other holder of
Indebtedness of the Company or any of its Restricted Subsidiaries, the Company
shall deliver to each Noteholder (i) copies of all other financial statements,
reports or projections with respect to the Company or its Restricted
Subsidiaries which are broader in scope or on a more frequent basis than the
Company is required to provide under this Agreement and (ii) copies of all
studies, reviews, reports or assessments relating to environmental matters that
reveal circumstances, events or other matters that would reasonably be expected
to have a Material Adverse Effect.
(k) Original Issue Discount Information. The Company shall deliver
to each Noteholder all original issue discount information relating to the Notes
as may be required by Applicable Law.
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(l) Management Report. Promptly upon receipt thereof, the Company
shall deliver to each Noteholder, copies of all detailed financial and
management reports submitted to any Issuer by independent auditors in connection
with each annual or interim audit made by such auditors of the books of such
Issuer.
(m) Litigation and Other Material Events. Promptly after the
commencement thereof, the Company shall deliver to each Noteholder notice of all
actions, suits, investigations, litigation, arbitrations and proceedings Known
to the Issuers against or affecting the Company or any of its Restricted
Subsidiaries or any of the property or assets thereof in any court or before any
arbitrator or by or before any Governmental Authority or court of any kind not
previously disclosed by the Company or any of its Restricted Subsidiaries that
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect (so long as such Purchaser holds any Warrants or Warrant
Shares).
(n) Additional Matters. (i) The Audax Investor Group agrees that any
delivery obligation of the Company owed to any member of the Audax Investor
Group pursuant to this Section 6 shall be satisfied upon the delivery of the
required documents and information to Audax Management.
(i) Notwithstanding any provision in this Agreement to the contrary,
(x) none of Holdings, the Company or any Subsidiary shall in any event be
required to provide to any Person any information protected by law as a
privileged communication resulting from a protected relationship (including, by
way of example, the attorney client relationship), so long as such information
remains privileged and the disclosure of such privileged information would, in
the good faith judgment of Holdings or the Company (based on the advice of
counsel), constitute a waiver of such privileged status and (y) other than with
respect to any original Purchaser (so long as such Purchaser holds any Warrants
or Warrant Shares), the Company shall not have any obligations to provide
information under this Section 6 to any Warrantholder or Warrantshareholder that
holds Warrants and/or Warrant Shares (and Existing Warrants and Existing Warrant
Shares) equivalent to less than 500 shares of Holdings Common Stock (subject to
appropriate adjustment for combinations, subdivisions, stock dividends and like
events with respect to the Holdings Common Stock).
SECTION 7
OTHER AFFIRMATIVE COVENANTS
Each Closing Time Issuer further covenants and agrees with each
Purchaser and each Noteholder that until the principal amount of (and premium,
if any, on) all the Notes, and all interest and other obligations (other than
contingent indemnification obligations, to the extent no claim has been
asserted) hereunder in respect thereof, shall have been paid in full:
7.01. Payment of Principal, Premium and Interest. The Company shall
duly and punctually pay the principal of (and premium, if any, on) and all
interest on the Notes in accordance with the terms of the Notes and this
Agreement.
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The Company shall pay interest on overdue principal (including
post-petition interest on a proceeding under any Bankruptcy Law), and interest
on overdue interest, to the extent lawful, at the rate specified in the Notes.
7.02. Preservation of Corporate Existence and Franchises. Subject to
Sections 8.10 and 13.03 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (a) its corporate
existence, and the corporate, partnership or other existence of each of its
Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (b) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
Restricted Subsidiaries if (i) the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and (ii) the loss
thereof could not reasonably be expected to have a Material Adverse Effect.
7.03. Maintenance of Properties. The Company shall cause all
properties used or useful in the conduct of its business or the business of any
of its Restricted Subsidiaries to be maintained and kept in good condition,
repair and working order (normal wear and tear excepted) and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may properly and advantageously conducted at all times; provided,
however, that the foregoing shall not prevent the Company from discontinuing the
operation or maintenance of any of such properties if (i) such discontinuance is
desirable in the conduct of the Company's business or the business of any
Restricted Subsidiary and (ii) such discontinuance would not reasonably be
expected to have a Material Adverse Effect.
7.04. Taxes.
(a) Payment of Taxes. The Company shall pay or discharge or cause to
be paid or discharged, before the same shall become delinquent, (i) all Taxes,
assessments and governmental charges levied or imposed upon the Company or any
of its Restricted Subsidiaries or upon the income, profits or property of the
Company or any of its Restricted Subsidiaries, and (ii) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a Lien upon
the property of the Company or any of its Restricted Subsidiaries; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such Tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings; provided that appropriate reserves therefor are established in the
Company's consolidated financial statements in accordance with GAAP.
(b) Tax Returns. The Company and its Restricted Subsidiaries shall
timely file or cause to be filed when due all Tax Returns that are required to
be filed by or with respect to the Company for taxable years ending after the
Closing Time and shall pay any Taxes due in respect of such Tax Returns;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such Tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings; provided that appropriate reserves therefor are
established in the Company's consolidated financial statements in accordance
with GAAP.
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(c) Contest Provisions. The Company shall promptly notify the
Purchasers and Noteholders in writing upon receipt by the Company or any of its
Restricted Subsidiaries or any of their Affiliates of notice of any pending or
threatened Tax audits or assessments which may materially affect the Tax
liabilities of the Company.
7.05. Books, Records and Access. Holdings, the Company and each of
its Restricted Subsidiaries shall keep complete and accurate books and records
of their transactions in accordance with good accounting practices on the basis
of GAAP applied on a consistent basis (including the establishment and
maintenance of appropriate reserves). To the extent reasonably required in
connection with any resale of the Notes and upon reasonable notice, Holdings and
the Company shall, and the Company shall cause its Restricted Subsidiaries to,
subject to compliance with Applicable Laws and confidentiality obligations to
third parties, give each Purchaser and any Noteholder that (i) holds not less
than 10% in aggregate principal amount of the then outstanding Notes and (ii) is
not a competitor of the Company or any of its Restricted Subsidiaries and their
authorized representatives (provided such representatives agree to be bound by
the provisions of Section 15.14 hereof) reasonable access during normal business
hours to all contracts, books, records, personnel, offices and other facilities
and properties of Holdings, the Company and its Restricted Subsidiaries, permit
each Purchaser and such Noteholder to make such copies and inspections thereof
as such Purchaser or Noteholder may reasonably request and furnish such
Purchaser and Noteholder with such financial and operating data and other
information with respect to the business and properties of Holdings, the Company
and its Restricted Subsidiaries as such Purchaser or Noteholder may from time to
time reasonably request. Any such visits will be at the expense of such
Purchaser or Noteholder. Each such Purchaser and Noteholder agrees to use its
best efforts to ensure that all such inspections, visits and examinations be
conducted in a manner that minimizes interference with the business of Holdings,
the Company or any such Restricted Subsidiary. All such information obtained
during any such inspection, visit or examination shall be treated as
confidential information subject to Section 15.14 hereof and Holdings or the
Company, as applicable, may require the recipient of such information to
acknowledge in writing the applicability of Section 15.14 to such information.
Notwithstanding any provision in this Agreement to the contrary, none of
Holdings, the Company nor any Subsidiary shall be obligated to provide to any
Person any information protected by law as a privileged communication resulting
from a protected relationship (including, by way of example, the attorney-client
relationship), so long as such information remains privileged and the disclosure
of such privileged information would, in the good faith judgment of Holdings or
the Company (based on the advise of counsel), constitute a waiver of such
privileged status.
7.06. Compliance with Law. The Company shall, and shall cause each
of its Restricted Subsidiaries to, comply with all Applicable Laws and shall
obtain and maintain, and shall cause each of its Restricted Subsidiaries to
obtain and maintain, all Permits necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that any such non-compliance with Applicable Law or
any failure to obtain or maintain such Permits, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
7.07. Insurance. The Company shall, and shall cause its Restricted
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and business against such
casualties and contingencies, of such types, on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if adequate reserves
are maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
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7.08. Offer to Repurchase upon Change of Control.
(a) Within 30 days following any Change of Control, the Company
covenants to
(i) repay in full all obligations and terminate all commitments
under or in respect of all Senior Indebtedness under the Credit Agreement
to the extent the terms thereof prohibit the purchase by the Company of
the Notes upon a Change of Control in compliance with the terms of this
covenant or offer to repay in full all obligations and terminate all
commitments under or in respect of all such Senior Indebtedness under the
Credit Agreement and repay the Senior Indebtedness owed to each such
lender who has accepted such offer; or
(ii) obtain the requisite consents, if any, under the Credit
Agreement to permit the repurchase of the Notes as described below.
The Company must first comply with the covenant described in this
Section 7.08(a) before it shall be required to purchase Notes in the event of a
Change of Control; provided that the Company's failure to comply with the
covenant described in the preceding sentence shall constitute an Event of
Default described in clause (c) under Section 11.01.
(b) Upon the occurrence of a Change of Control and upon compliance
by the Company with Section 7.08(a) above, the Company shall make an offer (a
"Change of Control Offer") to each Noteholder to repurchase all or any part of
each Noteholder's Notes at an offer price in cash equal to the sum of 100% of
the principal amount of the Notes being repurchased plus the Applicable Premium
plus accrued and unpaid interest, if any, thereon to the Change of Control
Payment Date (the "Change of Control Purchase Price"). The Company shall comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control, and the Company shall not be in violation of this
Agreement by reason of any act required by such rule or other applicable law.
(c) Within 30 days following any Change of Control, the Company
shall send, by first-class mail, a notice to each Noteholder stating:
(i) that the Change of Control Offer is being made pursuant to this
Section 7.08 and that all Notes tendered will be accepted for payment;
(ii) the purchase price and the purchase date, which shall be at
least 30 but not more than 60 days from the date on which the Company
mails notice of the Change of Control, other than as may be required by
law (the "Change of Control Payment Date");
(iii) that any Notes not tendered will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the Change
of Control Purchase Price, all Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that Noteholders electing to have any Notes purchased pursuant
to a Change of Control Offer shall be required to surrender the Notes,
with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Notes completed, to the Company or its desig-
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nated agent for such purpose at the address specified in the notice prior
to 5:00 p.m. New York City time on the third Business Day preceding the
Change of Control Payment Date;
(vi) that Noteholders will be entitled to withdraw their election if
the Company or its designated agent for such purpose receives, not later
than 5:00 p.m. New York City time on the second Business Day preceding the
Change of Control Payment Date, a facsimile transmission or letter setting
forth the name of the Noteholder, the principal amount of Notes delivered
for purchase, and a statement that such Noteholder is withdrawing his
election to have the Notes purchased; and
(vii) that Noteholders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
(d) On or before the Change of Control Payment Date, the Company
shall, to the extent lawful, (i) accept for payment all Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (ii) mail or
wire to each Noteholder so tendered the Change of Control Purchase Price for
such Notes plus all accrued and unpaid interest to the Change of Control Payment
Date, and (iii) execute and mail to each Noteholder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any;
provided, however, that each such new Note shall be in a principal amount at
least equal to the Minimum Denomination. The Company shall inform the
Noteholders in writing of the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Payment Date.
(e) If the Company or any of its Restricted Subsidiaries has
outstanding any Preferred Stock or Subordinated Indebtedness, and the Company or
such Subsidiary is required to make a change of control offer or to make a
distribution with respect to such Preferred Stock or Subordinated Indebtedness
in the event of a Change of Control, the Company shall not consummate any such
offer or distribution with respect to such Preferred Stock, or Subordinated
Indebtedness until such time as the Company has paid the Change of Control
Purchase Price to the Noteholders that have accepted the Company's Change of
Control Offer and must otherwise have consummated the Change of Control Offer.
The Company shall not issue Preferred Stock, or Subordinated Indebtedness with
change of control provisions requiring the payment of such Preferred Stock or
Subordinated Indebtedness prior to the payment of the Notes in the event of a
Change in Control.
7.09. Offer to Purchase by Application of Excess Proceeds.
(a) In the event that, pursuant to Section 8.05 hereof, the Company
shall be required to commence an offer to all Noteholders to purchase Notes (an
"Excess Proceeds Offer"), it shall follow the procedures specified in this
Section 7.09. The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes pursuant to an Excess Proceeds Offer, and the Company
shall not be in violation of this Agreement by reason of any act required by
such rule or other applicable law.
(b) Within 30 days following each date on which the Company's
obligation to make an Excess Proceeds Offer is triggered, the Company shall
send, by first-class mail, a notice to each Noteholder stating:
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(i) that the Excess Proceeds Offer is being made pursuant to this
Section 7.09 and Section 8.05;
(ii) that the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 8.05 (the "Offer Amount"),
the purchase price per Note and the purchase date, which shall be at least
30 but no more than 60 days from the date on which the Company mails
notice of the Excess Proceeds Offer, other than as may be required by law
(the "Excess Proceeds Offer Payment Date");
(iii) that any Notes not tendered will continue to accrue interest;
(iv) that, unless the Company defaults in payment of the Offer
Amount on the Excess Proceeds Offer Payment Date, all Notes accepted for
payment pursuant to the Excess Proceeds Offer shall cease to accrue
interest after the Excess Proceeds Offer Payment Date;
(v) that Noteholders electing to have any Notes purchased pursuant
to an Excess Proceeds Offer shall be required to surrender the Notes, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Notes completed, to the Company or its designated agent for such
purpose at the address specified in the notice prior to 5:00 p.m. New York
City time on the third Business Day preceding the Excess Proceeds Offer
Payment Date;
(vi) that Noteholders will be entitled to withdraw their election if
the Company or its designated agent for such purpose receives, not later
than 5:00 p.m. New York City time on the second Business Day preceding the
Excess Proceeds Offer Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Noteholder, the
principal amount of Notes delivered for purchase, and a statement that
such Noteholder is withdrawing his election to have the Notes purchased;
(vii) that, if the aggregate principal amount of Notes surrendered
by Noteholders exceeds the Offer Amount, the Company shall select the
Notes to be purchased on a pro rata basis; and
(viii) that Noteholders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
On or before the Excess Proceeds Offer Payment Date, the Company
shall, to the extent lawful, (i) accept for payment, on a pro rata basis to the
extent necessary, all Notes or portions thereof properly tendered pursuant to
the Excess Proceeds Offer up to the principal amount of Notes equal to the Offer
Amount, or, if less than the Offer Amount has been tendered, all Notes tendered,
(ii) mail or wire to each Noteholder so tendered the purchase price for such
Notes, plus all accrued and unpaid interest to the Excess Proceeds Offer Payment
Date, (iii) execute and mail to each Noteholder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any, and (iv)
deliver to the Noteholders an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 7.09. The Company shall inform the Noteholders in writing
of the results of the Excess Proceeds Offer on or as soon as practicable after
the Excess Proceeds Offer Payment Date.
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7.10. Board Observer Rights and Frequency of Board Meetings.
(a) So long as any one or more members of the Audax Investor Group
or any of their Affiliates shall be Noteholders and collectively shall hold at
least $2.5 million in aggregate principal amount of the Notes and the Existing
Notes, each member of the Audax VCOC Group shall have the right exercisable by
written notice filed with the Secretary of each of Holdings and the Company, as
applicable, to appoint one observer to the Board of Directors of each of
Holdings and the Company (each such right to appoint one observer shall be
personal to each member of the Audax VCOC Group and may not be assigned to any
other Person) who shall be entitled to: (i) receive notice of all meetings (both
regular and special) of the Board of Directors of each of Holdings and the
Company and each committee thereof (such notices to be delivered or mailed as
specified in Section 15.01 and in accordance with Holdings' or the Company's, as
applicable, by-laws and applicable law), (ii) attend (or in the case of
telephone meetings, monitor) all such meetings, (iii) receive all information,
reports and solicitations of written consents in lieu of a meeting of Holdings'
or the Company's, as applicable, Board of Directors which are furnished to
members of the Board of Directors of Holdings or the Company, as applicable, or
any committee thereof at the same time such information, reports and
solicitations are furnished to such members and (iv) participate in all
discussions conducted at such meetings. Such observer shall not constitute a
member of the Board of Directors of Holdings or the Company (or any committee
thereof) and shall not be entitled to vote on any matters presented at meetings
of the board or of any committee thereof or to consent to any matter as to which
Holdings or the Company shall have requested the consent of the Board of
Directors or of any committee thereof. Notwithstanding each member of the Audax
VCOC Group's right to appoint one observer to the Board of Directors of each of
Holdings and the Company, each member of the Audax VCOC Group, to the extent
permitted under the Plan Asset Regulation, shall cooperate in appointing one
observer to serve as the observer for all members of the Audax VCOC Group.
(b) There will be at least four meetings of the Board of Directors
of each of Holdings and the Company during each fiscal year, at least one of
which will be held in each quarterly period during each of Holdings' and the
Company's fiscal year.
(c) Each such observer shall be required to abide by (and, if
requested by the Company, shall agree in writing to abide by) the
confidentiality provision contained in Section 15.14 hereof as a condition
precedent to the rights of Audax under this Section 7.10. Notwithstanding any
provision in this Agreement to the contrary, none of Audax, any Audax VCOC or
such observer shall be privy to any information of Holdings, the Company or any
of its Subsidiaries protected by law as a privileged communication resulting
from a protected relationship (including, by way of example, the attorney-client
relationship), so long as such information remains privileged and the disclosure
to the observer of such information would in the good faith judgment of the
Company or Holdings (based on the advice of counsel), constitute a waiver of
such privileged status.
(d) The Company shall reimburse each such observer for all of his
reasonable costs and expenses incurred in attending (or in the case of telephone
meetings, monitoring) each meeting of any Board of Directors.
(e) In addition, for so long as Audax or any Audax VCOC shall have
the right to appoint an observer to the Board of Directors of the Company, Audax
or such Audax VCOC, as applicable, shall have (i) the right to have its
representatives consult with Holdings' and the Company's executive officers
and/or directors periodically at a regular meeting between such representatives
and Holdings' and the Company's executive officers and/or directors, upon a
schedule suitable to Holdings
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or the Company as applicable, regarding business strategies, operating
priorities and other important corporate issues including, without limitation,
significant changes in management personnel and compensation of employees,
introduction of new products or new lines of business, important acquisitions or
dispositions of plants and equipment, significant research and development
programs, the purchasing or selling of important trademarks, licenses or
concessions or the proposed commencement or compromise of significant
litigation, (ii) the right to review any material equity and capitalization of
Holdings and the Company, and (iii) such other information rights and rights of
consultation as may reasonably be determined by Audax to be necessary to qualify
its investments in Holdings and the Company as a "venture capital investment"
for purposes of the United States Department of Labor Regulation published at 29
C.F.R. Section 2510.3-101(d)(3)(i) (the "Plan Asset Regulation").
7.11. Further Assurances. Holdings and the Company shall, upon the
request of any Holder or Warrantshareholder, execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the provisions of this Agreement.
7.12. Trust Subordinated Debt Documents. If an Event of Default
exists at the time that any interest payment is due under the Trust Subordinated
Debentures or would be caused by the making of such interest payment, the
Company shall exercise its rights under the Trust Subordinated Debentures, to
the maximum extent available, to defer payment of such interest.
7.13. ERISA Covenant. If at any time any Issuer shall become such a
"party in interest" (within the meaning of Section 3(14) of ERISA) or
"disqualified person" (within the meaning of Section 4975(e)(2) of the Code)
with respect to any Noteholder (or any employee benefit plan the assets of which
are held by a Noteholder), it shall promptly notify such Noteholder thereof.
7.14. Mandatory Partial Redemption. (a) On May 22, 2008 and each
Interest Payment Date thereafter, excluding the Interest Payment Date that falls
on the final Maturity of this Note, the Company shall redeem a principal amount
of the outstanding Notes on such date on a pro rata basis at a redemption price
of 100% of the principal amount of the Notes so redeemed (the amount paid in
order to redeem such Notes on any such date, the "PIK Redemption Amount" for
such date), such that the sum of the PIK Redemption Amount plus cash interest to
be paid on such date with respect to all outstanding Notes equals the AHYDO
Amount. The "AHYDO Amount" for any such Interest Payment Date will equal the
excess of (i) the aggregate amount includible in gross income with respect to
the Notes (i.e., the amount of interest, including original issue discount
accrued with respect to the Notes) from the date of issuance of the Notes
through and including each accrual period of the Notes ending after the fifth
anniversary of the issuance of the Notes (each, an "Accrual Period"), determined
as set forth in Section 163(i)(2)(A) of the Code, over (ii) the sum of (A) the
product of the issue price of the Notes and their annual yield to maturity
determined as set forth in Section 163(i)(2)(B)(ii) of the Code plus (B) the
aggregate amount of cash interest payments and PIK Redemption Amounts paid on
the Notes before the close of each such Accrual Period (excluding the PIK
Redemption Amount and current interest payable on such Interest Payment Date),
determined as set forth in Section 163(i)(2)(B)(i) of the Code. Notice of
redemption will be mailed at least 30 days but not more than 60 days before the
redemption date to each Noteholder of Notes to be redeemed.
(b) If the Company shall be prohibited for any reason, including by
operation of the terms of the Subordination Agreement, from consummating the
redemption of the outstanding principal amount of Notes contemplated to be
redeemed under clause (a) above in respect of (i) the May 22, 2008 Interest
Payment Date, and such prohibition shall have continued for a period of 30
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days following such Interest Payment Date, Holdings shall, no later than the
fifth Business Day following such 30-day period, issue to the Noteholders (pro
rata on the basis of the then outstanding principal amount of Notes held by such
Noteholders) AHYDO Warrants (the "Initial AHYDO Warrants") initially exercisable
for an aggregate of 30,957 shares of Holdings Common Stock (subject to
appropriate adjustment for stock dividends, subdivisions, combinations or like
events occurring after the Closing Time with respect to Holdings Common Stock),
and (ii) any Interest Payment Date following May 22, 2008, and such prohibition
shall have continued for a period of 30 days following such subsequent Interest
Payment Date, Holdings shall, no later than the fifth Business Day following
such 30-day period, issue to the Noteholders (pro rata on the basis of the then
outstanding principal amount of Notes held by such Noteholders) AHYDO Warrants
(the "Subsequent AHYDO Warrants") initially exercisable for an aggregate of
10,319 shares of Holdings Common Stock (subject to appropriate adjustment for
stock dividends, subdivisions, combinations or like events occurring after the
Closing Time with respect to Holdings Common Stock); provided, however, that
Holdings shall not be obligated to (i) issue Subsequent AHYDO Warrants on more
than one occasion or (ii) issue any Subsequent AHYDO Warrants if the Initial
AHYDO Warrants shall have been issued pursuant to the terms of clause (i) above.
Notwithstanding any provision in this Agreement to the contrary, no breach of
this Agreement or Default or Event of Default shall be deemed to have occurred
by virtue of the Company's failure to consummate any redemption contemplated by
this Section 7.14; provided that Holdings shall have issued the AHYDO Warrants
as required by this Section 7.14.
SECTION 8
NEGATIVE COVENANTS
Each Closing Time Issuer hereby covenants and agrees with each
Purchaser and each Noteholder that until the principal amount of (and premium,
if any, on) all the Notes, and all interest and other obligations (other than
contingent indemnification obligations, to the extent no claims have been
asserted) hereunder in respect thereof, shall have been paid in full:
8.01. Usury Laws. Each Closing Time Issuer covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any usury
law that would render any rights of the Noteholders to receive interest in
respect of the Notes unenforceable wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of its
obligations under the Notes, the Guarantees or this Agreement, and each Closing
Time Issuer hereby expressly waives on its behalf, and on behalf of the
Guarantors, all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Noteholders, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
8.02. Restricted Payments.
(a) None of Holdings, the Company or any Restricted Subsidiary of
the Company shall, (i) make any dividend or distribution to any of its equity
holders in respect of their equity interests, (ii) purchase or redeem any of its
equity interests or any warrants, options or other rights in respect thereof,
(iii) pay any management, consulting or similar fees to any of its equity
holders or any of its Affiliates, (iv) make any redemption, prepayment (whether
mandatory or optional), defeasance,
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repurchase or any other payment in respect of any Subordinated Indebtedness or
the Senarc Debt, including without limitation any redemption or prepayment of
the Trust Subordinated Debentures or the Trust Preferred Securities (whether
pursuant to the Trust Preferred Guarantee or otherwise) or (v) set aside funds
for any of the foregoing (clauses (i) through (v) of this Section 8.02
collectively referred to as a "Restricted Payment").
(b) Notwithstanding the foregoing, (i) any Wholly-Owned Restricted
Subsidiary may pay dividends or make other distributions to the Company or to a
Wholly-Owned Restricted Subsidiary that is a Guarantor; (ii) so long as no Event
of Default exists or would result therefrom, the Company may make distributions
to Holdings to permit Holdings to (A) pay federal and state income taxes then
due and owing by Holdings (or its equity holders), so long as the amount of such
distributions shall not be greater, nor the receipt by the Company of Tax
benefits less, than they would have been had the Company not filed consolidated
income tax returns with such Person and (B) make the payments described in
Sections 8.06(i) and (ii); (iii) so long as no Event of Default or Default
exists or would result therefrom, the Company may (1) pay fees to the Sponsors
pursuant to the Services and Fee Agreement in an aggregate amount not exceeding
$500,000 in any Fiscal Year (exclusive of transaction costs paid pursuant to the
Services and Fee Agreement at the Closing Time in respect of the Transactions),
plus reasonable out-of-pocket expenses as provided in the Services and Fee
Agreement and (2) make regularly scheduled payments of interest only (and not
principal or premium) in respect of Subordinated Indebtedness, or any other
payment that may be permitted under any applicable subordination agreement or
subordination provision that the Required Holders shall have consented to; (iv)
the Company may make regular scheduled payments of interest and principal in
respect of the Senarc Debt, or any other payment that may be permitted under the
Senarc Debt Documents; (v) any Closing Time Issuer or any Restricted Subsidiary
may make non-cash payments in the form of Common Stock (or Preferred Stock on
which dividends are payable solely in kind or in Common Stock) on such Person's
securities; (vi) each of the Closing Time Issuers or any Restricted Subsidiary
may consummate the Transactions and may pay fees and expenses incurred in
connection with the Transactions; (vii) so long as no Event of Default exists or
would result therefrom, the Company may make distributions to Holdings to permit
Holdings to purchase Holdings Common Stock or Holdings Common Stock options from
present or former officers or employees of Holdings, the Company or any
Restricted Subsidiary upon the death, disability of termination of employment of
such officer or employee, provided that the aggregate amount of payments by
Holdings in connection with such purchases subsequent to the date hereof (net of
any proceeds received by Holdings subsequent to the date hereof in connection
with resales of any Common Stock or Common Stock options so purchased) shall not
exceed the Annual Repurchase Amount for such Fiscal Year (the "Annual Repurchase
Amount" shall be $250,000 per year; provided that any unused portion of the
Annual Repurchase Amount for any Fiscal Year may be carried forward to
subsequent years, so long as the aggregate amount of payments in any single
Fiscal Year does not exceed $500,000); (viii) so long as no Event of Default
exists or would result therefrom, and so long as permitted under the
subordination provisions applicable thereto, the Company may make payments under
the Trust Preferred Guarantee of the obligations of the Trust under the Trust
Preferred Securities; , (ix) so long as no Event of Default exists or would
result therefrom, the Company may make scheduled payments of principal and
interest in accordance with the terms of the Kiddie World Debt as in effect at
the Closing Time and (x) on the Closing Time, the Company may make distributions
to Holdings to permit Holdings to redeem Common Stock of Holdings held by a
lender under the Credit Agreement.
8.03. Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or
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otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary of the Company to
(a) pay dividends or make any other distributions to the Company or
any Restricted Subsidiary of the Company (i) on its Capital Stock or (ii)
with respect to any other interest or participation in, or measured by,
its profits;
(b) subject to any subordination provisions for the benefit of the
Noteholders, repay any Indebtedness or any other obligation owed to the
Company or any Restricted Subsidiary of the Company;
(c) make loans or advances or capital contributions to the Company
or any of its Restricted Subsidiaries; or
(d) transfer any of its properties or assets to the Company or any
of its Restricted Subsidiaries;
except for such encumbrances or restrictions existing under or by reason of
(1) encumbrances or restrictions existing at the Closing Time to the
extent and in the manner such encumbrances and restrictions are in effect
at the Closing Time;
(2) this Agreement, the Notes and the Guarantees;
(3) Applicable Law;
(4) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person (including any Subsidiary of the Person), so
acquired;
(5) customary non-assignment provisions in leases or other
agreements entered in the ordinary course of business and consistent with
past practices;
(6) customary restrictions in security agreements or mortgages
securing Indebtedness of the Company or a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject to
such security agreements and mortgages;
(7) customary restrictions with respect to a Restricted Subsidiary
of the Company pursuant to an agreement that has been entered into for the
sale or disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary; or
(8) contained in the Credit Agreement but not more restrictive in
any material respect than as are in effect on the date hereof.
8.04. Incurrence of Indebtedness. The Company shall not, and shall
not permit any Restricted Subsidiary of the Company to, create, incur, assume or
suffer to exist any Indebtedness, except:
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(i) Indebtedness represented by the Senior Debt, less (without
duplication) the amount of any Net Cash Proceeds of any Asset Sale used to
repay Indebtedness thereunder in accordance with Section 8.05;
(ii) Indebtedness not otherwise permitted hereunder secured by Liens
permitted by Section 8.08(a)(iv), and extensions, renewals and
refinancings thereof; provided that the aggregate principal amount of all
such Indebtedness at any time outstanding shall not exceed $500,000;
(iii) Indebtedness of the Company to any Wholly-Owned Restricted
Subsidiary that is a Guarantor or Indebtedness of any Wholly-Owned
Restricted Subsidiary that is a Guarantor to the Company or another
Wholly-Owned Restricted Subsidiary that is a Guarantor;
(iv) Indebtedness of the Acquisition Sub to Fundamental Dynamics
Industries, Inc. in an aggregate outstanding principal amount not at any
time in excess of $75,000;
(v) Hedging Obligations incurred by the Company or any Restricted
Subsidiary for bona fide hedging purposes and not for speculation;
(vi) Indebtedness (including Contingent Obligations) described on
Schedule 8.04 as of the Closing Time, and any extension, renewal,
refunding or refinancing thereof so long as the principal amount thereof
is not increased;
(vii) the Trust Subordinated Debt in an aggregate outstanding
principal amount not at any time exceeding $17.0 million, together with
all accrued and unpaid interest thereon;
(viii) the Indebtedness under this Agreement, the Notes and the
Guarantees;
(ix) the Senarc Debt in an aggregate outstanding principal amount
not at any time exceeding $223,490, together with accrued and unpaid
interest thereon;
(x) Contingent Obligations arising (1) with respect to customary
indemnification obligations in favor of sellers in connection with
Acquisitions permitted under this Agreement and purchasers in connection
with dispositions permitted under this Agreement, (2) in the ordinary
course of business by the Company or any of its Restricted Subsidiaries
guaranteeing obligations of the Company or any of its Restricted
Subsidiaries that are Guarantors, (3) in favor of customers in the
ordinary course of business as a result of product warranties and (4) in
connection with unfunded pension fund and other employee benefit plan
obligations, to the extent the same are not yet required to be funded;
(xi) Indebtedness incurred in connection with Acquisitions permitted
pursuant to Section 8.15(xvi); provided that the requirements of clause
(6) of such Section are satisfied;
(xii) the Kiddie World Debt in an aggregate outstanding principal
amount not at any time exceeding $953,051, together with all accrued and
unpaid interest thereon; and
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(xiii) other Indebtedness, in addition to the Indebtedness listed
above, in an aggregate outstanding principal amount not at any time to
exceed $500,000, less the aggregate outstanding principal amount of the
Senarc Debt at such time (but in no event less than zero)
(such clauses (i) through (xiii), collectively, referred to as "Permitted
Indebtedness"), provided that the Company and its Restricted Subsidiaries shall
not incur any Permitted Indebtedness after the date hereof that is Subordinated
Indebtedness that has a maturity or mandatory sinking fund payment prior to the
Maturity of the Notes.
8.05. Asset Sales.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary of the Company to, consummate any Asset Sale unless
(i) the Company or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such sale or other disposition at
least equal to the Fair Market Value of the assets sold or otherwise
disposed of;
(ii) not less than 75% of the consideration received by the Company
or such Restricted Subsidiary, as the case may be, is in the form of cash;
provided that the following will also be deemed to be cash for purposes of
this clause (ii):
(A) any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet) of the Company or
any Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinate in right of payment to the Notes
or any Guarantee) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability; and
(B) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that
are contemporaneously (subject to ordinary settlement periods)
converted by the Company or such Subsidiary into cash (to the extent
of the cash received in that conversion); and
(iii) the Net Cash Proceeds received by the Company or such
Restricted Subsidiary are applied:
(A) first, to the extent the Company or any such Restricted
Subsidiary, as the case may be, elects, or is required, to prepay,
repay or purchase Indebtedness under the Credit Agreement within 180
days following the receipt of the Net Cash Pro ceeds from any Asset
Sale; provided that any such repayment shall result in a permanent
reduction of the commitments thereunder in an amount equal to the
principal amount so repaid;
(B) second, to the extent of the balance of Net Cash Proceeds
after application as described in subclause (A) above, to the extent
the Company elects, to an Investment in property or other assets
(including Capital Stock or other securities purchased in connection
with the acquisition of Capital Stock or property of another Person)
in compliance with Section 8.13; provided that
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(1) such Investment occurs or the Company or any such
Restricted Subsidiary enters into contractual commitments to
make such Investment, subject only to customary conditions
(other than the obtaining of financing), within 180 days
following receipt of such Net Cash Proceeds; and
(2) Net Cash Proceeds so contractually committed are so
applied within 270 days following the receipt of such Net Cash
Proceeds; and
(C) third, if on such 180th day in the case of clauses
(iii)(A) and (iii)(B)(1) (if applicable) or on such 270th day in the
case of clause (iii)(B)(2) (if applicable) with respect to any Asset
Sale, the Available Asset Sale Proceeds exceed $1.0 million, the
Company shall apply an amount equal to the Available Asset Sale
Proceeds to an offer to repurchase the Notes, at a purchase price in
cash equal to the sum of 100% of the principal amount thereof plus
Applicable Premium plus accrued and unpaid interest, if any, to the
purchase date in accordance with the terms of Section 7.09.
(b) If an Excess Proceeds Offer is not fully subscribed, the Company
may retain the portion of the Available Asset Sale Proceeds not required to
repurchase Notes and the amount of Available Asset Sale Proceeds shall be reset
to zero (0).
(c) In the event of the transfer of substantially all of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 8.10 or Section
13.03, the successor Person will be deemed to have sold the properties and
assets of the Company and its Restricted Subsidiaries not so transferred for
purposes of this Section 8.05, and must comply with the provisions of this
Section 8.05 with respect to such deemed sale as if it were an Asset Sale.
8.06. Transactions with Affiliates. None of Holdings, the Company or
any Restricted Subsidiary of the Company shall enter into, or cause, suffer or
permit to exist any transaction, arrangement or contract not otherwise permitted
under this Agreement with any of its other Affiliates other than any agreement
between or among the Company and/or one or more Wholly-Owned Restricted
Subsidiaries that are Guarantors, which is on terms which are less favorable
than are obtainable from any Person which is not one of its Affiliates, except:
(i) reasonable directors' fees and expenses paid to and indemnity
provided on behalf of directors and officers of Holdings, the Company or
any of the Company's Restricted Subsidiaries, as determined in good faith
by the applicable Board of Directors;
(ii) reasonable compensation paid to officers of Holdings, the
Company or any of the Company's Restricted Subsidiaries, as determined in
good faith by the applicable Board of Directors;
(iii) the execution and delivery of the Transaction Documents and
the consummation of the transactions contemplated thereby and/or permitted
pursuant to Section 8.02, including but not limited to the incurrence and
payment on the Closing Time of all fees and expenses (including fees and
expenses payable to or on behalf of the Sponsors or Holdings pursuant to
the Services and Fee Agreement) in connection therewith;
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(iv) the fees and out-of-pocket expenses described in Sections
8.02(b)(iii) and (b)(vi);
(v) so long as no Default or Event of Default shall have occurred
and be continuing, payments to the Sponsors of customary transaction fees
in connection with Acquisitions, to the extent such fees are approved by
the Required Holders in their sole discretion;
(vi) payments made by the Company pursuant to the terms of the
Services and Fee Agreement (including, without limitation, indemnification
obligations);
(vii) the agreements listed on Schedule 8.06 to the extent and in
the manner such agreements are in effect as of the Closing Time; and
(viii) Indebtedness permitted under Sections 8.04(iii), (vii) and
(xi) and Investments permitted under Sections 8.15(a)(i), (iii), (iv),
(xii), (xiii), (xvi), (xvii) and (xviii).
8.07. Limitation on Incurrence of Senior Subordinated Indebtedness.
The Company shall not, and shall not permit any Restricted Subsidiary that is a
Guarantor to incur, directly or indirectly, contingently or otherwise, any
Indebtedness that is both
(a) subordinate in right of payment to any Senior Indebtedness of
the Company or such Guarantor, as the case may be; and
(b) senior in right of payment to the Notes or the Guarantee of such
Guarantor, as the case may be.
8.08. Limitation on Liens.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary of the Company to, create or permit to exist any Lien on any of its
real or personal properties, assets or rights of whatsoever nature (whether now
owned or hereafter acquired), except:
(i) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in
good faith by appropriate proceedings and, in each case, for which it
maintains adequate reserves;
(ii) Liens arising in the ordinary course of business (such as (1)
Liens of carriers, warehousemen, mechanics, landlords and materialmen and
other similar Liens imposed by law and Liens of landlords imposed pursuant
to the underlying leases, and (2) Liens incurred in connection with
worker's compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with
statutory liens in the ordinary course (such as for payment of inventory
or wages) for claims not overdue or being contested in good faith, surety,
stay, customs and appeal bonds, bids, performance bonds and similar
obligations) for sums not overdue or being contested in good faith by
appropriate proceedings and not involving any borrowed money or the
deferred purchase price of property (other than inventory acquired in the
ordinary course of business) or services and, in each case, for which it
maintains adequate reserves;
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(iii) Liens (1) described on Schedule 8.08 as of the Closing Time or
(2) securing refinancing Indebtedness permitted pursuant to Section
8.04(vi) to the extent the Indebtedness being refinanced is secured by the
same or similar assets;
(iv) subject to the limitation set forth in Section 8.04(ii), (1)
Liens arising in connection with Capital Leases (and attaching only to the
property being leased), (2) Liens existing on property at the time of the
acquisition thereof by the Company or any Restricted Subsidiary (and not
created in contemplation of such acquisition) and (3) Liens that
constitute purchase money security interests on any property securing debt
incurred for the purpose of financing all or any part of the cost of
acquiring such property, provided that any such Lien attaches to such
property within 60 days of the acquisition thereof and attaches solely to
the property so acquired;
(v) attachments, appeal bonds, judgments and other similar Liens,
for sums not exceeding $250,000 arising in connection with court
proceedings; provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings;
(vi) easements, rights of way, zoning, restrictions, minor defects
or irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of the Company
or any Restricted Subsidiary;
(vii) Liens securing the Senior Debt;
(viii) the replacement, extension or renewal of any Lien permitted
by clause (iii)(1) above upon or in the same property subject thereto
arising out of the extension, renewal or replacement of the Indebtedness
secured thereby (without increase in the amount thereof);
(ix) any interest or title of a lessor or sublessor under any lease
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of its business and covering only the assets so leased;
(x) Liens arising from precautionary Uniform Commercial Code
financing statements filed under any lease not otherwise prohibited by
this Agreement;
(xi) Liens incurred in connection with Indebtedness permitted
pursuant to Section 8.04(iii) or (iv);
(xii) Liens on the inventory, and certain equipment and contracts,
acquired by the Company in connection with its acquisition of Senarc, that
secure the Senarc Debt;
(xiii) Liens on the assets acquired by the Company in connection
with the Kiddie World Acquisition that secure the Kiddie World Debt; and
(xiv) Liens not otherwise permitted by this Section 8.08 so long as
(1) the Indebtedness secured by such Liens is permitted under Section
8.04, (2) the aggregate outstanding principal amount of the Indebtedness
secured by such Liens does not exceed $250,000, less the aggregate
outstanding principal amount of the Senarc Debt at such time (but in no
event less than zero) and (3) the aggregate Fair Market Value (as of the
date each such Lien is in-
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curred) of the assets subject thereto does not exceed $250,000, less the
aggregate Fair Market Value of the assets securing the Senarc Debt at the
time such Senarc Debt was incurred (but in no event less than zero)
each clause (i) through (xiv) collectively referred to as "Permitted Liens" and
individually a "Permitted Lien".
8.09. Payments for Consents. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to any
Noteholder for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of this Agreement or the Notes unless such consideration
is offered to be paid or agreed to be paid to all Noteholders that so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or amendment; provided, however, a Noteholder's
participation in a subsequent financing for which such consent, waiver or
amendment is sought will not constitute, for purposes of this Section 8.09,
consideration for such consent, waiver or amendment.
8.10. Merger or Consolidation. The Company shall not consolidate or
merge with or into (whether or not the Company is the surviving corporation), or
directly and/or indirectly through its Restricted Subsidiaries sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
properties and assets of the Company and its Restricted Subsidiaries taken as a
whole in one or more related transactions, to any other Person unless (a) (i)
the Company is the surviving corporation or (ii) the entity or the Person formed
by or surviving any such consolidation or merger (if other than the Company) or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (the entity or Person described in this clause (ii), the
"Successor Company") is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (b) the
Successor Company assumes all the obligations of the Company under the Notes and
this Agreement pursuant an amendment or supplement to this Agreement and each
other instrument, document or agreement entered into by the Company in
connection therewith, in each case in a form reasonably satisfactory to the
Required Holders; (c) immediately after such transaction no Default or Event of
Default exists; and (d) the Company or the Successor Company will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction.
Notwithstanding the foregoing, without complying with clauses (c)
and (d) above, any Restricted Subsidiary of the Company may merge with and into
the Company or any Wholly-Owned Restricted Subsidiary that is a Guarantor.
8.11. Successor Company Substituted. Upon any consolidation of the
Company with, or merger of the Company into, any other Person or any transfer,
conveyance, sale, lease or other disposition of all or substantially all of the
properties and assets of the Company and its Restricted Subsidiaries taken as a
whole in one or more related transactions in accordance with Section 8.10, the
Successor Company shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Agreement and the Notes with
the same effect as if such Successor Company had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Company
shall be relieved of all obligations and covenants under this Agreement and the
Notes.
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8.12. Additional Guarantees. If the Company or any of its Restricted
Subsidiaries shall acquire or create another Restricted Subsidiary (other than a
Foreign Restricted Subsidiary) or the Company redesignates any Unrestricted
Subsidiary as a Restricted Subsidiary (other than a Foreign Restricted
Subsidiary) after the date of this Agreement, then such newly acquired, created
or redesignated Restricted Subsidiary shall execute and deliver to the
Noteholders a Guarantee of the Notes in the form of Exhibit B hereto pursuant to
which such Restricted Subsidiary shall unconditionally guarantee all of the
Company's obligations under the Notes.
8.13. Conduct of Business. The Company shall not, and shall not
permit any Restricted Subsidiary to, engage in any line of business other than
the businesses engaged in on the Closing Time and businesses reasonably related
thereto (each such business, a "Permitted Business").
8.14. Public Disclosures. None of Holdings, the Company or any
Subsidiary of the Company shall disclose the name or identity of any Purchaser
or any Noteholder as an investor in the Company in any press release or other
public announcement or in any document or material filed with any governmental
entity, unless such disclosure is required by Applicable Law or by order of a
court of competent jurisdiction, in which case, to the extent practicable, prior
to making such disclosure the Company shall give written notice to such
Purchaser or Noteholder, as the case may be, describing in reasonable detail the
proposed content of such disclosure and shall permit such Purchaser or
Noteholder, as the case may be, to review and comment upon the form and
substance of such disclosure.
8.15. Investments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, make or permit to exist any Investment in any other Person,
except the following:
(i) Investments by the Company or any Restricted Subsidiary in (A)
the Company, (B) any Wholly-Owned Restricted Subsidiary that is a Guarantor or
(C) any other Person that, after giving effect to such Investment, becomes a
Wholly-Owned Restricted Subsidiary and a Guarantor or is merged with or into the
Company or a Wholly-Owned Restricted Subsidiary that is a Guarantor;
(ii) [Reserved];
(iii) Investments in one or more Unrestricted Subsidiaries in an
aggregate amount not in excess of $250,000 for each Unrestricted
Subsidiary and $1.0 million in the aggregate for all Unrestricted
Subsidiaries;
(iv) Investments constituting Indebtedness permitted by Sections
8.04(iii) and (iv);
(v) Contingent Obligations constituting Indebtedness permitted by
Section 8.04 or Liens permitted by Section 8.08;
(vi) Cash Equivalent Investments;
(vii) bank deposits in the ordinary course of business;
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(viii) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(ix) Investments listed on Schedule 8.15 as of the Closing Time;
(x) any purchase or other acquisition by the Company or any
Wholly-Owned Restricted Subsidiary of the assets, equity interests or debt
of any Restricted Subsidiary;
(xi) extensions of trade credit in the ordinary course of business;
(xii) loans and advances to employees of the Company or any
Restricted Subsidiary of the Company in the ordinary course of business
(including, without limitation, for travel, entertainment and relocation
expenses) in an aggregate amount for the Company and any Restricted
Subsidiary of the Company not to exceed $250,000 at any one time
outstanding, plus Investments of up to $630,000 in the aggregate in the
form of loans made by the Company to the Company's senior management in
order to permit such Persons to purchase equity securities of Holdings;
(xiii) Investments constituting any portion of the Transactions;
(xiv) Hedging Obligations permitted under this Agreement or required
under the Credit Agreement;
(xv) [Reserved];
(xvi) any Acquisition by the Company or any domestic Wholly-Owned
Restricted Subsidiary that is a Guarantor (other than the Gameplan
Acquisition) where (1) the business or division acquired are for use, or
the Person acquired is engaged, in the businesses engaged in by the
Company and the Restricted Subsidiaries at the Closing Time, (2) in the
case of the Acquisition of any Person, the Board of Directors of such
Person has approved such Acquisition and all of the equity interests of
such Person are being acquired, (3) immediately before and after giving
effect to such Acquisition and the Indebtedness incurred in connection
therewith, no Default or Event of Default shall exist, (4) the Company is
in pro forma compliance with Section 8.20 calculated on a pro forma basis
for the most recent four fiscal quarter period then ended, but including
the effect of the proposed Acquisition and the Indebtedness incurred in
connection therewith, as reflected in an Officers' Certificate delivered
to the Noteholders at least three Business Days prior to the consummation
of such Acquisition, (5) the aggregate consideration to be paid by the
Company and the Subsidiaries (including any Indebtedness assumed or issued
in connection therewith, the amount thereof to be calculated in accordance
with GAAP) in connection with such Acquisition, together with such
consideration paid in connection with all other Acquisitions completed
since the Closing Time (other than the Kiddie World Acquisition, the ▇▇▇▇
Acquisition and, if consummated, the Gameplan Acquisition), is less than
or equal to $3,000,000, (6) no more than $2,000,000 in the aggregate of
the purchase prices for all Acquisitions completed since the Closing Time
(other than the Kiddie World Acquisition, the ▇▇▇▇ Acquisition and, if
consummated, the Gameplan Acquisition), shall be financed with
Indebtedness, and such Indebtedness (other than Revolving Loans (as
defined in the Credit Agreement) advanced under the Credit Agreement)
shall be unsecured, (7) the business or division acquired, or the Person
acquired, has positive earnings be-
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fore interest, taxes, depreciation and amortization (determined pursuant
to GAAP) for the most recent 12 month period then completed, (8)
reasonably prior to such Acquisition, the Noteholders shall have received
complete executed or conformed copies of each material document,
instrument and agreement to be executed in connection with such
Acquisition, and (9) the Noteholders shall have approved the Company's
computation of Pro Forma EBITDA for the Person to be acquired, which
approval shall not be unreasonably withheld, or if the Company elects not
to seek the Noteholders' approval, such Pro Forma EBITDA shall be deemed
to be equal to zero for all purposes hereunder;
(xvii) the Gameplan Acquisition, so long as (1) the Board of
Directors of each of Gameplan and Pinball has approved the Gameplan
Acquisition, (2) immediately before and after giving effect to the
Gameplan Acquisition and the Indebtedness incurred in connection
therewith, no Default or Event of Default shall exist, (3) the aggregate
consideration to be paid by the Company and the Subsidiaries (including
any Indebtedness assumed or issued in connection therewith, the amount
thereof to be calculated in accordance with GAAP) in connection with the
Gameplan Acquisition is less than or equal to $8,500,000, (4) the only
Indebtedness incurred to consummate the Gameplan Acquisition shall be
solely a combination of the proceeds of the Notes and the proceeds of the
Term C Loan and Term D Loan (each as defined in the Credit Agreement), (5)
reasonably prior to the Gameplan Acquisition, the Noteholders shall have
received complete executed or conformed copies of each material document,
instrument and agreement to be executed in connection with the Gameplan
Acquisition, (6) the Noteholders shall have received and reviewed, with
satisfactory results, all business and legal due diligence reasonably
required by them in connection with the Gameplan Acquisition, (7) the
Noteholders shall have received satisfactory evidence that Pro Forma
EBITDA for Gameplan and Pinball is at least $1,800,000 and (8) the
Gameplan Acquisition shall have been consummated on or prior to May 31,
2003; and
(xviii) in addition to Investments otherwise expressly permitted by
clauses (i) through (xvii) above, Investments by the Company or any of its
Restricted Subsidiaries in an aggregate amount (valued at cost) not to
exceed $250,000 during the term of this Agreement.
8.16. Amendments or Waivers of Certain Documents. The Company shall
not, and shall not cause or permit any of its Subsidiaries to, amend or
otherwise modify, or waive any rights, or suffer to occur any amendment or other
modification or waiver, under (i) any Transaction Document, (ii) any provisions
of any agreement, instrument or document evidencing or securing any of the
Subordinated Indebtedness, including without limitation, the Trust Subordinated
Debt Documents, the Trust Preferred Guarantee and the Kiddie World Debt
Documents, (iii) the Senarc Debt Documents or (iv) any provisions of the Trust
Preferred Documents, in each case, other than amendments, modifications and
waivers not materially adverse to the interests of the Noteholder as determined
by the Required Holders in their reasonable judgment.
8.17. Amendments to Charter Documents. The Company shall not, nor
shall it cause or permit any of its Subsidiaries to, amend its certificate of
incorporation or bylaws in any respect which could be materially adverse to the
interests of the Noteholders.
8.18. Operating Leases. The Company shall not permit the aggregate
amount of all rental payments under Operating Leases made (or scheduled to be
made) by the Company and the Restricted Subsidiaries (on a consolidated basis)
to exceed $6,000,000 in any Fiscal Year.
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8.19. Fiscal Year. The Company shall not change its Fiscal Year.
8.20. Financial Covenants.
8.20.1. Fixed Charge Coverage Ratio. The Company shall not permit
the Fixed Charge Coverage Ratio for any Computation Period to be less than the
applicable ratio set forth below for such Computation Period:
Fixed Charge
Computation Period Ending Coverage Ratio
------------------------- --------------
June 30, 2003 1.00 : 1.0
September 30, 2003 1.00 : 1.0
December 31, 2003 1.00 : 1.0
March 31, 2004 1.00 : 1.0
June 30, 2004 1.00 : 1.0
September 30, 2004 1.00 : 1.0
December 31, 2004 1.00 : 1.0
March 31, 2005 1.00 : 1.0
June 30, 2005 1.00 : 1.0
September 30, 2005 1.00 : 1.0
December 31, 2005 1.00 : 1.0
March 31, 2006 and each June 30, September 30, December 31 and March
31 thereafter 1.05 : 1.0
8.20.2. Interest Coverage Ratio. The Company shall not permit the
Interest Coverage Ratio for any Computation Period to be less than the
applicable ratio set forth below for such Computation Period:
Interest
Computation Period Ending Coverage Ratio
------------------------- --------------
June 30, 2003 2.25 : 1.0
September 30, 2003 2.25 : 1.0
December 31, 2003 2.25 : 1.0
March 31, 2004 2.25 : 1.0
June 30, 2004 2.25 : 1.0
September 30, 2004 2.40 : 1.0
December 31, 2004 2.40 : 1.0
March 31, 2005 2.55 : 1.0
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June 30, 2005 2.55 : 1.0
September 30, 2005 2.75 : 1.0
December 31, 2005 2.75 : 1.0
March 31, 2006 3.00 : 1.0
June 30, 2006 3.00 : 1.0
September 30, 2006 3.00 : 1.0
December 31, 2006 3.20 : 1.0
March 31, 2007 3.20 : 1.0
June 30, 2007 and each September 30, December 31,
March 31 and June 30 thereafter 3.40 : 1.0
8.20.3. Total Debt to EBITDA Ratio. The Company shall not permit the
Total Debt to EBITDA Ratio as of the last day of any Computation Period to
exceed the applicable ratio set forth below for such Computation Period:
Total Debt to
Computation Period Ending EBITDA Ratio
------------------------- ------------
June 30, 2003 4.45 : 1.0
September 30, 2003 4.45 : 1.0
December 31, 2003 4.15 : 1.0
March 31, 2004 4.15 : 1.0
June 30, 2004 4.15 : 1.0
September 30, 2004 4.10 : 1.0
December 31, 2004 4.10 : 1.0
March 31, 2005 4.10 : 1.0
June 30, 2005 3.85 : 1.0
September 30, 2005 3.85 : 1.0
December 31, 2005 3.85 : 1.0
March 31, 2006 3.50 : 1.0
June 30, 2006 3.50 : 1.0
September 30, 2006 3.25 : 1.0
December 31, 2006 3.25 : 1.0
March 31, 2007 and each June 30, September 30,
December 31 and March 31 thereafter 3.00 : 1.0
8.20.4. Capital Expenditures. The Company shall not permit the
aggregate amount of all Capital Expenditures made by the Company and its
Restricted Subsidiaries in any Fiscal Year to
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exceed (a) if the Gameplan Acquisition shall not have been consummated, the
applicable amount set forth below under the column entitled "Capital
Expenditures (if the Gameplan Acquisition is not consummated)" for such Fiscal
Year and (b) if the Gameplan Acquisition shall have been consummated, the
applicable amount set forth below under the column entitled "Capital
Expenditures (if the Gameplan Acquisition is consummated)" for such Fiscal Year:
Capital Expenditures Capital Expenditures
(if the Gameplan Acquisition (if the Gameplan Acquisition
Fiscal Year is not consummated) is consummated)
----------- ------------------- ---------------
2003 12,800,000 $13,500,000
2004 12,800,000 $13,500,000
2005 13,800,000 $14,500,000
2006 13,800,000 $14,500,000
2007 and each Fiscal Year thereafter 13,800,000 $14,500,000
If the Company does not utilize the entire amount of Capital Expenditures
permitted in any Fiscal Year commencing with Fiscal Year 2003, the Company may
carry forward, to the immediately succeeding Fiscal Year only, 50% of such
unutilized amount (with Capital Expenditures made by the Company in such
succeeding Fiscal Year applied last to such unutilized amount).
SECTION 9
INTEGRATION
9.01. No Integration. Each Issuer shall not and (to the extent
within its control) it shall cause its Affiliates not to make any offer or sale
of securities of any class of such Issuer if, as a result of the doctrine of
"integration" referred to in Rule 502 under the Securities Act, such offer or
sale would render invalid any applicable exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof with respect
to the issuance and sale of the Securities.
SECTION 10
THE NOTES
10.01. Form and Execution. The Notes shall be in the form of Exhibit
A hereto. The Notes shall be executed on behalf of the Company by its President
or one of its Vice Presidents, under its corporate seal reproduced thereon
attested by its Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or
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any of them have ceased to hold such offices prior to the authentication and
delivery of such Notes or did not hold such offices at the date of such Notes.
10.02. Terms of the Notes. The terms of the Notes shall be as set
forth in Exhibit A. Without limiting the foregoing:
(a) Stated Maturity. The Stated Maturity of the principal of Notes
shall be as provided in Exhibit A.
(b) Interest. The Notes will bear interest on their principal amount
and overdue interest as provided in Exhibit A.
10.03. Denominations. The Notes shall be issuable only in registered
form without coupons and only in denominations equal to or greater than the
Minimum Denomination.
10.04. Form of Legend for the Notes. Every Note issued and delivered
hereunder shall bear legends in substantially the following form:
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD
OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN
EFFECT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS
NOTE IS SUBJECT TO THE TERMS OF THE PURCHASE AGREEMENT, DATED AS OF APRIL
15, 2003 (THE "PURCHASE AGREEMENT"), AMONG AMERICAN COIN MERCHANDISING,
INC. (THE "COMPANY"), THE GUARANTORS NAMED THEREIN AND THE PURCHASERS
NAMED THEREIN. A COPY OF SUCH PURCHASE AGREEMENT IS AVAILABLE AT THE
OFFICES OF THE COMPANY.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000
PRINCIPAL AMOUNT OF THIS NOTE, (1) THE ISSUE PRICE IS $974.36; (2) THE
AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS $25.64; (3) THE ISSUE DATE IS
APRIL 15, 2003, AND (4) THE YIELD TO MATURITY IS 17.45% (COMPOUNDED
QUARTERLY).
provided, however, that the first preceding legend shall not be required to
appear on any Note if (x) the transfer of the surrendered note is in accordance
with the provisions of Rule 144 of the Securities Act (or any other rule
permitting public sale without registration under the Securities Act) or (y) the
Company shall have received an opinion of counsel, which counsel and opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer was effected without registration under the Securities Act and that the
transferee would be entitled to transfer such Note in a public sale without
registration under the Securities Act.
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10.05. Payments and Computations. All payments of interest on the
Notes shall be paid to the persons in whose names such Notes are registered on
the Security Register at the close of business on the date fifteen days prior to
the related Interest Payment Date (the "Regular Record Date") and all payments
of principal on the Notes shall be paid to the persons in whose names such Notes
are registered on the applicable Redemption Date or at Maturity, as applicable.
Principal and premium on any Note shall be payable only against surrender
therefor, while payments of interest on Notes shall be made, in accordance with
this Agreement and subject to applicable laws and regulations, by check mailed
on or before the due date for such payment to the person entitled thereto at
such person's address appearing on the Security Register or, by wire transfer to
such account as any Noteholder shall designate by written instructions received
by the Company no less than 15 days prior to any applicable Interest Payment
Date, which wire instruction shall continue in effect until such time as the
Noteholder otherwise notifies the Company or such Noteholder no longer is the
registered owner of such Note or Notes.
10.06. Registration; Registration of Transfer and Exchange.
(a) Security Register. The Company shall maintain a register (the
"Security Register") for the registration or transfer of the Notes. The name and
address of the holder of each Note, records of any transfers of the Notes and
the name and address of any transferee of a Note shall be entered in the
Security Register and the Company shall, promptly upon receipt thereof, update
the Security Register to reflect all information received from a Noteholder.
There shall be no more than one Noteholder for each Note, including all
beneficial interests therein.
(b) Registration of Transfer. Upon surrender for registration of
transfer of any Note at the office or agency of the Company, the Company shall
execute and deliver, in the name of the designated transferee or transferees,
one or more new Notes, of any authorized denominations and like aggregate
principal amount.
(c) Exchange. At the option of the Noteholder, Notes may be
exchanged for other Notes, of any authorized denominations and of like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, the Company shall
execute and deliver the Notes which the Noteholder making the exchange is
entitled to receive.
(d) Effect of Registration of Transfer or Exchange. All Notes issued
upon any registration of transfer or exchange of Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits and obligations under this Agreement, as the Notes surrendered upon
such registration of transfer or exchange.
(e) Requirements; Charges. Every Note presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company duly executed by the Noteholder thereof or his
attorney duly authorized in writing. No service charge shall be made for any
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 8.10 not involving any transfer.
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(f) Certain Limitations. If the Notes are to be redeemed in part,
the Company shall not be required (i) to issue, register the transfer of or
exchange any Note during a period beginning at the opening of 15 business days
before the day of the mailing of a notice of redemption of any such Notes
selected for redemption under Section 12.01 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
10.07. Transfer Restrictions.
(a) Subject to the provisions of this Section 10.07, any Note may be
transferred or assigned, in whole or in part (subject to the requirement that
the denomination of any Note equal the Minimum Denomination) by the holder of
such Note at any time, and from time to time provided such transfer is in
compliance with applicable securities laws. Each transferee or assignee of any
Note acknowledges that the Note has not been registered under the Securities Act
and may be transferred or assigned only pursuant to an effective registration
under the Securities Act or pursuant to an applicable exemption from the
registration requirements of the Securities Act. With respect to any transfer or
assignment of a Note, or any portion thereof, that shall occur, such holder
shall, if required by the Company, request an opinion of counsel (which shall be
rendered by counsel reasonably acceptable to the Company) that the proposed
transfer may be effected without registration or qualification under any Federal
or state securities or blue sky law. Counsel shall, as promptly as practicable,
notify the Company and the holder of such opinion and of the terms and
conditions, if any, to be observed in such transfer, whereupon the holder shall
be entitled to transfer such Note (or portion thereof), subject to any other
provisions and limitations of contained in this Agreement or such Note.
(b) Without the consent of the Company, no member of the Audax
Investor Group may consummate a sale of Notes prior to the first anniversary of
the date of this Agreement (other than to one or more Affiliates) such that on
or before such date the Audax Investor Group and its Affiliates will
collectively hold less than $3.3 million in aggregate principal amount of Notes;
provided, however any member of the Audax Investor Group and such Affiliates may
pledge any or all of the Notes to any commercial bank or other institutional
lender, subject to compliance with this Section 10.07 and applicable securities
law.
(c) Notwithstanding anything herein to the contrary, (i) each
transferee or assignee shall cooperate with the Company to ensure such transfer
or assignment complies with Applicable Law, including submitting any information
reasonably required to be provided to the Washington State Gambling Commission,
and (ii) no PIK Note may be transferred to any Person other than a Noteholder or
a transferee or assignee of any Note (or portion thereof) in respect of which
such PIK Note was issued.
10.08. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated
Note is surrendered to the Company, the Company shall execute and deliver in
exchange therefor a new Note of the same principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company (a) evidence to its
satisfaction of the destruction, loss or theft of any Note and (b) such security
or indemnity as may be required by then to save each of it and any agent
harmless, then, in the absence of notice that such Note has been acquired by a
bona fide purchaser, the Company shall execute and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of a like principal amount and
bearing a number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note pursuant to this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
10.09. Persons Deemed Owners. Prior to due presentment of a Note for
registration of transfer, the Company and any agent of the Company may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note be overdue and neither
the Company nor any agent of the Company shall be affected by notice to the
contrary.
10.10. Cancellation. All Notes surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Company, be delivered to the Company and shall be promptly canceled by
it. The Company shall cancel any Notes previously issued and delivered hereunder
which the Company may have reacquired.
SECTION 11
EVENTS OF DEFAULT
11.01. Events of Default. An Event of Default shall exist upon the
occurrence of any of the following specified events (each an "Event of
Default"):
(a) the Company defaults in the payment when due of interest on the
Notes and such default continues for a period of five Business Days
(whether or not such payment is otherwise then permitted by the provisions
of the Subordination Agreement); provided, however, that failure to
deliver any PIK Note pursuant to Section 2 of the Notes shall not
constitute an Event of Default provided that interest accrues on the Notes
as set forth in Section 2 and such PIK Note is otherwise delivered within
30 days of the written request by the Noteholder to issue such PIK Note;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at its
Maturity (whether or not such payment is otherwise then permitted by the
provisions of the Subordination Agreement);
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(c) Holdings, the Company or any Restricted Subsidiary fails to
comply with any of the provisions of Section 7.02(a), 7.08, 7.09, 8.02,
8.04, 8.05 and 8.10, hereof;
(d) Holdings, the Company or any Restricted Subsidiary fails to
observe or perform any other covenant, or other agreement in this
Agreement, the Notes or the Guarantees and such failure continues for a
period that is the earlier of (i) 30 days after the Company becomes aware
of such failure to observe or perform any covenant and (ii) 30 days after
the Company has received a notice of such failure from any Noteholder,
which notice must specify the failure, demand that it be remedied and
state that the notice is a "Notice of Default";
(e) any representation, warranty, certification or statement made by
or on behalf of any Issuer or by any officer of any Issuer in respect of
any Basic Document or in any statement or certificate at any time given by
or on behalf of any Issuer or by any officer of any Issuer in writing
pursuant hereto or in connection herewith or therewith shall be false in
any material respect on the date as of which made;
(f) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness of Holdings or the Company or any of its
Restricted Subsidiaries (or payment of which is guaranteed by Holdings or
the Company or any of its Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the date of this
Agreement, which default (i) constitutes a failure to pay principal when
due and payable at final maturity after the expiration of any applicable
grace period provided in such Indebtedness on the date of such default or
(ii) shall have resulted in such Indebtedness being accelerated or
otherwise becoming or being declared due and payable prior to its stated
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a payment default or the maturity of which has been
so accelerated, in excess of $250,000 or more;
(g) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against Holdings or
the Company or any of its Restricted Subsidiaries and such judgment or
judgments remain unpaid and undischarged for a period (during which
execution shall not be effectively stayed) of 30 days; provided that the
amount of such undischarged judgments exceeds $250,000 individually for
any one judgment or $500,000 in the aggregate for all such judgments;
(h) Holdings or the Company or any of its Significant Subsidiaries
or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of a decree or order for relief
against it in an involuntary case or proceeding or to the
commencement of any case or proceeding against it,
(iii) consents to the filing of a petition or to the
appointment of or taking possession by a Custodian of it or for all
or any substantial part of its property,
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(iv) makes or consents to the making of a general assignment
for the benefit of its creditors, or
(v) generally is not paying, or admits in writing that it is
not able to pay, its debts as they become due;
(i) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against Holdings or the Company or any of
its Significant Subsidiaries or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary,
in an involuntary case or proceeding;
(ii) appoints a Custodian of Holdings or the Company or any of
its Significant Subsidiaries or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary,
or for all or any substantial part of the property of Holdings or
the Company or any of its Significant Subsidiaries or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, or approves as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or
in respect of any of the foregoing; or
(iii) orders the winding up or liquidation of Holdings or the
Company or any of its Significant Subsidiaries or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, or adjudges any of them a bankrupt or
insolvent;
and any such order or decree remains unstayed and in effect for 60
consecutive days;
(j) the Guarantee of Holdings or any Guarantee of a Restricted
Subsidiary ceases to be in full force and effect or the Guarantee of
Holdings or any Guarantee of a Restricted Subsidiary is declared to be
null and void and unenforceable or the Guarantee of Holdings or any
Guarantee of a Restricted Subsidiary is found to be invalid or any
Guarantor denies its liability under its Guarantee (other than by reason
of release of a Guarantor in accordance with the terms of this Agreement);
or
(k) an "Early Dissolution Event" (as defined in the Trust Agreement)
shall occur with respect to the Trust.
11.02. Remedies. If an Event of Default (other than an Event of
Default specified in Section 11.01(h) or 11.01(i)) occurs and is continuing,
then and in every such case the Noteholders of 51% or more in principal amount
of the then outstanding Notes may declare the principal amount of all the Notes
to be due and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal amount and any accrued interest shall
become immediately due and payable. For the avoidance of doubt, if any Payment
Default or acceleration that constitutes an Event of Default under Section
11.01(f) shall have occurred and prior to any acceleration under this Section
11.02 such payment default shall have been cured or waived or such acceleration
shall have been rescinded, then from and after such cure, waiver or rescission,
such Event of Default shall no longer be deemed to be continuing. If an Event of
Default specified in Section 11.01(h) or 11.01(i) occurs and is continuing, the
principal amount of and any accrued interest on the outstanding Notes shall
automati-
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cally, and without any declaration or other action on the part of any
Noteholder, become immediately due and payable. Notwithstanding the foregoing,
if any Event of Default specified in Section 11.01 (a) or 11.01 (b) occurs and
is continuing any Noteholder may declare such Noteholder's Notes due and payable
immediately.
If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to optionally redeem the Notes pursuant to Paragraph 3
of the Notes, then, upon acceleration of the Notes, an equivalent premium shall
also become and be immediately due and payable, to the extent permitted by
Applicable Law, anything in this Agreement or in the Notes to the contrary
notwithstanding.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained,
the Required Holders, by written notice to the Company, may rescind and annul
such declaration and its consequences if:
(a) the Company has paid a sum sufficient to pay:
(i) all overdue interest on all Notes;
(ii) the principal of (and premium, if any, on) any Notes
which have become due otherwise than by such declaration of
acceleration (including any Notes required to have been purchased
pursuant to an offer to purchase that the Company is required to
make hereunder) and any interest thereon at the rate borne by the
Notes; and
(iii) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate provided therefor in the
Notes; and
(b) all Events of Default, other than the nonpayment of the
principal amount of Notes and interest thereon which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 11.03.
11.03. Waiver of Past Defaults. The Required Holders may on behalf
of the holders of all the Notes waive any past default hereunder and its
consequences, except a default:
(a) in the payment of the principal (or premium, if any) or interest
on any Note (including any Note which is required to have been purchased
pursuant to an offer to purchase that the Company is required to make
hereunder), or
(b) in respect of a covenant or provision hereof which under Section
15.04 cannot be modified or amended without the consent of the holder of
each outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Agreement; provided, however, no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
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SECTION 12
REDEMPTION
12.01. Right of Redemption. The Notes may be redeemed at the
election of the Company at such times, in such amounts and at the Redemption
Prices (together with any applicable accrued interest to the Redemption Date)
specified in the form of Note attached as Exhibit A hereto.
12.02. Partial Redemptions. In case the Company elects to redeem
less than all of the Notes, the Company shall redeem the Notes pro rata from
each Noteholder. For all purposes of this Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Notes shall
relate, in the case of any Notes redeemed or to be redeemed only in part, to the
portion of the principal amount of such Notes which has been or is to be
redeemed.
12.03. Notice of Redemption. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date, to each Noteholder to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the outstanding Notes are to be redeemed, the
portion of each Note to be redeemed,
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note to be redeemed and that interest thereon
will cease to accrue on and after said date, and
(e) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company and at the expense of the Company.
12.04. Notes Payable on Redemption Date. If notice of redemption
shall have been given as provided above, the Notes so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in the
payment of the Redemption Price and any applicable accrued interest) such Notes
shall not bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with any applicable accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the
Noteholders of such Notes, or one or more Predecessor Notes, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of this Agreement.
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If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Note.
12.05. Notes Redeemed in Part. Any Note which is to be redeemed only
in part shall be surrendered at the principal offices of the Company (with, if
the Company so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company duly executed by, the Noteholder thereof or
his attorney duly authorized in writing), and the Company shall execute and
deliver to the Noteholder of such Note without service charge, a new Note or
Notes, of any authorized denomination as requested by such Noteholder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Note so surrendered.
SECTION 13
GUARANTEES
13.01. Guarantees. Each of the Guarantors hereby, jointly and
severally, unconditionally guarantees, to each Noteholder, irrespective of the
validity and enforceability of this Agreement, the Notes or the obligations of
the Company hereunder or thereunder, that: (a) the principal of and premium and
interest on the Notes shall be promptly paid in full when due, subject to any
applicable grace period, whether at Stated Maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of (and any premium) and
interest on the Notes, if any, if lawful, and all other obligations of the
Company to the Noteholders hereunder or thereunder shall be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that the same shall be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at Stated Maturity, by acceleration or
otherwise. Failing payment when due, subject to any applicable grace period, of
any amount so guaranteed or any performance so guaranteed for whatever reason,
the Guarantors shall be jointly and severally obligated to pay the same
immediately. The Guarantors hereby agree that their obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Agreement, the absence of any action to enforce the same, any
waiver or consent by any Noteholder with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that, subject to Section 13.04, this Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Agreement.
If any Noteholder is required by any court or otherwise to return to
the Company or Guarantors, or any Custodian, trustee, liquidator or other
similar official acting in relation to either the Company or Guarantors, any
amount paid by the Company or the Guarantor to such Noteholder, this Guarantee,
to the extent theretofore discharged, shall be reinstated in full force and
effect as to such amount only. Each Guarantor agrees that it shall not be
entitled to any right of subrogation in relation to the Noteholders in respect
of any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor further agrees that, as between the
Guarantors, on the one
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hand, and the Noteholders, on the other hand, (a) the Maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 11 for
the purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby and (b) in the event of any declaration of acceleration of
such obligations as provided in Section 11, such obligations (whether or not due
and payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Noteholders under the Guarantees.
13.02. Execution and Delivery of Guarantees. To evidence its
Guarantee set forth in Section 13.01, each Guarantor hereby agrees that a
Guarantee in the form of Exhibit B hereto shall be executed on behalf of such
Guarantor by its President or one of its Vice Presidents pursuant to which such
Subsidiary shall become a Guarantor under this Section 13 and shall guarantee
the obligations of the Company under this Agreement and the Notes.
13.03. Guarantors May Consolidate, Etc. on Certain Terms. No
Guarantor may consolidate with or merge with or into (whether or not such
Subsidiary Guarantor is the surviving Person) another Person (other than the
Company or another Subsidiary Guarantor) unless:
(a) subject to the provisions of Section 13.04 hereof, the
Person formed by or surviving any such consolidation or merger (if
other than such Subsidiary Guarantor) unconditionally assumes all
the obligations of such Subsidiary Guarantor under its Guarantee;
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(c) such Subsidiary Guarantor, or any Person formed by or
surviving any such consolidation or merger, would have Consolidated
Net Worth (immediately after giving effect to transaction), equal to
or greater than the Consolidated Net Worth of such Subsidiary
Guarantor immediately preceding the transaction.
Notwithstanding the foregoing, no Subsidiary Guarantor shall be permitted to
consolidate with or merge with or into (whether or not such Subsidiary Guarantor
is the surviving Person), another corporation, Person or entity pursuant to the
preceding sentence if such consolidation or merger would not be permitted by
Section 8.10 hereof.
In case of any such consolidation or merger and upon the assumption
by the successor corporation of the Guarantee, such successor corporation shall
succeed to and be substituted for the Subsidiary Guarantor with the same effect
as if it had been named herein as a Subsidiary Guarantor. All the Guarantees so
issued shall in all respects have the same legal rank and benefit under this
Agreement as the Guarantees theretofore and thereafter issued in accordance with
the terms of this Agreement as though all of such Guarantees had been issued at
the date of the execution hereof.
Nothing contained in this Agreement or in any of the Notes shall
prevent any consolidation or merger of a Subsidiary Guarantor with or into the
Company or another Subsidiary Guarantor, or shall prevent any sale or conveyance
of the property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Company or another Subsidiary Guarantor.
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13.04. Releases of Guarantees. In the event of (i) a sale or other
disposition of all of the assets of any Subsidiary Guarantor, by way of merger,
consolidation or otherwise or (ii) a sale or other disposition of all of the
Capital Stock of any Subsidiary Guarantor, such Subsidiary Guarantor (in the
event of a sale or other disposition, by way of such a merger, consolidation,
distribution or otherwise, of all of the Capital Stock of such Subsidiary
Guarantor) or the corporation acquiring the property (in the event of a sale or
other disposition of all of the assets of such Subsidiary Guarantor) will be
released and relieved of any obligations under its Guarantee; provided that the
proceeds of such sale or other disposition shall be applied in accordance with
the provisions of Section 8.05 hereof. Any Subsidiary Guarantor not released
from its obligations under its Guarantee shall remain liable for the full amount
of principal of and interest on the Notes and for the other obligations of any
Guarantor under this Agreement as provided in this Section 13.
13.05. Limitation on Guarantor Liability. Each Guarantor, and by its
acceptance of the Notes, each Noteholder, hereby confirms that it is the
intention of all such parties that the Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any Guarantee. To
effectuate the foregoing intention, the Noteholders and the Guarantors hereby
irrevocably agree that the obligations of such Guarantor under its Guarantee and
this Section 13 shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
such Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Section 13, result in the obligations of such Guarantor
under its Guarantee not constituting a fraudulent transfer or conveyance.
SECTION 14
EXPENSES, INDEMNIFICATION AND
CONTRIBUTION, AND TERMINATION
14.01. Expenses. Whether or not the transactions contemplated hereby
are consummated, the Issuers will pay all costs and expenses (including
reasonable and documented attorneys', accountants', advisors', appraisers' and
consultants' fees and disbursements) incurred by the Purchasers or any Holder in
connection with the transactions contemplated by the Basic Documents and in
connection with any amendments, waivers or consents under or in respect of this
Agreement, the other Basic Documents or the Securities (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the Purchasers' reasonable out-of-pocket expenses (including, without
limitation, all reasonable due diligence, travel, courier, reproduction,
printing and delivery expenses) in connection with the preparation, review,
negotiation, execution and delivery of the Basic Documents and the consummation
of the transactions contemplated by the Basic Documents, (b) the Purchasers'
reasonable out-of-pocket expenses in connection with the Purchasers'
examinations and appraisals of the Issuers' properties, books and records, (c)
the costs and expenses incurred in enforcing, defending or declaring (or
determining whether or how to enforce, defend or declare) any rights or remedies
under this Agreement, the other Basic Documents or the Securities or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement, the other Basic Documents or
the Securities, or by reason of being a holder of any Securities, and (d) the
costs and expenses, including reasonable and documented consultants' and
advisors'
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fees, incurred in connection with any work-out or restructuring of the
transactions contemplated hereby, by the other Basic Documents or by the
Securities. The Company will pay, and will save each Purchaser and each other
Holder harmless from, all claims in respect of any fees, costs or expenses if
any, of brokers and finders engaged by or on behalf of any Closing Time Issuer
or any of its Subsidiaries in relation to the Transactions.
14.02. Indemnification.
(a) Indemnification by the Issuers. Each Closing Time Issuer,
jointly and severally, agrees to indemnify and hold harmless (i) each Purchaser,
(ii) each Person, if any, who controls (within the meaning of Section 14 of the
Securities Act or Section 20 of the Exchange Act) the Person referred to in
clause (i) (any of the Persons referred to in this clause (ii) being referred to
herein as a "Controlling Person") and (iii) the respective officers, directors,
managing directors, stockholders, partners, employees, representatives,
trustees, fiduciaries, and agents of any Person referred to in clause (i) or any
such Controlling Person (any such Person referred to in clause (i), (ii) or
(iii), a "Purchaser Indemnified Person") against any losses, claims, damages or
liabilities, joint or several, to which such Purchaser Indemnified Person may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based (i) in whole or in part upon any inaccuracy in any of the
representations and warranties of such Issuers contained herein, (ii) in whole
or in part upon any failure of any Issuer to perform its obligations hereunder
or under Applicable Law, or (iii) upon the transactions contemplated by the
Basic Documents or the Purchasers' financing thereof, and will reimburse each
such Purchaser Indemnified Person for any legal and other expenses reasonably
incurred by such Purchaser Indemnified Person in connection with investigating
or defending any such action or claims as such expenses are incurred upon
presentation of appropriate invoices containing reasonable detail; provided,
however, that if a Purchaser Indemnified Person is reimbursed hereunder for any
expenses, such reimbursement of expenses shall be refunded to the extent it is
finally judicially determined that the losses, claims, damages or liabilities in
question resulted primarily from (i) the willful misconduct or gross negligence
of such Purchaser Indemnified Person or (ii) the breach by such Purchaser
Indemnified Person of any representation, warranty, covenant or other agreement
of such Purchaser Indemnified Person contained in this Agreement.
Notwithstanding any provision in this paragraph (a) to the contrary, no such
Issuer shall be liable under this Section 14.02(a) to a Purchaser Indemnified
Person: (i) for any amount paid by the Purchaser Indemnified Person in
settlement of claims by the Purchaser Indemnified Person without the Company's
consent (which consent shall not be unreasonably withheld), (ii) to the extent
that it is finally judicially determined that such losses, claims, damages or
liabilities resulted primarily from the willful misconduct or gross negligence
of such Purchaser Indemnified Person or (iii) to the extent that it is finally
judicially determined that such losses, claims, damages or liabilities resulted
primarily from the breach by such Purchaser Indemnified Person of any
representation, warranty, covenant or other agreement of such Purchaser
Indemnified Person contained in this Agreement. The indemnity agreement set
forth in this Section 14.02(a) shall be in addition to any liabilities that such
Issuers may have under common law or otherwise.
(b) Indemnification by the Purchasers. Each Purchaser agrees,
severally and not jointly, to indemnify and hold harmless (i) each Closing Time
Issuer and (ii) each Controlling Person of such Issuer and (iii) the respective
officers, directors, employees, representatives and agents of each such Issuer
or any such Controlling Person (any such Person referred to in clause (i), (ii)
or (iii), an "Issuer Indemnified Person") against any losses, claims, damages or
liabilities, joint or several, to which such Issuer Indemnified Person may
become subject, under the Securities Act or otherwise insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are
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based (i) in whole or in part upon any inaccuracy in any of the representations
and warranties of such Purchaser contained herein, or (ii) in whole or in part
upon the failure of such Purchaser to perform its obligations hereunder; and
will reimburse the Issuer Indemnified Persons for any legal and other expenses
reasonably incurred by the Issuer Indemnified Persons in connection with
investigating or defending any such actions or claims as such expenses are
incurred upon presentation of appropriate invoices containing reasonable detail;
provided, however, that if an Issuer Indemnified Person is reimbursed hereunder
for any expenses, such reimbursement of expenses shall be refunded to the extent
it is finally judicially determined that the losses, claims, damages or
liabilities in question resulted primarily from (i) the willful misconduct or
gross negligence of such Issuer Indemnified Person or (ii) the breach by any
Issuer Indemnified Person of any representation, warranty, covenant or other
agreement of any Issuer Indemnified Person contained in this Agreement.
Notwithstanding any provision in this paragraph (b) to the contrary, no
Purchaser shall be liable under this Section 14.02(b) to an Issuer Indemnified
Person: (i) for any amount paid by the Issuer Indemnified Person in settlement
of claims by the Issuer Indemnified Person without such Purchaser's consent
(which consent shall not be unreasonably withheld), (ii) to the extent that it
is finally judicially determined that such losses, claims, damages or
liabilities resulted primarily from the willful misconduct or gross negligence
of such Issuer Indemnified Person or (iii) to the extent that it is finally
judicially determined that such losses, claims, damages or liabilities resulted
primarily from the breach by any Issuer Indemnified Person of any
representation, warranty, covenant or other agreement of any Issuer Indemnified
Person contained in this Agreement. The indemnity agreement set forth in this
Section 14.02(b) shall be in addition to any liabilities that each Purchaser may
have under common law or otherwise.
(c) Notifications and Other Indemnification Procedures. Promptly
after receipt by a Purchaser Indemnified Person or an Issuer Indemnified Person
(each, an "Indemnified Person") of notice of the commencement of any action,
such Indemnified Person shall, if a claim in respect thereof is to be made
against an indemnifying party under Section 14.02(a) or 14.02(b), as applicable,
notify such indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any Indemnified Person otherwise than under
Section 14.02(a) or 14.02(b), as applicable, or to the extent it is not
materially prejudiced as a proximate result of such failure. In case any such
action is brought against any Indemnified Person and it shall notify an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it shall elect within 30
days after receiving any such notification, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such Indemnified Person in its reasonable judgment, and, after
notice from the indemnifying party to such Indemnified Person of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such Indemnified Person under such paragraph for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by such
Indemnified Person, in connection with the defense thereof other than reasonable
costs of investigation. Notwithstanding the foregoing, any Indemnified Person
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Person unless (i) the Indemnified
Person shall have been advised by counsel that representation of the Indemnified
Person by counsel provided by the indemnifying party would be inappropriate due
to actual or potential conflicting interests between the indemnifying party and
the Indemnified Person, including situations in which there are one or more
legal defenses available to the Indemnified Person that are different from or
additional to those available to the indemnifying party, (ii) the indemnifying
party shall have authorized in writing the employment of counsel for the
Indemnified Person at the expense of the indemnifying party or (iii) the
indemnifying party shall have failed to assume the defense or retain counsel
reasonably satisfactory to the Indemnified Person; provided, however, that the
indemnifying party shall not, in
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connection with any one such action or proceeding or separate but substantially
similar actions or proceedings arising out of the same general allegations, be
liable for the fees and expenses of more than one separate firm of attorneys at
any time for all Indemnified Persons, except to the extent that local counsel,
in addition to their regular counsel, is required in order to effectively defend
against such action or proceeding. No indemnifying party shall, without the
written consent of the Indemnified Person, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the Indemnified Person is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the Indemnified Person from
all liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any Indemnified Person.
14.03. Contribution. If the indemnification provided for in Section
14.02 is unavailable to or insufficient to hold harmless an Indemnified Person
under paragraph (a), (b) or (c) of Section 14.02 in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) to the fullest extent permissible
under applicable law.
The obligations of the Closing Time Issuers and the Purchasers under
this Section 14.03 shall be in addition to any liability which such Closing Time
Issuer and the Purchasers may have under common law or otherwise.
14.04. Survival. The obligations of the Closing Time Issuers and the
Purchasers under this Section 14 will survive the payment or transfer of any
Security, the enforcement, amendment or waiver of any provision of this
Agreement.
SECTION 15
MISCELLANEOUS
15.01. Notices. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number set out below if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), (c) the day following the day on which the same has
been delivered prepaid to a reputable national overnight air courier service or
(d) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to the respective
parties at the address set forth below, or at such other address as such party
may specify by written notice to the other party hereto:
(i) if to a Purchaser or its nominee, to such Purchaser or its
nominee at the address specified for such communications in Schedule A,
with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., or at such other address as such
Purchaser or its nominee shall have specified to the Company in writing;
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(ii) if to any other Holder or Warrantshareholder, to such Holder or
Warrantshareholder at the address of such Holder or Warrantshareholder
appearing in the Security Register or such other address as such other
holder shall have specified to the Company in writing; or
(iii) if to an Issuer, to the Company at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: Chief Executive Officer, facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or at such other address as the Company
shall have specified to each Holder and Warrantshareholder in writing.
15.02. Benefit of Agreement; Assignments and Participations. Except
as otherwise expressly provided herein, all covenants, agreements and other
provisions contained in this Agreement by or on behalf of any of the parties
hereto shall bind, inure to the benefit of and be enforceable by their
respective successors and assigns (including, without limitation, any subsequent
holder of a Security) whether so expressed or not; provided, however, that the
Company may not assign and transfer any of its rights or obligations without the
prior written consent of the other parties hereto and each such holder. The
rights of any Purchaser or any other Holder or Warrantshareholder under this
Agreement may only be assigned by such Holder or Warrantshareholder in
connection with a transfer or assignment of all, or any portion of the
Securities or Warrant Shares held by such Holder or Warrantshareholder.
Nothing in this Agreement or in the Securities, express or implied,
shall give to any Person other than the parties hereto, their successors and
assigns and the holders from time to time of the Securities any benefit or any
legal or equitable right, remedy or claim under this Agreement.
15.03. No Waiver; Remedies Cumulative. No failure or delay on the
part of any party hereto or any Holder or Warrantshareholder in exercising any
right, power or privilege hereunder or under the Securities and no course of
dealing between any Issuer and any other party or Holder or Warrantshareholder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under the Securities preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies provided herein and
in the Securities are cumulative and not exclusive of any rights or remedies
which the parties or Holders or Warrantshareholder would otherwise have. No
notice to or demand on any Issuer in any case shall entitle any Issuer to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the other parties hereto or the Holders or
Warrantshareholder to any other or further action in any circumstances without
notice or demand.
15.04. Amendments, Waivers and Consents. This Agreement may be
amended, and the observance of any term hereof may be waived (either
retroactively or prospectively) with (and only with) the written consent of
Holdings, the Company and the Required Holders or in the case of amendments or
waivers relating to the rights of Warrantholders and Warrantshareholders
adversely affecting Warrantholders and Warrantshareholders, by a majority in
interest in the aggregate of the Warrantholders and Warrantshareholders, as
applicable (or, in each case, if prior to the Closing Time, the Purchasers);
provided, however, that no such amendment or waiver may, without the prior
written consent of each Noteholder affected thereby (or the Purchasers if prior
to the Closing Time) (i) subject any Noteholder to any additional obligation,
(ii) reduce the principal of (or premium, if any) or rate of interest on any
Note, (iii) postpone the date fixed for any payment of principal of (or premium,
if any)
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or interest on any Note, (iv) change the
percentage of the aggregate principal amount of the Notes the holders of which
shall be required to consent or take any other action under this Section 15.04
or any other provision of this Agreement, (v) amend or waive the provisions of
(a) Section 7.08 following the occurrence of a Change of Control or (b) Section
7.09 or 8.05 following the maturity at the Company's obligation to make an
Excess Proceeds Offer and in the case of each of clauses (a) and (b), any of the
definitions used in such Sections, (vi) adversely affect the ranking of the
Notes or (vii) change the currency in which amounts due under the Notes are
payable. No amendment or waiver of this Agreement will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or thereby impair any right consequent thereon. As used
herein, the term this "Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
15.05. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. Each counterpart may consist of a number of copies hereof,
each signed by less than all, but together signed by all, of the parties hereto.
15.06. Reproduction. This Agreement, the other Basic Documents and
all documents relating, hereto and thereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Purchasers at the Closing Time (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished in connection herewith, may be reproduced by
any photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and any original document so reproduced may be destroyed.
Each Closing Time Issuer agrees and stipulates that, to the extent permitted by
Applicable Law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 15.06 shall not prohibit any Issuer, any other party hereto or any
Holder or Warrantshareholder from contesting any such reproduction to the same
extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.
15.07. Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
15.08. Governing Law; Submission to Jurisdiction; Venue.
(A) THIS AGREEMENT AND THE SECURITIES SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.
(b) If any action, proceeding or litigation shall be brought by any
Holder or Warrantshareholder in order to enforce any right or remedy under this
Agreement or any of the Securities, the Closing Time Issuer hereby consents and
will submit, and will cause each of their Subsidiaries to
-79-
submit, to the jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of New
York on the date of this Agreement. Such Issuer hereby irrevocably waives any
objection, including, but not limited to, any objection to the laying of venue
or based on the grounds of forum non conveniens, which they may now or hereafter
have to the bringing of any such action, proceeding or litigation in such
jurisdiction. Such Issuers further agrees that they shall not, and shall cause
their Subsidiaries not to, bring any action, proceeding or litigation arising
out of this Agreement, the Securities or any other Basic Document in any state
or federal court other than any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the date
of this Agreement.
(C) THE PARTIES HEREBY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE SECURITIES.
15.09. Severability. If any provision of this Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable to the extent of such illegality, invalidity or unenforceability
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
15.10. Entirety. This Agreement together with the other Basic
Documents represents the entire agreement of the parties hereto and thereto, and
supersedes all prior agreements and understandings, oral or written, if any,
relating to the Basic Documents or the transactions contemplated herein or
therein.
15.11. Survival of Representations and Warranties. All
representations and warranties and covenants and indemnities made by the parties
herein shall survive the execution and delivery of this Agreement, the issuance
and transfer of all or any portion of the Securities or the Warrant Shares and
the payment of principal of the Notes, the expiration, exercise or other
termination of the Warrants and any other obligations hereunder, regardless of
any investigation made at any time by or on behalf of any Purchaser or any other
holder that is Affiliated with any Purchaser. All statements contained in any
certificate delivered by or on behalf of any Closing Time Issuer pursuant to
this Agreement shall be deemed representations and warranties of such Issuers
under this Agreement.
15.12. Calculation of Outstanding Notes. In determining whether the
holders of the requisite principal amount of the outstanding Notes have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Company or any other obligor upon the Notes or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be outstanding. Notes so owned which have been pledged in good
faith may be regarded as outstanding if the pledgee establishes to the
satisfaction of the Required Holders the pledgee's right so to act with respect
to such Notes and that the pledgee is not the Company or any other obligor upon
the Notes or any Affiliate of the Company or of such other obligor.
15.13. Incorporation. All Exhibits and Schedules attached hereto are
incorporated as part of this Agreement as if fully set forth herein.
15.14. Confidentiality. Each Purchaser and each Holder and
Warrantshareholder agrees to use commercially reasonable efforts to maintain as
confidential all non-public information with respect to the Issuers which has
been previously provided by, or at the direction of, any Issuer to
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such Purchaser, Holder or Warrantshareholder or which is now or in the future
furnished pursuant to this Agreement or any other Basic Document, except that
each Purchaser, Holder or Warrantshareholder, as applicable, may disclose such
information (a) to its Affiliates, provided that each such Affiliate agrees to
comply with this Section 15.14; (b) to Persons employed or engaged by such
Purchaser in evaluating, approving, structuring or administering the Securities,
provided that each such Person agrees to comply with this Section 15.14; (c) to
any assignee or participant or potential assignee or participant that has agreed
to comply with the covenant contained in this Section 15.14 (and any such
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clauses (a)
through (g) hereof); (d) as required or requested by any federal or state
regulatory authority or examiner, or any insurance industry association, or as
reasonably believed by such Purchaser, Holder or Warrantshareholder to be
compelled by any court decree, subpoena or legal or administrative order or
process; (e) as, on the advice of such Purchaser's, Holder's or
Warrantshareholder's counsel, is required by law; (f) in connection with the
exercise of any right or remedy under the Basic Documents or in connection with
any litigation to which such Purchaser, Holder or Warrantshareholder is a party;
(g) to any nationally recognized rating agency that requires access to
information about a Purchaser's, Holder's or Warrantshareholder's investment
portfolio in connection with ratings issued with respect to such Purchaser,
Holder or Warrantshareholder; or (h) that ceases to be confidential through no
fault of such Purchaser, Holder or Warrantshareholder. Notwithstanding the
foregoing, each Purchaser, Holder and Warranatshareholder agrees that it will
not disclose any such non-public information to any Person that is in direct
competition with the Company and any of its Subsidiaries. The Company consents
to the publication by any Purchaser of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement,
and the Purchasers reserve the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements.
Holdings and the Company may require as a condition to providing non-public
information to any Holder or Warrantshareholder (not a party to this Agreement)
that such Holder or Warrantshareholder, as applicable, acknowledges in writing
the applicability of this Section 15.14.
15.15. Disclosure of Certain Tax Matters. Notwithstanding anything
contained in this Agreement or elsewhere to the contrary (and notwithstanding
any other express or implied agreement or understanding regarding
confidentiality), each party and its employees, representatives and other agents
(collectively, "agents") are authorized to disclose the tax treatment and tax
structure of any of the transactions to be consummated pursuant to this
Agreement to any and all persons, without limitation of any kind. Each party and
its agents may disclose all materials of any kind (including opinions or other
tax analyses) insofar as such materials relate to the tax treatment and tax
structure of any of such transactions. This authorization does not extend to
disclosure of any other information which is strictly prohibited other than as
permitted in Section 15.14, including (without limitation) (a) the identity of
participants or potential participants in such transactions, (b) the existence
or status of any negotiations, (c) any pricing information or (d) any financial,
business, legal or personal information of or regarding a party or its
affiliates, or of or regarding any participants or potential participants in
such transactions (or any of their respective affiliates), that is not related
to the tax treatment and tax structure of such transactions.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
AMERICAN COIN MERCHANDISING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: President & CEO
-------------------------------
ACMI HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: President & CEO
-------------------------------
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PURCHASERS:
AUDAX MEZZANINE FUND, L.P.
By: Audax Mezzanine Business, L.P.
Its: General Partner
By: Audax Mezzanine Business, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
AUDAX CO-INVEST, L.P.
By: 101 Huntington Holdings, LLC
Title: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
AUDAX TRUST CO-INVEST, L.P.
By: 101 Huntington Holdings, LLC
Title: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
AFF CO-INVEST, L.P.
By: 101 Huntington Holdings, LLC
Title: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
THE ROYAL BANK OF SCOTLAND PLC,
NEW YORK BRANCH
By: /s/ Una Corr
-----------------------
Name: Una Corr
Title: Vice President
-2-
EXHIBIT A
[FORM OF NOTE]
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE TERMS OF THE PURCHASE AGREEMENT, DATED AS OF APRIL 15, 2003 (THE "PURCHASE
AGREEMENT"), AMONG AMERICAN COIN MERCHANDISING, INC. (THE "COMPANY"), THE
GUARANTORS NAMED THEREIN AND THE PURCHASERS NAMED THEREIN. A COPY OF SUCH
PURCHASE AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS NOTE IS
BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF
THIS NOTE, (1) THE ISSUE PRICE IS $974.36; (2) THE AMOUNT OF THE ORIGINAL ISSUE
DISCOUNT IS $25.64; (3) THE ISSUE DATE IS APRIL 15, 2003, AND (4) THE YIELD TO
MATURITY IS 17.45% (COMPOUNDED QUARTERLY).
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AND INTERCREDITOR AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED
AS OF APRIL 15, 2003 AMONG AUDAX MEZZANINE FUND, L.P., AUDAX CO-INVEST, L.P.,
AUDAX TRUST CO-INVEST, L.P., AFF CO-INVEST, L.P., ROYAL BANK OF SCOTLAND PLC,
NEW YORK BRANCH, AMERICAN COIN MERCHANDISING, INC. (THE "COMPANY") AND MADISON
CAPITAL FUNDING LLC ("AGENT"), TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY
THE COMPANY PURSUANT TO THAT CERTAIN AMENDED AND RESTATED CREDIT AGREEMENT DATED
AS OF APRIL 15, 2003 AMONG THE COMPANY, AGENT AND THE LENDERS FROM TIME TO TIME
PARTY THERETO, AS SUCH CREDIT AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, AND TO INDEBTEDNESS
REFINANCING THE INDEBTEDNESS UNDER THAT AGREEMENT AS CONTEMPLATED BY THE
SUBORDINATION AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE
HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
A-1
17% SENIOR SUBORDINATED NOTES DUE 2009
No. _______ $_______
American Coin Merchandising, Inc., a corporation duly organized and
existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Purchase Agreement), for value received,
hereby promises to pay to [ ], or registered assigns, the principal sum
of [ ] Dollars on February 22, 2009 (the "Stated Maturity").
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
A-2
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
AMERICAN COIN MERCHANDISING, INC.
[Seal]
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
A-3
[Form of Reverse of Note]
1. GENERAL. This Note is one of a duly authorized issue of Notes of
the Company designated as its 17% Senior Subordinated Notes due 2009 (herein
called the "Notes"), limited in aggregate principal amount to the sum of (a)
$6.5 million and (b) any additional Notes issued as in-kind interest on
outstanding Notes in accordance with Paragraph 2 below; in each case, issued and
to be issued pursuant to the Purchase Agreement, dated as of April 15, 2003
(herein called the "Purchase Agreement"), among ACMI Holdings, Inc.
("Holdings"), the Company and the Purchasers named therein, to which Purchase
Agreement and all amendments thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company and the Noteholders and of the terms upon which the Notes are,
and are to be, issued and delivered.
Principal on this Note shall be payable only against surrender
therefor, while payments of interest on this Note shall be made, in accordance
with the Purchase Agreement and subject to applicable laws and regulations, by
check mailed on or before the due date for such payment to the person entitled
thereto at such person's address appearing on the Security Register or, by wire
transfer to such account as any Noteholder shall designate by written
instructions received by the Company no less than 15 days prior to any
applicable Interest Payment Date, which wire instruction shall continue in
effect until such time as the Noteholder otherwise notifies the Company or such
Noteholder no longer is the registered owner of this Note.
2. INTEREST. The Company promises to pay interest on the principal
amount of this Note from the date of issuance of this Note (or any Predecessor
Note) (which, in the case of any Note which is a PIK Note (as defined below),
shall be the Interest Payment Date as to which such PIK Note relates) or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, quarterly in arrears on February 22, May 22, August 22 and
November 22 in each year commencing May 22, 2003 (each, an "Interest Payment
Date") at the rate of 17% per annum, until the principal hereof is paid;
provided, however, that on each such Interest Payment Date the Company may, at
its option and in its sole discretion, in lieu of the payment in whole or in
part of interest due on this Note, which is in excess of 13% (including, without
limitation, interest on overdue principal, premium or interest provided for in
the following sentence), pay such amount in excess of 13% (and only such excess
amount) on this Note through the issuance of additional Notes (each a "PIK
Note") in an aggregate principal amount equal to the amount of interest that
would be payable with respect to this Note, if such interest were paid in cash
and otherwise substantially in the form of this Note. To the extent that the
payment of such interest shall be legally enforceable, any principal of, or
premium or installment of interest on, this Note which is overdue shall bear
interest at the rate of 2% per annum in excess of the rate of interest then
borne by the Notes ("default interest") from the date such amounts are due until
they are paid, and the entire amount of such default interest (and not just the
amount in excess of 13%) shall be payable in cash; provided, however, that if
the Subordination Agreement shall be in effect and shall not permit the payment
of default interest in cash in respect of default interest, the Company shall
issue a PIK Note in the principal amount of such default interest then due;
provided, further, that if the Subordination Agreement shall be terminated or
shall at any time permit the full payment of default interest in cash, then each
such PIK Note issued in respect of default interest shall become immediately due
and payable. The Company shall pay interest on overdue principal and premium and
on overdue installments of interest from time to time on demand.
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Interest on this Note shall be computed on the basis of a 360-day
year of twelve 30-day months.
All interest payable, on any Interest Payment Date will, as provided
in the Purchase Agreement, be paid to the Person in whose name this Note (or one
or more Predecessor Notes) is registered at the close of business on the
"Regular Record Date" for such interest, which shall be the fifteenth calendar
day (whether or not a Business Day) immediately preceding such Interest Payment
Date. Notwithstanding the foregoing, if this Note is issued after a Regular
Record Date and prior to an Interest Payment Date, the record date for such
Interest Payment Date shall be the original issue date.
3. OPTIONAL REDEMPTION. (a) The Company may, at its option, redeem
the Notes, in whole or in part from and including February 22, 2004 through to
and including Stated Maturity at a Redemption Price as set forth below plus
accrued and unpaid interest, if any, to the Redemption Date:
Period Commencing: Redemption Price
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February 22, 2004 105.0%
February 22, 2005 103.0%
February 22, 2006 101.0%
February 22, 2007 100.0%
(b) The Company may not otherwise redeem the Notes prior to February
22, 2004. Notwithstanding the foregoing, the Company may, at its option, redeem
the Notes, prior to February 22, 2004, in whole or in part, upon the occurrence
of a Qualified IPO (to the extent of the Net Cash Proceeds received and
available after the payment of Senior Indebtedness) or a Change of Control at a
Redemption Price of 107% of the principal amount thereof plus accrued and unpaid
interest, if any, to the Redemption Date to the extent such redemption occurs on
or after February 22, 2003 but prior to February 22, 2004. Any such redemption
pursuant to this clause (b) shall occur within 90 days of the occurrence of such
Qualified IPO or a Change of Control, as applicable.
4. PROCEDURES FOR REDEMPTION. If less than all the Notes are to be
redeemed, the Notes shall be redeemed pro rata from each Noteholder.
In the event of redemption or purchase pursuant to an offer to
purchase this Note in part only, a new Note or Notes for the unredeemed or
unpurchased portion hereof will be issued in the name of the Noteholder hereof
upon the cancellation hereof.
5. SUBORDINATION. This Note is subject to the terms of that certain
Subordination and Intercreditor Agreement dated as of April 15, 2003 by and
among the Purchasers, the Company, Holdings and Madison Capital Funding LLC, as
agent (the "Subordination Agreement") and this Note is issued subject to the
provisions of the Subordination Agreement. Each Noteholder, by accepting the
same, agrees to and shall be bound by such provisions.
6. EVENTS OF DEFAULT. If an Event of Default shall occur and be
continuing, the principal of all the Notes may be declared due and payable in
the manner and with the effect provided in the Purchase Agreement.
7. OFFERS TO PURCHASE NOTES. The Purchase Agreement provides that,
subject to certain conditions, if (i) certain Excess Proceeds are available to
the Company as a result of Asset Sales
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or (ii) a Change of Control occurs, the Company shall be required to make an
offer to purchase all or a specified portion of the Notes as provided for in the
Purchase Agreement.
8. AMENDMENTS, MODIFICATIONS AND WAIVERS. The Purchase Agreement
permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and certain rights
of the Noteholders under the Purchase Agreement at any time by Holdings and the
Company with the consent of the holders of a majority in aggregate principal
amount of the Notes at the time outstanding. The Purchase Agreement also
contains provisions permitting the Noteholders of specified percentages in the
aggregate principal amount of the Notes at the time outstanding, on behalf of
the Noteholders of all the Notes, to waive compliance by the Company with
certain provisions of the Agreement and certain past defaults under the
Agreement and their consequences. Any such consent or waiver by the holder of
this Note shall be conclusive and binding upon such Noteholder and upon all
future Noteholders and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
9. REGISTRATION OF TRANSFER. As provided in the Purchase Agreement
and subject to certain limitations therein set forth, the transfer of this Note
is registrable in the Security Register, upon surrender of this Note for
registration of transfer at the principal offices of the Company, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Company duly executed by, the holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations authorized under the Purchase Agreement. As provided in the
Purchase Agreement and subject to certain limitations therein set forth, Notes
are exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company
and any agent of the Company may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary.
10. MISCELLANEOUS. All terms used in this Note which are defined in
the Agreement shall have the meanings assigned to them in the Purchase
Agreement.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW
YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its entirety by
the Company pursuant to Section 7.08 or 7.09 of the Agreement, check the box:
| |
If you want to elect to have only a part of the principal amount of
this Note purchased by the Company pursuant to Section 7.08 or 7.09 of the
Agreement, state the portion of such amount: $_______________.
Dated: Your Signature: ___________________________
(Sign exactly as name appears on the other
side of this Note)
Signature Guarantee: ___________________________________________
(Signature must be guaranteed by a
financial institution that is a member of
the Securities Transfer Agent Medallion
Program ("STAMP"), the Stock Exchange
Medallion Program ("SEMP"), the New York
Stock Exchange, Inc. Medallion Signature
Program ("MSP") or such other signature
guarantee program as may be determined by
the Security Registrar in addition to, or
in substitution for, STAMP, SEMP or MSP,
all in accordance with the Securities
Exchange Act of 1934, as amended.)
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EXHIBIT B
FORM OF GUARANTEE
THE OBLIGATIONS OF THE GUARANTOR TO THE HOLDERS OF NOTES PURSUANT TO
THIS GUARANTEE AND THE PURCHASE AGREEMENT, DATED AS OF APRIL 15, 2003, AMONG
AMERICAN COIN MERCHANDISING, INC. (THE "COMPANY"), ACMI HOLDINGS, INC.
("HOLDINGS"), AND THE PURCHASERS NAMED THEREIN (THE "PURCHASE AGREEMENT") ARE
EXPRESSLY SET FORTH IN SECTION 13 OF THE PURCHASE AGREEMENT, AND REFERENCE IS
HEREBY MADE TO SUCH PURCHASE AGREEMENT FOR THE PRECISE TERMS OF THIS GUARANTEE.
THE TERMS OF THE PURCHASE AGREEMENT, INCLUDING WITHOUT LIMITATION SECTION 13,
ARE INCORPORATED HEREIN BY REFERENCE.
The Guarantor hereby, jointly and severally, together with all other
Guarantors unconditionally guarantees to each Noteholder, irrespective of the
validity and enforceability of the Purchase Agreement, the Notes or the
obligations of the Company thereunder, that: (a) the principal of and premium
and interest on the Notes shall be promptly paid in full when due, subject to
any applicable grace period, whether at Stated Maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of (and any
premium) and interest on the Notes, if any, if lawful, and all other obligations
of the Company to the Noteholders thereunder shall be promptly paid in full or
performed, all in accordance with the terms thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same shall be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, subject to any
applicable grace period, whether at Stated Maturity, by acceleration or
otherwise. Failing payment when due, subject to any applicable grace period, of
any amount so guaranteed or any performance so guaranteed for whatever reason,
the Guarantor together with all other Guarantors shall be jointly and severally
obligated to pay the same immediately. The Guarantor hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or the Purchase Agreement, the absence
of any action to enforce the same, any waiver or consent by any Noteholder with
respect to any provisions thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
The Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenants that, subject to Section 13 of the Purchase
Agreement, this Guarantee shall not be discharged except by complete performance
of the obligations contained in the Notes and the Purchase Agreement.
If any Noteholder is required by any court or otherwise to return to
the Company or the Guarantor, or any Custodian, trustee, liquidator or other
similar official acting in relation to either the Company or the Guarantor, any
amount paid by the Company or the Guarantor to such Noteholder, this Guarantee,
to the extent theretofore discharged, shall be reinstated in full force and
effect as to such amount only. The Guarantor agrees that it shall not be
entitled to any right of subrogation in relation to the Noteholders in respect
of any obligations guaranteed hereby. The Guarantor further agrees that, as
between the Guarantor, on the one hand, and the Noteholders, on the other hand,
(a) the Matur-
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ity of the obligations guaranteed hereby may be accelerated as provided in
Section 11 of the Purchase Agreement for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations Guaranteed hereby and (b) in the
event of any declaration of acceleration of such obligations as provided in
Section 11 of the Purchase Agreement, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantor for the purpose
of this Guarantee. The Guarantor shall have the right to seek contribution from
any nonpaying Guarantor so long as the exercise of such right does not impair
the rights of the Noteholders under the Guarantees.
The obligations of the Guarantor under this Guarantee are subject to
the terms of that certain Subordination and Intercreditor Agreement dated as of
April 15, 2003 by and among the Purchasers, the Company, Holdings and Madison
Capital Funding LLC, as agent.
The Guarantor, and by its acceptance of Notes, each Noteholder,
hereby confirms that it is the intention of all such parties that this Guarantee
not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar federal or state law to the extent applicable to any Guarantee.
To effectuate the foregoing intention, the Noteholders and the Guarantor hereby
irrevocably agree that the obligations of the Guarantor under this Guarantee and
Section 13 of the Purchase Agreement shall be limited to the maximum amount as
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of the Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under Section 13 of the Purchase Agreement,
result in the obligations of such Guarantor under this Guarantee not
constituting a fraudulent transfer or conveyance.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon the Guarantor and its respective successors and
assigns to the extent set forth in the Purchase Agreement until full and final
payment of all of the Company's obligations under the Notes and the Purchase
Agreement and shall inure to the benefit of the Noteholders and their permitted
successors and assigns and, in the event of any permitted transfer or assignment
of rights by any Noteholder, the rights and privileges herein conferred upon
that party shall automatically extend to and be vested in such permitted
transferee or assignee, all subject to the terms and conditions hereof and of
Section 13 of the Purchase Agreement. Notwithstanding the foregoing, if the
Guarantor satisfies the provisions of Section 13.04 of the Purchase Agreement,
such Guarantor shall be released of its obligations hereunder.
THIS GUARANTEE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW
YORK, EXCLUDING CHOICE OF LAW PRINCIPLES OF THE LAW OF THE STATE OF NEW YORK
THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
Capitalized terms used herein have the same meanings given in the
Purchase Agreement unless otherwise indicated.
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IN WITNESS WHEREOF, [GUARANTOR] has caused this Guarantee to be executed by its
duly authorized officer as of April 15, 2003.
[GUARANTOR]
By: _______________________
Name:
Title:
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▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇-▇
▇▇▇:
WARRANT
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT AND SUCH SHARES AND ANY INTEREST OR PARTICIPATION HEREIN OR
THEREIN MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND SUCH SHARES MAY
NOT BE TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN THIS
WARRANT, AND NO TRANSFER OF THIS WARRANT OR SUCH SHARES SHALL BE
VALID OR EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL HAVE BEEN
COMPLIED WITH.
THE SALE, TRANSFER OR ENCUMBRANCE OF THE SECURITIES REPRESENTED
HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A SECOND AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT, DATED AS OF APRIL 15, 2003,
AMONG ACMI HOLDINGS, INC. AND CERTAIN HOLDERS OF ITS OUTSTANDING
SECURITIES, AS SUCH AGREEMENT MAY BE AMENDED. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD HEREOF TO THE SECRETARY OF ACMI HOLDINGS, INC.
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WARRANT
To Purchase Shares of Common Stock of
ACMI Holdings, Inc.
THIS CERTIFIES THAT, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged,[ ] or its registered
assigns (the "holder"), is entitled, subject to the adjustment provisions and
the conditions and limitations hereinafter set forth, to purchase from ACMI
Holdings, Inc. (the "Company"), a corporation organized and existing under the
laws of the State of Delaware, [ ] shares, as adjusted pursuant to Section 4
hereof, of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"), at an exercise price of $0.01 per share, as adjusted pursuant to
Section 4 hereof, (the "Exercise Price"). This Warrant shall not be terminable
by the Company prior to the Expiration Date (as defined in Section 9 hereof).
The shares of Common Stock issuable upon exercise of this Warrant (and any other
or additional shares, securities or property that may hereafter be issuable upon
exercise of this Warrant) are sometimes referred to herein as the "Warrant
Shares," and the maximum number of shares so issuable under this Warrant is
sometimes referred to as the "Aggregate Number" (as such number may be increased
or decreased, as more fully set forth herein).
This Warrant shall be void and all rights represented hereby shall
cease on the Expiration Date.
This Warrant is part of an authorized issue of warrants (the
"Authorized Warrants") initially exercisable for an aggregate of 30,957 shares
of Common Stock issued on the date hereof pursuant to the terms of the Purchase
Agreement.
Certain terms used in this Warrant are defined in Section 9 hereof.
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise; Issue of Certificates; Payment for Shares. (a) The
right to purchase Common Stock represented by this Warrant may be exercised by
the holder hereof, in whole or in part (but not as to fractional shares of
Common Stock), to purchase the Aggregate Number of shares (initially equal to [
] shares) of Common Stock at all times prior to the Expiration Date hereof.
(b) This Warrant shall be exercisable, upon five (5) days notice,
by surrendering this Warrant (with the Exercise Form annexed hereto as Schedule
1 properly completed and executed) to the Company at its principal office
specified in Section 14, or its then current
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address, and upon payment to the Company of the Exercise Price for the Warrant
Shares being purchased.
(c) Payment of the aggregate Exercise Price with respect to an
exercise in whole or in part of this Warrant may be made, in the sole discretion
of the holder, in the form of any of the following:(a) by cash or a check or
bank draft in New York Clearing House funds, (b) by the surrender to the Company
of a portion of this Warrant (without the payment of the Exercise Price in cash)
which is exercisable for such number of Warrant Shares equal to the product of
(1) the number of Warrant Shares issuable in connection with such exercise
assuming payment in cash of the Exercise Price as of the date of exercise and
(2) the Cashless Exercise Ratio or (c) by any combination of (a) and (b) above.
The shares so purchased shall be and shall be deemed to be issued to the holder
hereof as the record owner of such shares as of the close of business on the
Business Day on which this Warrant shall have been surrendered and payment made
for such shares as aforesaid. Notwithstanding any provision in this Warrant to
the contrary, including the provisions of Section 4 hereof, the Exercise Price
per share paid by the holder upon any exercise of this Warrant shall equal the
greater of (x) the Exercise Price per share as determined under this Warrant and
(y) the par value per share of the Common Stock at the time of exercise.
(d) Certificates for the shares so purchased shall be delivered to
the holder hereof within a reasonable time, not exceeding five (5) days, after
this Warrant shall have been so exercised, and unless this Warrant has expired
or been fully exercised, a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised shall also be
delivered to the holder hereof within such time.
2. Shares to be Fully Paid; Reservation of Shares; Listing. The
Company covenants and agrees that: (a) all Warrant Shares will, upon issuance,
be original-issue shares (and not treasury stock) fully paid and nonassessable
and free from all taxes, claims, liens, charges and other encumbrances with
respect to the issue thereof; (b) without limiting the generality of the
foregoing, it will not amend the Certificate of Incorporation to increase the
par value per share of Common Stock above the Exercise Price; (c) during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved for the purpose of issue
upon exercise of this Warrant a sufficient number of original-issue shares of
its Common Stock to provide for the exercise of this Warrant in full; and (d)
upon the exercise of this Warrant, it will, at its expense, promptly notify each
securities exchange on which any Common Stock is at the time listed of such
issuance, and use its best efforts to maintain a listing of all shares of Common
Stock from time to time issuable upon the exercise of this Warrant to the extent
such shares can be listed.
3. Stockholders Agreement. The holder of this Warrant shall be
entitled to all of the benefits, and subject to all of the obligations, of the
Stockholders Agreement, in
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connection with this Warrant and the Warrant Shares to be issued in connection
with the exercise of this Warrant.
4. Adjustments to Aggregate Number. The Exercise Price and the
Aggregate Number of shares of Common Stock issuable upon the exercise of this
Warrant (the "Exercise Rate") is subject to adjustment from time to time upon
the occurrence of the events enumerated in this Section 4.
(a) Adjustment for Change in Capital Stock. If the Company:
(1) pays a dividend or makes any other distribution on its Common
Stock in shares of its Common Stock or other capital stock of the Company;
or
(2) subdivides, combines or reclassifies its outstanding shares of
Common Stock,
then, in each such case, the Exercise Rate and the Exercise Price in effect
immediately prior to such action shall be proportionately adjusted so that the
holder of this Warrant thereafter exercised may upon payment of the same
aggregate Exercise Price payable immediately prior to such action receive the
Aggregate Number and kind of shares of capital stock of the Company which such
holder would have owned immediately following such action if such Warrant had
been exercised immediately prior to such action.
Any such adjustment shall become effective immediately after the
record date of such dividend or distribution or the effective date of such
subdivision, combination or reclassification.
If after an adjustment the holder of this Warrant upon exercise of
it may receive shares of two or more classes of capital stock of the Company,
the board of directors of the Company shall determine the allocation of the
adjusted Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the Exercise Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section 4.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Certain Issuances of Common Stock.
(i) If the Company issues or sells to any Person shares of its
Common Stock or distributes any rights, options or warrants entitling any
Person to purchase shares of Common Stock, or securities convertible into
or exchangeable for Common Stock, in each case, at a price per share
(determined, in the case of rights, options, war-
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rants or convertible or exchangeable securities ("Derivative Securities"),
by dividing (x) the total consideration determined in accordance with
Section 4(d) hereof, by (y) the total number of shares of Common Stock
covered by such Derivative Securities) less than the Current Market Value
on the date of such issuance, sale or distribution (the "Time of
Determination"), the Exercise Rate shall be adjusted in accordance with
the formula:
E' = E x O + N
---------
O + N x P
-----
M
and the Exercise Price shall be adjusted in accordance with the following
formula:
EP' = EP x E
--
E'
where:
E' = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination for any such issuance, sale or distribution.
EP'= the Adjusted Exercise Price.
EP = the Exercise Price immediately prior to the Time of
Determination for any such issuance, sale or distribution.
O = the number of Fully Diluted Shares (as defined below)
outstanding immediately prior to the Time of Determination for
any such issuance, sale or distribution.
N = the number of additional shares of Common Stock issued, sold
or issuable upon exercise of such rights, options or warrants
or conversion or exchange of such convertible or exchangeable
securities.
P = the per share price received and receivable by the Company in
the case of any issuance or sale of Common Stock or Derivative
Securities inclusive of the exercise price per share of Common
Stock payable upon exercise, conversion or exchange of such
Derivative Securities.
M = the Current Market Value per share of Common Stock on the Time
of Determination for any such issuance, sale or distribution.
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For purposes of this Section 4 the term "Fully Diluted Shares" shall
mean (i) the shares of Common Stock outstanding as of a specified date, and (ii)
the shares of Common Stock into or for which rights, options, warrants or other
securities outstanding as of such date are exercisable, convertible or
exchangeable (other than the Warrants).
The adjustments shall be made successively whenever any such Common
Stock or Derivative Securities are issued and shall become effective immediately
after the relevant Time of Determination. Notwithstanding the foregoing, the
Exercise Rate and the Exercise Price shall not be subject to adjustment in
connection with (i) the issuance of any shares upon exercise of any such
Derivative Securities which have previously been the subject of an adjustment
under this Agreement for which the required adjustment has been made; (ii) the
issuance of the Authorized Warrants and the issuance of any shares upon the
exercise of the Authorized Warrants; (iii) the issuance of any other Derivative
Securities that are outstanding on the date hereof and the issuance of any
shares upon the exercise of such Derivative Securities; (iv) any event
contemplated by Section 4(a) or 4(c) hereof; (v) the issuance of options to
purchase an aggregate of 410,111 shares of Common Stock (as appropriately
adjusted for stock dividends, subdivisions, combinations and like events
affecting the Common Stock) granted pursuant to the Company's option plans and
the issuance of the shares issuable upon exercise of such options; (vi) the
issuance of shares of Common Stock, or Derivative Securities containing the
right to subscribe for or purchase shares of Common Stock, issued as part of a
unit in connection with any arm's length institutional financing of debt, and
the issuance of shares upon the exercise, conversion or exchange of such
Derivative Securities; (vii) shares of Common Stock, or Derivative Securities
containing the right to subscribe for or purchase shares of Common Stock, issued
in connection with any acquisition by the Company or one of its subsidiaries of
a Person, or all or substantially all of the assets of a Person in each case
except for issuances to, any Affiliate of the Company, and the issuance of
shares upon exercise, conversion or exchange of such Derivative Securities to
the extent such Derivative Securities or shares would otherwise be included in
clause 4(b)(i); and (viii) the issuance of the AHYDO Warrants (as defined in the
Purchase Agreement) pursuant to the terms of the Purchase Agreement and the
AHYDO Warrants (as defined in the Original Purchase Agreement) pursuant to the
terms of the Original Purchase Agreement and, in each case, the issuance of any
shares upon exercise of the AHYDO Warrants pursuant to the Purchase Agreement
and the Original Purchase Agreement. If at the end of the period during which
any such Derivative Securities are exercisable, convertible or exchangeable not
all such Derivative Securities shall have been exercised, converted or exchanged
in full, any adjustment made to the Exchange Rate and the Exercise Price which
was made upon the issuance of such Derivative Securities, and any subsequent
adjustments based thereon, shall be recomputed on the basis that "N" in the
above formula had been the number of shares actually issued upon the exercise,
conversion or exchange of such Derivative Securities and "P" in the above
formula had been calculated on the basis of the actual consideration received or
receivable in connection with such Derivative Securities (as determined herein).
-7-
(c) Adjustment for Other Distributions. If the Company fixes a
record date for the distribution to all holders of Common Stock of (i) any
evidences of indebtedness of the Company or any of its subsidiaries, (ii) any
assets of the Company or any of its subsidiaries, whether in cash, property or
otherwise (other than regularly scheduled cash dividends or cash distributions
payable out of consolidated earnings or earned surplus or dividends payable in
capital stock for which adjustment is made under Section 4(a)), or (iii) any
rights, options or warrants to acquire any of the foregoing or to acquire any
other securities of the Company, the Exercise Rate shall be adjusted in
accordance with the formula (it being understood that in no event shall the
fraction M be less than zero):
E' = E x M
---
M - F
and the Exercise Price shall be decreased (but not increased) in accordance with
the following formula:
EP' = EP x E
-
E'
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date referred to in
this paragraph (c) above.
EP'= the Adjusted Exercise Price.
EP = the current Exercise Price on the record date referred to in
this paragraph (c) below.
M = the Current Market Value per share of Common Stock on the
record date referred to in this paragraph (c) above.
F = the fair market value (as determined in good faith by the
Company's board of directors) on the record date referred to
in this paragraph (c) above of the indebtedness, assets,
rights, options or warrants distributable in respect of one
share of Common Stock.
The adjustments shall be made successively whenever any such record
date is fixed and shall become effective immediately after such record date. If
any adjustment is made pursuant to clause (iii) above of this subsection (c) as
a result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or war-
-8-
rants are exercisable, not all such rights, options or warrants shall have
been exercised, in full, any adjustment made to the Exchange Rate and the
Exercise Price which was made upon the record date fixed in respect of such
rights, options or warrants, and any subsequent adjustments based thereon, shall
be recomputed on the basis that "F" in the above formula had been the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on such record date.
Notwithstanding anything to the contrary contained in this subsection (c) in
lieu of the adjustment otherwise required by this subsection (c), the Company
may elect to distribute to the holder of this Warrant, upon exercise thereof,
the evidences of indebtedness, assets, rights, options or warrants which would
have been distributed to such holder had this Warrant been exercised immediately
prior to the record date for such distribution.
(d) The following provisions shall be applicable to the making of
adjustments of the Exercise Price and Exercise Rate herein before provided for
in this Section 4:
(i) The sale or other disposition of any issued shares of Common
Stock owned or held by or for the account of the Company shall be deemed
an issuance thereof for the purposes of this Section 4.
(ii) The adjustments required by the preceding paragraphs of this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except as expressly provided herein.
For the purpose of any adjustment, any specified event shall be deemed to
have occurred at the close of business on the date of its occurrence.
(iii) In computing adjustments under this Section 4 fractional
interests in Common Stock shall be taken into account to the nearest
one-thousandth (.001) of a share and shall be aggregated until they equal
one whole share.
(iv) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any item
described in Sections 4(a) through 4(c) hereof, but abandon its plan to
pay or deliver such item, then no adjustment shall be required by reason
of the taking of such record and any such adjustment previously made in
respect thereof shall be rescinded and annulled.
(v) The consideration for any additional shares of Common Stock
issuable pursuant to any options, warrants or other rights to subscribe
for or purchase the same shall be the consideration received or receivable
by the Company for issuing such options, warrants or other rights, plus
the additional consideration payable to the Company upon the exercise of
such options, warrants or other rights. The consideration for any
additional shares of Common Stock issuable pursuant to the terms of any
convertible or
-9-
exchangeable securities shall be the consideration received or receivable
by the Company for issuing any options, warrants or other rights to
subscribe for or purchase such convertible or exchangeable securities,
plus the consideration paid or payable to the Company in respect of the
subscription for or purchase of such convertible or exchangeable
securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion, exercise or exchange
of such convertible or exchangeable securities. In case of the issuance at
any time of any additional shares of Common Stock or convertible or
exchangeable securities in payment or satisfaction of any dividend upon
any class of stock other than Common Stock, the Company shall be deemed to
have received for such additional shares of Common Stock or convertible or
exchangeable securities a consideration equal to the amount of such
dividend so paid or satisfied.
(e) (i) If any event occurs as to which the other provisions of
this Section 4 are not strictly applicable but the lack of any provision for the
exercise of the rights of the holder of this Warrant would not fairly protect
the purchase rights of such holder in accordance with the essential intent and
principles of such provisions, or, if strictly applicable, would not fairly
protect the conversion rights of such holder in accordance with the essential
intent and principles of such provisions, then the Company shall appoint a firm
of independent certified public accountants in the United States (which may be
the regular auditors of the Company) of recognized national standing in the
United States reasonably satisfactory to the Required Holders, which shall give
their opinion as to the adjustments, if any, necessary to preserve, without
dilution, on a basis consistent with the essential intent and principles
established in the other provisions of this Section 4, the exercise rights of
such holder. Upon receipt of such opinion, the Company shall forthwith make the
adjustments described therein.
(ii) In case of any capital reorganization, other than in the cases
referred to in Section 4(a), (b) or (c) hereof and other than any capital
reorganization that does not result in any reclassification of the outstanding
shares of Common Stock into shares of other stock or other securities or
property, or the consolidation or merger of the Company with or into another
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding shares of Common Stock into shares of other stock or other
securities or property), or the sale of all or substantially all of the assets
of the Company (collectively such actions being hereinafter referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise of this
Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock that would otherwise have
been deliverable upon the exercise of this Warrant would have been entitled upon
such Reorganization if this Warrant had been exercised in full immediately prior
to such Reorganization. In case of any Reorganization, appropriate adjustment,
as determined in good faith by the board of directors of the Company, whose
deter-
-10-
mination shall be described in a duly adopted resolution certified by the
Company's Secretary or Assistant Secretary, shall be made in the application of
the provisions herein set forth with respect to the rights and interests of
holders so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any such shares or other securities or
property thereafter deliverable upon exercise of this Warrant.
The Company shall not effect any such Reorganization unless prior to
or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such Reorganization or the corporation or
other entity purchasing such assets shall (i) expressly assume, by a
supplemental warrant or other acknowledgment executed and delivered to the
holders the obligation to deliver to the holders such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase, and the due and punctual performance and
observance of each and every covenant, condition, obligation and liability under
this Warrant to be performed and observed by the Company in the manner
prescribed herein and (ii) if such Reorganization takes place prior to
consummation by the Company of all of its registration obligations under the
Stockholders Agreement, enter into an agreement providing to the holders rights
and benefits substantially similar to those enjoyed by the holders under the
Stockholders Agreement.
The foregoing provisions of this Section 4(e)(ii) shall apply to
successive Reorganization transactions.
(f) Within 10 days after the occurrence of an event resulting in
an adjustment pursuant to this Section 4 during which an event occurred that
resulted in an adjustment pursuant to this Section 4, the Company shall cause to
be promptly mailed to the holder of this Warrant (and upon the exercise hereof,
to the exercising holder) by first-class mail, postage prepaid, notice of each
adjustment or adjustments to the Exercise Price and Exercise Rate effected since
the date of the last such notice and a certificate of the Company's Chief
Financial Officer or Chief Accounting Officer. The certificate referred to above
shall set forth the Exercise Price and Exercise Rate after such adjustment(s), a
brief statement of the facts requiring such adjustment(s) and the computation by
which such adjustment(s) was made.
(g) The occurrence of a single event shall not trigger an
adjustment of the Exercise Price and Exercise Rate under more than one paragraph
of this Section 4.
5. Taxes on Exercise. The issuance of certificates for Warrant
Shares upon the exercise of this Warrant shall be made without charge to the
holder exercising this Warrant for any issue or stamp tax in respect of the
issuance of such certificates, and such certificates shall be issued in the
respective names of, or in such names as may be directed by, the holder;
provided, however, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate in a name other than that of the holder, and the Company
shall not be required to issue or de-
-11-
liver such certificates unless or until the Person or Persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
6. Limitation of Liability. No provision hereof in the absence of
the exercise of this Warrant by the holder and no enumeration herein of the
rights or privileges of the holder shall give rise to any liability on the part
of the holder for the Exercise Price of the Warrant Shares or as a stockholder
of the Company, whether such liability is asserted by the Company or by any
creditor of the Company. Upon exercise of the Warrants the holder will have the
right to vote the Common Stock received upon such exercise. No holder of this
Warrant shall be entitled to vote or be deemed the holder of Common Stock (or
any other securities as may be issuable upon the exercise of this Warrant) nor
shall anything contained herein be construed to confer upon the holder of this
Warrant the rights of a stockholder of the Company or the right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or give or withhold consent to any corporate action or to
receive notice of meetings or other actions affecting stockholders or to receive
dividends, distributions or subscription rights or otherwise (except as provided
herein), until this Warrant shall have been exercised in accordance with the
terms and conditions of this Warrant.
7. Closing of Books. The Company will at no time close its
transfer books against the transfer of this Warrant or of any shares of Common
Stock issued or issuable upon the exercise of this Warrant in any manner that
interferes with the timely exercise hereof. The Company shall deem and treat the
registered holder of this Warrant as the absolute owner thereof for all
purposes, including without limitation for the purpose of exercise thereof. The
Company agrees that, upon exercise of this Warrant in accordance with the terms
hereof (including receipt by the Company of payment of the aggregate Exercise
Price), the shares so purchased shall be deemed to be issued to such holder as
the record owner of such shares as of the close of business on the date on which
this Warrant shall have been exercised and the holder of this Warrant shall be
deemed for all purposes a stockholder of the Company with respect to such shares
as though the certificate for such shares had been issued on the date of such
exercise.
8. Restrictions on Transfer.
A. Subject to the provisions of this Section 8 and the
Stockholders Agreement, this Warrant may be transferred or assigned, in whole or
in part, by the holder at any time, and from time to time. Each transferee of
the Warrant or the Warrant Shares acknowledges that the Warrant or the Warrant
Shares have not been registered under the Securities Act and may be transferred
only pursuant to an effective registration under the Securities Act or pursuant
to an applicable exemption from the registration requirements of the Securities
Act. With respect to a transfer that shall occur prior to the time that the
Warrant or the Warrant Shares issuable upon the exercise thereof is registered
under the Securities Act, such holder shall, if required by the Company, request
an opinion of counsel (which shall be ren-
-12-
dered by counsel reasonably acceptable to the Company) that the proposed
transfer may be effected without registration or qualification under any Federal
or state securities or blue sky law. Counsel shall, as promptly as practicable,
notify the Company and the holder of such opinion and of the terms and
conditions, if any, to be observed in such transfer, whereupon the holder shall
be entitled to transfer this Warrant or such Warrant Shares (or portion
thereof), subject to any other provisions and limitations of this Warrant. In
the event this Warrant shall be exercised as an incident to such transfer, such
exercise shall relate back and for all purposes of this Warrant be deemed to
have occurred as of the date of such notice regardless of delays incurred by
reason of the provisions of this Section 8 which may result in the actual
exercise on any later date.
B. Restrictive Legends. (i) Each stock certificate for any
Warrant Shares issued upon the exercise of this Warrant, and each stock
certificate issued upon the transfer of any such Warrant Shares (except as
otherwise permitted by this Section 8) shall be stamped or otherwise imprinted
with a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION THEREFROM
UNDER SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS. THESE
SHARES MAY NOT BE TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN THE
WARRANT PURSUANT TO WHICH THESE SHARES HAVE BEEN ISSUED, AND NO TRANSFER
OF THESE SHARES SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH
CONDITIONS SHALL HAVE BEEN COMPLIED WITH.
Each Warrant issued in substitution for this Warrant pursuant to
Section 10, 11 or 12 hereof and each Warrant issued upon the transfer of this
Warrant (except as otherwise permitted by this Section 8) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND
SUCH SHARES AND ANY INTEREST OR PARTICIPATION THEREIN MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT AND SUCH SHARES MAY NOT BE TRANSFERRED EXCEPT UPON THE CONDITIONS
SPECIFIED IN THIS WAR-
-13-
RANT, AND NO TRANSFER OF THIS WARRANT OR SUCH SHARES SHALL BE VALID OR
EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL HAVE BEEN COMPLIED WITH.
(ii) Each Warrant issued in substitution for this Warrant pursuant
to Section 10, 11 or 12 hereof, each Warrant issued upon transfer of this
Warrant, each stock certificate for any Warrant Shares issued upon exercise of
this Warrant, and each stock certificate issued upon the transfer of any such
Warrant Shares (until such time as such securities are no longer subject to the
provisions of the Stockholders Agreement) shall be stamped or otherwise
imprinted with a legend in substantially the following form:
THE SALE, TRANSFER OR ENCUMBRANCE OF THE SECURITIES REPRESENTED
HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A SECOND AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT, DATED AS OF APRIL 15, 2003, AMONG ACMI
HOLDINGS, INC. AND CERTAIN HOLDERS OF ITS SECURITIES, AS SUCH AGREEMENT
MAY BE AMENDED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF
ACMI HOLDINGS, INC.
C. Termination of Restrictions. The restrictions imposed by this
Section 8 upon the transferability of this Warrant and Warrant Shares shall
apply as to this Warrant and any Warrant Shares until (a) such securities shall
have been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering such securities, or (b) such
time as, in the reasonable opinion of counsel for the Company, or upon the
written opinion of counsel for the holder thereof reasonably acceptable to the
Company, such restrictions are not required in order to comply with the
Securities Act. Whenever such restrictions shall terminate as to this Warrant or
any Warrant Shares, the holder thereof shall be entitled to receive from the
Company, without expense, new certificates of like tenor not bearing the
restrictive legends set forth in Section 8.A.
9. Definitions. As used in this Warrant, unless the context
otherwise requires, the following terms have the following respective meanings:
Affiliate: of any Person means (a) any other Person which, directly
or indirectly, controls or is controlled by or is under common control
with such Person and (b) any officer or director of such Person. A Person
shall be deemed to be "controlled by" any other Person if such Person
possesses, directly or indirectly, power to vote 10% or any more of the
securities (on a fully diluted basis) having ordinary voting power for the
election of directions or managers or power to direct or cause the
direction of the management and policies of such Person whether by
contract or otherwise.
-▇▇-
▇▇▇▇▇▇▇▇▇ Number: as set forth in the first paragraph of this
Warrant.
Authorized Warrants: as set forth in the third paragraph of this
Warrant.
Business Day: means any day on which commercial banks are open for
commercial banking business in New York, New York.
capital stock: means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated
and whether or not voting) of corporate stock, partnership or limited
liability company interests or any other participation, right or other
interest in the nature of an equity interest in such Person including,
without limitation, common stock and preferred stock of such Person, or
any option, warrant or other security convertible into any of the
foregoing.
Cashless Exercise Ratio: shall equal a fraction, the numerator of
which is the Exercise Price per share as of the date of exercise and the
denominator of which is the Current Market Value of one share of Common
Stock as of the date of exercise.
closing bid price: for any security on each Business Day shall mean
(A) if such security is listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day on the principal
exchange on which such security is traded, or if no sale takes place on
such day, the average of the closing bid and asking prices on such day,
(B) if such security is not then listed or admitted to trading on any
securities exchange, the last reported sale price on such day, or if there
is no such last reported sale price on such day, the average of the
closing bid and the asked prices on such day, as reported by a reputable
quotation source designated by the Company or (C) if neither clause (A)
nor (B) is applicable, the average of the reported high bid and low asked
prices on such day, as reported by a reputable quotation service, or a
newspaper of general circulation in the Borough of Manhattan, City of New
York, customarily published on each Business Day, designated by the
Company. If there are no such prices on a Business Day, then the market
price shall not be determinable for such Business Day.
Commission: the United States Securities and Exchange Commission and
any other similar or successor agency of the United States federal
government administering the Securities Act or the Exchange Act.
Common Stock: the shares of Common Stock, par value $.01 per share,
of the Company, currently provided for in the Certificate of Incorporation
of the Company, and including, for all purposes hereunder, any other
capital stock of the Company into which such shares of Common Stock may be
converted or reclassified or that may be issued in respect of, in exchange
for, or in substitution of, such Common Stock by rea-
-15-
son of any stock splits, stock dividends, distributions, mergers,
consolidations or like events.
Company: ACMI Holdings, Inc., a Delaware corporation, and its
successors and assigns.
Current Market Value: per share of Common Stock or of any other
security at any date shall be:
(1) if the security is not registered under the Exchange
Act, the value of the security determined in good faith by the board
of directors of the Company and certified in a board resolution
delivered to the holders of this Warrant; provided that if 51% in
interest of the holders of all then outstanding Authorized Warrants
disagree with the board of directors' valuation, the value of the
security shall be determined by an Independent Financial Expert
selected by the Company and reasonably acceptable to holders of 51%
in interest of the then outstanding Authorized Warrants (which
Independent Financial Expert shall be engaged at the expense of the
Company); provided, however, that if the value determined by such
Independent Financial Expert shall differ by less than 5% from the
value determined by the Board of Directors then the holders of
Authorized Warrants that disagreed with the Board of Director's
valuation shall reimburse the Company for the reasonable cost of
such Independent Financial Expert (which reimbursement shall be made
ratably among such holders in proportion to Authorized Warrants
held), or
(2) if the security is registered under the Exchange Act,
the average of the daily closing bid prices for each Business Day
during the period commencing 30 Business Days before such date and
ending on the date one day prior to such date or, if the security
has been registered under the Exchange Act for less than 30
consecutive Business Days before such date, then the average of the
daily closing bid prices (as defined below) for all of the Business
Days before such date for which daily closing bid prices are
available. If the closing bid price is not determined for at least
10 Business Days in such period, the Current Market Value of the
security shall be determined as if the security was not registered
under the Exchange Act.
Derivate Securities: as set forth in Section 4(b)(i) of this
Warrant.
Exchange Act: the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Commission thereunder.
Exercise Price: as set forth in the first paragraph of this Warrant.
-16-
Exercise Rate: as set forth in Section 4 of this Warrant.
Expiration Date: February 22, 2009.
Fully Diluted Shares: as set forth in the penultimate paragraph in
Section 4(b) of this Warrant.
holder: as set forth in the first paragraph of this Warrant.
Independent: any Person who (i) is in fact independent, (ii) does
not have any direct financial interest or any material indirect financial
interest in the Company or any of its subsidiaries, or in any Affiliate of
the Company or any of its subsidiaries (other than as a result of holding
securities of the Company in trading accounts) and (iii) is not an
officer, employee, promoter, trustee, partner, director or Person
performing similar functions for the Company or any of its subsidiaries or
any Affiliate of the Company or any of its subsidiaries.
Independent Financial Expert: a reputable accounting, appraisal or
investment banking firm that is, in the reasonable judgment of the board
of directors of the Company, qualified to perform the task for which such
firm has been engaged hereunder, is nationally recognized and
disinterested and Independent with respect to the Company and its
Affiliates and is reasonably acceptable to the holders of 51% in interest
of the Authorized Warrants (i) that does not (and whose directors,
officers, employees and Affiliates do not) have a direct or indirect
material financial interest in the Company, (ii) that has not been, and,
at the time it is called upon to serve as an Independent Financial Expert
under this Warrant is not (and none of whose directors, officers,
employees or Affiliates is) a promoter, director or officer of the
Company, (iii) that has not been retained by the Company for any purpose,
other than to perform an equity valuation, within the preceding twelve
months and (iv) that, in the reasonable judgment of the board of directors
of the Company (certified by a board resolution) is otherwise qualified to
serve as an independent financial advisor.
Original Purchase Agreement: shall mean the Purchase Agreement dated
as of February 11, 2002 and amended November 12, 2002 and April 15, 2003
by and among ACMI Holdings, Inc., American Coin Merchandising, Inc. and
the purchasers named in Schedule A thereto.
Person: means any natural person, corporation, partnership, trust,
limited liability company, association, governmental authority or unit, or
any other entity, whether acting in an individual, fiduciary or other
capacity.
-17-
Purchase Agreement: shall mean the Purchase Agreement dated as of
April 15, 2003 by and among American Coin Merchandising, Inc., the Company
and the purchasers named in Schedule A thereto.
Reorganization: as set forth in Section 4(e)(ii) of this Warrant.
Required Holders: any holder or holders holding at least 51% of the
outstanding Authorized Warrants (measured in terms of the number of
Warrant Shares for which such Warrants are currently exercisable) and
Warrant Shares.
Securities Act: the Securities Act of 1933, as amended and the rules
and regulations promulgated by the Commission thereunder.
Stockholders Agreement: shall mean the Second Amended and Restated
Stockholders Agreement dated as of April 15, 2003, by and among the
Company, and the security holders named therein.
Time of Determination: as set forth in Section 4(b) of this Warrant.
Warrant Shares: as set forth in the first paragraph of this Warrant.
10. Warrant Transferable. This Warrant is issued as a Warrant for
which there is a register maintained by the Company. Subject to the provisions
of Section 8, the transfer of this Warrant and all rights hereunder, in whole or
in part, is registerable at the office or agency of the Company referred to in
Section 1 hereof by the holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant with a properly completed Form of Assignment in
the form annexed hereto as Schedule 2. Each taker and holder of this Warrant, by
taking or holding the same, consents and agrees that this Warrant, when endorsed
in blank, shall be deemed negotiable, and that the holder hereof, when the
Warrant shall have been so endorsed, may be treated by the Company and all other
persons dealing with this Warrant as the absolute owner hereof for any purpose
and as the person entitled to exercise the rights represented by this Warrant,
or to the registration of transfer hereof on the books of the Company; and until
due presentment for registration of transfer on such books, the Company may
treat the registered holder thereof as the owner for all purposes, and the
Company shall not be affected by notice to the contrary. Any transfer tax
relating to a transfer of this Warrant shall be paid by the holder.
11. Warrant Exchangeable for Different Denominations. Subject to
the provisions of Section 8, this Warrant is exchangeable, upon the surrender
hereof by the holder hereof at such office or agency of the Company, for new
Warrants of like tenor, each of such new Warrants to represent the right to
purchase such number of shares as shall be designated by said holder at the time
of such surrender; provided, however, that (i) the minimum number of shares
which any new Warrants so issued may represent the rights to purchase shall not
be less
-18-
than ten (10), as appropriately adjusted for stock splits, subdivisions,
combinations and like events affecting the Common Stock and (ii) such new
Warrants shall represent in the aggregate the right to purchase the number of
shares hereunder.
12. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity bond (or, in the case of a holder that is an original
Purchaser (as defined in the Purchase Agreement) or a substantial financial
institution, an unsecured indemnity agreement) reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, upon surrender
and cancellation of such Warrant, the Company will execute and deliver, subject
to the provisions of Section 8, in lieu thereof, a new Warrant of like tenor to
the registered holder of such Warrant, at such holder's expense.
13. Rights and Obligations Survive Exercise of Warrants. The
rights and obligations of the Company contained in this Warrant shall survive
the exercise or repurchase of this Warrant to the extent that such survival is
necessary to give effect to a provision hereof.
14. Notices. All notices, requests and other communications
required or permitted to be given or delivered to the holder of this Warrant
shall be in writing, and shall be delivered, or shall be sent by certified or
registered mail postage prepaid and addressed, to such holder at the address
shown on this Warrant, or at such other address as shall have been furnished to
the Company by notice from such holder. All notices, requests and other
communications required or permitted to be given or delivered to the Company
shall be in writing, and shall be delivered, or shall be sent by certified or
registered mail, postage prepaid and addressed to the office of the Company
(return receipt requested) at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, attention: Chief Executive Officer, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, with a
copy to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or
at such other address as the Company shall have specified to each holder in
writing. Any such notice, request or other communication may be sent by telegram
or telex, but shall in such case be subsequently confirmed by a writing
delivered or sent by certified or registered mail as provided above. All notices
shall be deemed to have been given either at the time of the delivery thereof to
(or the receipt by, in the case of a telegram or telex) any officer or employee
of the person entitled to receive such notice at the address of such person for
purposes of this Section 14, or, if mailed, at the completion of the third full
day following the time of such mailing thereof to such address, as the case may
be.
15. Amendments. Neither this Warrant nor any term or provision
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
-19-
16. Remedies. The holder of this Warrant may seek to enforce the
terms of this Warrant by seeking a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of the
terms hereof or otherwise. If any default under the terms of this Warrant shall
occur and be continuing, the holder of this Warrant may proceed to protect and
enforce its rights under this Warrant by exercising such remedies as are
available to such holders in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific performance of
any covenant or other agreement contained in this Warrant or in aid of the
exercise of any power granted in this Warrant. No remedy conferred in this
Warrant or the Purchase Agreement upon the holder of this Warrant is intended to
be exclusive of any other remedy available to such holder, and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in equity or by statute
or otherwise.
17. Governing Law. THIS WARRANT HAS BEEN EXECUTED AND DELIVERED AT
AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW YORK. THIS WARRANT AND
THE WARRANT SHARES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK,
EXCLUDING CHOICE OF LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. IF ANY
ACTION, PROCEEDING OR LITIGATION SHALL BE BROUGHT BY THE COMPANY OR ANY HOLDER
IN ORDER TO ENFORCE ANY RIGHT OR REMEDY UNDER THIS WARRANT, THE COMPANY HEREBY
CONSENTS AND WILL SUBMIT, AND WILL CAUSE EACH OF THEIR SUBSIDIARIES TO SUBMIT,
TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
SITTING WITHIN THE AREA COMPRISING THE SOUTHERN DISTRICT OF NEW YORK ON THE DATE
OF THIS WARRANT. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
BUT NOT LIMITED TO, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION, PROCEEDING OR LITIGATION IN SUCH JURISDICTION. THE COMPANY
FURTHER AGREES THAT IT SHALL NOT, AND SHALL CAUSE ITS SUBSIDIARIES NOT TO, BRING
ANY ACTION, PROCEEDING OR LITIGATION ARISING OUT OF THIS WARRANT OR THE WARRANT
SHARES OR ANY OTHER TRANSACTIONS CONTEMPLATED THEREBY IN ANY STATE OR FEDERAL
COURT OTHER THAN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING
WITHIN THE AREA COMPRISING THE SOUTHERN DISTRICT OF NEW YORK ON THE DATE OF THIS
WARRANT.
18. Waiver of Jury Trial. THE COMPANY AND THE HOLDER OF THIS
WARRANT HEREBY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL
-20-
BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS WARRANT OR ANY OF
THE WARRANT SHARES. THE COMPANY AND THE HOLDER OF THIS WARRANT ALSO WAIVE ANY
BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF THE OTHER PARTIES. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS WARRANT, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THE COMPANY AND THE HOLDER OF THIS WARRANT ACKNOWLEDGE
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS WARRANT AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
THE COMPANY AND THE HOLDER OF THIS WARRANT FURTHER WARRANT AND REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS WARRANT OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THE WARRANT.
-21-
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its duly authorized officer as of April 15, 2003
ACMI HOLDINGS, INC.
----------------------------------
Name:
Title:
Address:
Schedule 1
EXERCISE FORM
[TO BE EXECUTED ONLY UPON EXERCISE OF WARRANT]
To: [ ]
The undersigned irrevocably exercises [this Warrant in its
entirety/that portion of this Warrant representing the right] to purchase _____
shares of Common Stock, par value $0.01 per share ("Common Stock"), of ACMI
Holdings, Inc. (the "Company") and herewith makes payment of $____ (such payment
being (a) in cash or by check or bank draft in New York Clearing House funds
payable to the order of the Company, (b) by the surrender to the Company of a
portion of this Warrant (and without the payment of the Exercise Price in cash)
which is exercisable for such number of Warrant Shares equal to the product of
(1) the number of Warrant Shares issuable in connection with such exercise
assuming payment in cash of the Exercise Price as of the date of exercise and
(2) the Cashless Exercise Ratio or (c) by any combination of (a) and (b) above,
in each case as described below, all in accordance with the terms and conditions
specified in the within Warrant, surrenders the within Warrant and all right,
title and interest therein to the extent being exercised or surrendered as
described below to the Company and directs that the shares of Common Stock
deliverable upon the exercise of such Warrant be registered or placed in the
name and at the address specified below and delivered thereto.
Date:
----------------- ----------------------------
Describe amount exercised and method of payment:
Name:
--------------------------------
Address:
----------------------------------
----------------------------------
----------------------------------
Schedule 2
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered Holder of the within
Warrant hereby sells, assigns and transfers unto the Assignee(s) named below all
of the rights of the undersigned to purchase Common Stock, par value $.01 per
share, ("Common Stock") of ACMI Holdings, Inc. represented by the Warrant, with
respect to the number of shares of Common Stock set forth below:
Social Security or
Other Identifying
Names of Number of Number of
Assignees Address Assignee(s) Shares
--------- ------- ------------------ ---------
and does hereby irrevocably constitute and appoint ___________ the undersigned's
attorney to make such transfer on the books of ACMI Holdings, Inc. maintained
for that purpose, with full power of substitution in the premises.
Dated:
-------------------
(1)
--------------------------------
(Signature of Owner)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip Code)
----------
(1) The signature must correspond with the name as written upon the face of
the within Warrant in every particular, without alteration or enlargement
or any change whatever.
EXHIBIT D
FORM OF SUBORDINATION AGREEMENT
D-1
[Separately Filed as Exhibit 10.73 to Form 8-K]
EXHIBIT E
FORM OF STOCKHOLDERS AGREEMENT
E-1
SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
This Second Amended and Restated Stockholders' Agreement (this "AGREEMENT"),
dated as of April 15, 2003, by and among ACMI HOLDINGS, INC. (the "COMPANY"), a
Delaware corporation, WELLSPRING CAPITAL PARTNERS II, L.P. ("WELLSPRING"), a
Delaware limited partnership, KNIGHTSBRIDGE HOLDINGS, LLC D/B/A ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
COMPANY, a Delaware limited liability company ("KNIGHTSBRIDGE"), CIT LENDING
SERVICES CORPORATION, a Delaware corporation ("CIT"), INDOSUEZ CAPITAL PARTNERS
2003, L.L.C., a Delaware limited liability company ("ICP" and together with CIT,
the "SENIOR INVESTORS"), AUDAX CO-INVEST, L.P., a Delaware limited partnership,
AUDAX TRUST CO-INVEST, L.P., a Delaware limited partnership, AFF CO-INVEST,
L.P., a Delaware limited partnership, and AUDAX MEZZANINE FUND, L.P., a Delaware
limited partnership (collectively, "AUDAX"), WILTON PRIVATE EQUITY FUND, LLC, a
Delaware limited liability company ("Wilton"), STATE STREET BANK AND TRUST
COMPANY, AS TRUSTEE FOR DUPONT PENSION TRUST, a Massachusetts trust ("DUPONT"),
UPPER COLOMBIA CAPITAL COMPANY, LLC, a Delaware limited liability company
("UCCC") and THE ROYAL BANK OF SCOTLAND PLC, New York Branch ("RBS", and
together with Audax, Wilton, DuPont and UCCC, the "MEZZANINE INVESTORS") and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a Colorado resident ("▇▇▇▇▇▇▇"). Wellspring, Knightsbridge,
▇▇▇▇▇▇▇, the Senior Investors, and the Mezzanine Investors are sometimes
hereinafter together referred to as the "Stockholders" and each individually as
a "Stockholder."
W I T N E S S E T H :
WHEREAS, the Stockholders believe that it is in the best interest of the
Company and the Stockholders that they provide for the continuity and stability
of the business and policies of the Company, and, accordingly, desire to make
certain arrangements among themselves with respect to the election of directors
of the Company and with respect to certain other matters.
WHEREAS, the Company and the Stockholders (other than ▇▇▇▇▇▇▇ and the
Senior Investors) entered into a Stockholders' Agreement, dated as of February
7, 2002 that was subsequently amended and restated as of September 30, 2002 (the
"ORIGINAL AGREEMENT").
WHEREAS, the Company and the Stockholders desire to amend and restate the
Original Agreement and replace and supersede it with this Agreement, to include
▇▇▇▇▇▇▇ as a party.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall
have the following respective meanings:
(a) "AFFILIATE" shall mean (i) in the case of an entity, any Person
who or which, directly or indirectly, through one or more intermediaries,
controls or is
controlled by, or is under common control with, any specified Person or
(ii) in the case of an individual, such individual's spouse, children,
grandchildren or parents or a trust primarily for the benefit of any of
the foregoing.
(b) "BONA FIDE PURCHASER" shall mean any Person (other than a
Selling Stockholder's Affiliates) who or which has delivered a good faith
written offer to purchase all or any portion of such Stockholder's Shares.
(c) "BOOK VALUE" shall mean, with respect to a Share, the amount,
not less than zero, which such Share would receive (taking into account
any and all liquidation preferences) upon a liquidation, or other
distribution of assets, of the Company in which the amount to be
distributed equals the net worth of the Company, as reflected on the
Company's audited balance sheet for the Company's most recently completed
fiscal year.
(d) "CERTIFICATE OF INCORPORATION" shall mean the Certificate of
Incorporation of the Company, as the same may be amended from time to time
hereafter.
(e) "CLOSING PRICE" shall mean for any day, with respect to each
Share in question, (a) the last reported sale price regular way or, in
case no such sale takes place on such day, the average of the closing bid
and asked prices regular way, in either case as reported on the principal
national securities exchange on which such Shares are listed or admitted
for trading or (b) if the Shares are not listed or admitted for trading on
any national securities exchange, the last reported sale price or, in case
no such sale takes place on such day, the average of the highest reported
bid and the lowest reported asked quotation for the Shares, in either case
as reported on the NASDAQ National Market ("NASDAQ") or a similar service
if NASDAQ is no longer reporting such information.
(f) "COMMON STOCK" shall mean, collectively, the shares of common
stock, $.01 par value per share, of the Company and any class or series of
common stock of the Company authorized after the date hereof, or any other
class or series of stock resulting from successive changes or
reclassifications of any class or series of common stock of the Company.
(g) "COST" of a Share shall mean the dollar amount paid by a
Stockholder for such Share; provided, however, that if the dollar amount
so paid is zero, then "Cost" shall mean Book Value.
(h) "CURRENT MARKET PRICE" shall mean, with respect to a Share on
any date, (i) the average of the daily Closing Prices per Share for the 10
consecutive trading days commencing 15 trading days before such date, or
(ii) if on any such date the Shares are not listed or admitted for trading
on any national securities exchange or quoted by NASDAQ or a similar
service, then as determined in good faith by the Board of Directors of the
Company.
2
(i) "DISPOSE" or "DISPOSITION" (and any derivatives thereof) shall
mean (i) a voluntary or involuntary sale, assignment, mortgage, grant,
pledge, hypothecation, exchange, transfer, conveyance or other disposition
of a Stockholder's Shares, and (ii) any agreement, contract or commitment
to do any of the foregoing.
(j) "ENCUMBRANCE" or "ENCUMBER" shall mean or refer to any lien,
claim, charge, pledge, mortgage, encumbrance, security interest,
preferential arrangement, restriction on voting or alienation of any kind,
adverse interest, or the interest of a third party under any conditional
sale agreement, capital lease or other title retention agreement.
(k) "EQUITY EQUIVALENTS" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock
of the Company and any rights to acquire the foregoing, including, without
limitation, any rights to acquire securities exercisable for, convertible
into or exchangeable for the foregoing.
(l) "FULLY-DILUTED BASIS" shall be based on the assumption that all
convertible, exchangeable and exercisable Equity Equivalents shall have
been converted, exchanged or exercised in full.
(m) "INITIAL PUBLIC OFFERING" shall mean the underwritten public
offering by the Company or any of its Subsidiaries of its common stock
pursuant to a registration statement (other than a registration statement
relating solely to an employee benefit plan or transaction covered by Rule
145 of the Securities Act (as defined below)) that has been filed under
the Securities Act and declared effective by the Commission; provided,
however, that for this purpose any offering under Rule 144A under the
Securities Act or any similar rule or regulation promulgated under the
Securities Act shall not be deemed to be an Initial Public Offering.
(n) "INSTITUTIONAL INVESTORS" shall mean Wellspring and its
respective successors and assigns and their respective Permitted
Transferees.
(o) "MEZZANINE INVESTORS" shall mean each Person so identified in
the preamble hereto and shall include any other Person who acquires Equity
Equivalents from an existing Mezzanine Investor as contemplated by clause
(iii)(a) or (d) of the definition of Permitted Transferees.
(p) "NASDAQ" shall have the meaning ascribed thereto in the
definition of Closing Price.
(q) "NOTES" shall mean the 17% Senior Subordinated Notes due 2009 of
American Coin Merchandising, Inc., a Delaware Corporation, in the original
principal amount of $31,500,000 issued to the Mezzanine Investors.
(r) "OTHER STOCKHOLDERS" shall mean Knightsbridge, the Senior
Investors, ▇▇▇▇▇▇▇ and the Mezzanine Investors, together with any other
Person (as
3
defined below) who becomes a Stockholder (as defined below) after the date
hereof, except for Wellspring or any of its Permitted Transferees.
(s) "PERMITTED TRANSFEREES" shall mean in the case of (i)
Wellspring, the Affiliates, partners, managing directors and principals
and retired partners, managing directors and principals of Wellspring, the
estates and family members of any such Persons and of their spouses, and
any trusts for the benefit of any of the foregoing Persons, (ii)
Knightsbridge, the Affiliates, managing directors and principals, partners
and retired partners, managing directors and principals of Knightsbridge,
the estates and family members of any such Persons and of their spouses,
and any trusts for the benefit of any of the foregoing Persons, (iii) a
Mezzanine Investor (a) the Affiliates, managing directors and principals,
limited and general partners and any retired partners, of such Mezzanine
Investor, the estates and family members of any such Persons and of their
spouses, and any trusts for the benefit of any of the foregoing Persons,
(b) a pledgee that is a commercial bank or other financial institution
providing financing to such Mezzanine Investor, which such pledgee is
taking a security interest in such Mezzanine Investor's Equity Equivalents
in connection with such financing, (c) any transferee of Notes held by
such Mezzanine Investor provided that the amount of Equity Equivalents
transferred together with such Notes does not exceed the ratable amount of
Equity Equivalents issued in respect of the principal amount of Notes so
transferred, and (d) any other Mezzanine Investor, (iv) any Person
described in clause (iii)(c) above, (a) any Person of the type described
in clause (iii)(a) above with respect to such Person and (b) any Person
that acquires any portion of the Notes and Equity Equivalents from such
Person, (v) a Senior Investor (a) Affiliates of such Senior Investor, (b)
a pledgee that is a commercial bank or other financial institution
providing financing to such Senior Investor which such pledgee is taking a
security interest in such Senior Investor's Equity Equivalents in
connection with such financing, and (c) in connection with the sale of all
or substantially all of the assets of such Senior Investor, the buyer of
all such assets, (vi) Other Stockholders who are individuals, the estates
and family members of such Other Stockholder, and any trusts for the
benefit of the foregoing Persons, and (vii) the Other Stockholders who are
trusts, the trustees of such trust and the estates and family members of
such trust's beneficiaries, and any other trusts for the benefit of such
beneficiaries; provided, however, that in each of the foregoing cases such
Person shall agree in writing in a form reasonably acceptable to the
Company to be bound by and to comply with all applicable provisions of
this Agreement (as amended from time to time) to the extent and in the
manner their transferor was subject; provided, however, that delivery of
such agreement shall not constitute a condition precedent to the
effectiveness of transfers contemplated by clauses (i), (ii), (iii)(a) or
(v)(a) above, but, if not delivered at or prior to such transfer, such
agreement shall continue to be required to be delivered by such transferee
as promptly as is practicable and the Company and the other Stockholders
shall be entitled to deal solely with such transferor under any such
transfer with respect to this Agreement and matters relating thereto until
such agreement has been delivered. Each such Permitted Transferee shall
also be entitled to the benefits of this Agreement to the same extent as
its transferor would have been entitled. All references to any Person in
this Agreement shall include such Person's Permitted Transferee.
4
(t) "PERSON" shall mean any individual, partnership, corporation,
limited liability company, joint venture, trust, firm, association,
unincorporated organization or other entity.
(u) "QUALIFIED PUBLIC OFFERING" shall mean an Initial Public
Offering which either (i) represents at least 20% of the outstanding
common stock of the Company on a fully-diluted basis or (ii) yields net
proceeds of not less than $25,000,000.
(v) "REGISTRATION EXPENSES" shall mean the expenses so described in
Section 8(c) hereof.
(w) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(x) "SELLING EXPENSES" shall mean the expenses so described in
Section 8(c) hereof.
(Y) "SENIOR INVESTORS" shall mean each Person so identified in the
preamble hereto and shall include any other Person who acquires Equity
Equivalents from an existing Senior Investor as contemplated by clause (v)
of the definition of Permitted Transferees.
(z) "SHARES" shall mean, with respect to any Stockholder, (i) the
shares of capital stock of the Company, including, without limitation,
Common Stock and preferred stock, held at any time by such Stockholder,
(ii) any option, warrant, or other right held at any time by any
Stockholder, exercisable for shares of capital stock of the Company, and
(iii) any security, including, without limitation, preferred stock, held
at any time by such Stockholder, convertible or exchangeable for capital
stock of the Company.
(aa) "STOCKHOLDER" shall mean each Person so identified in the
preamble hereto and shall include any other Person who acquires Equity
Equivalents and agrees in writing to be bound by and to comply with all
applicable provisions of this Agreement and all Permitted Transferees
thereof.
(bb) "SUBSIDIARIES" shall mean, with respect to any Person, a
corporation or other entity of which 50% or more of such Person's voting
equity securities or voting equity interests are owned, directly or
indirectly, by such Person. Unless otherwise qualified, all references to
a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Company or to Subsidiaries thereof.
(CC) "THRESHOLD AMOUNT" shall mean Institutional Investors who
collectively own more than 45% (rounded to the nearest one hundredth) of
the Company's Equity Equivalents.
5
SECTION 2. PREEMPTIVE RIGHTS.
(a) If at any time the Company wishes to issue any Equity
Equivalents to any Person or Persons, the Company shall promptly deliver a
notice of its intention to sell (the "COMPANY'S NOTICE OF INTENTION TO
SELL") to each Stockholder (collectively, the "ELIGIBLE STOCKHOLDERS")
setting forth a description of the Equity Equivalents to be sold, the
proposed purchase price thereof and terms of sale. Upon receipt of the
Company's Notice of Intention to Sell, each Eligible Stockholder shall
have the right to elect to purchase, at the price and on the terms stated
in the Company's Notice of Intention to Sell, a number of the Equity
Equivalents equal to the product of (i) a fraction, the numerator of which
is such Eligible Stockholder's aggregate ownership of Common Stock
(calculated on a fully-diluted basis) and the denominator of which is the
number of shares of Common Stock (calculated on a fully-diluted basis)
held by all Eligible Stockholders, multiplied by (ii) the number of Equity
Equivalents to be issued. Such election is to be made by the Eligible
Stockholders by written notice to the Company within 30 days after receipt
by the Eligible Stockholders of the Company's Notice of Intention to Sell
(the "ACCEPTANCE PERIOD FOR EQUITY EQUIVALENTS"). Each Eligible
Stockholder shall also have the option, exercisable by so specifying in
such written notice, to purchase on a pro rata basis similar to that
described above, any remaining Equity Equivalents not purchased by other
Eligible Stockholders, in which case the Eligible Stockholders exercising
such further option shall be deemed to have elected to purchase such
remaining Equity Equivalents on such pro rata basis, up to the aggregate
number of Equity Equivalents which such Eligible Stockholder shall have
specified until either (A) no Eligible Stockholder shall have elected to
purchase any further amount of the Equity Equivalents which are the
subject of the Company's Notice of Intention to Sell or (B) all the Equity
Equivalents which are the subject of the Company's Notice of Intention to
Sell shall have been subscribed for by the Eligible Stockholder(s). The
Company shall promptly notify each electing Eligible Stockholder in
writing of each notice of election received from other Eligible
Stockholders pursuant to this paragraph 2 (a).
(b) If effective acceptances shall not be received pursuant to
paragraph 2(a) above in respect of all the Equity Equivalents which are
the subject of the Company's Notice of Intention to Sell, then the Company
may, at its election, during a period of 120 days following the expiration
of the Acceptance Period for Equity Equivalents, sell and issue the
remaining Equity Equivalents to another Person at a price and upon terms
not more favorable to such Person than those stated in the Company's
Notice of Intention to Sell. In the event the Company has not sold the
Equity Equivalents, or entered into an agreement to sell the Equity
Equivalents, within such 120 day period, the Company shall not thereafter
issue or sell any Equity Equivalents without first offering such
securities to each Eligible Stockholder in the manner provided in Section
2(a) hereof.
(c) If an Eligible Stockholder gives the Company notice, pursuant to
the provisions of this Section 2, that such Eligible Stockholder desires
to purchase any of the Equity Equivalents, payment therefor shall be by
check or wire transfer, against delivery
6
of the securities at the executive offices of the Company within 15
Business Days after giving the Company such notice, or, if later, the
closing date for the sale of such Equity Equivalents. In the event that
any such proposed issuance is for a consideration other than cash, such
Eligible Stockholder will be entitled to pay cash for each share or other
unit, in lieu of such other consideration, in the amount determined in
good faith by the Board of Directors of the Company to constitute the fair
value of such consideration other than cash to be paid per share or other
unit.
(d) The preemptive rights contained in this Section 2 shall not
apply to (i) Equity Equivalents issued (A) as a stock dividend to holders
of Common Stock or upon any subdivision or combination of shares of Common
Stock, (B) pursuant to an Initial Public Offering, (C) upon the conversion
of any equity security or debt security of the Company issued on or prior
to the date hereof, or (D) the exercise of any option, warrant or other
right to subscribe for, purchase or otherwise acquire either Common Stock
or any equity security or debt security convertible into Common Stock,
issued on or prior to the date hereof, (ii) (A) the issuance by the
Company of up to 410,111 shares of Common Stock(as appropriately adjusted
for stock dividends, subdivisions, combinations, and like events affecting
the Common Stock) reserved or to be reserved for issuance upon the
exercise of stock options, granted or to be granted exclusively to
employees, officers, directors or consultants of the Company or its
Subsidiaries and/or Affiliates pursuant to the Company's employee stock
option plan(s) now in existence or approved by the Board of Directors of
the Company or (B) the grant of the stock options referred to in clause
(ii)(A) of this paragraph (d), (iii) the issuance of shares of Common
Stock, or Equity Equivalents containing the right to subscribe for or
purchase shares of Common Stock, issued as part of a unit (A) in
connection with any arm's length institutional financing of debt
(including, without limitation those certain warrants to purchase Common
Stock, dated as of the date hereof, to be issued to the Purchasers under,
and as defined in, those certain Note Purchase Agreements, dated February
11, 2002 and April 15, 2003 (the "NOTE PURCHASE AGREEMENTS"), by and among
the Company, American Coin Merchandising, Inc. and the other Persons
parties thereto) or (B) as consideration for any acquisition by the
Company or one of its subsidiaries of a Person, or all or substantially
all of the assets of a Person; (iv) the AHYDO Warrants pursuant to the
terms of the Note Purchase Agreements; and (v) shares of Common Stock
issued upon the exercise, conversion or exchange of the Equity Equivalents
contemplated by clauses (i)-(iv) above. Failure by an Eligible Stockholder
to exercise his, her or its option to purchase with respect to one
offering, sale and issuance of Equity Equivalents shall not affect his,
her or its option to purchase Equity Equivalents in any subsequent
offering, sale and purchase.
SECTION 3. ISSUANCE OF SECURITIES. Notwithstanding any provision in
this Agreement to the contrary, unless Wellspring otherwise agrees, the Company
shall not issue or sell any Equity Equivalents to any Person who at the time of
such issuance or sale is not a party to this Agreement unless such Person either
(i) agrees in writing to be bound by all of the provisions of this Agreement or
(ii) has been issued such Equity Equivalents pursuant to a stock option plan
approved by Wellspring and has agreed in writing to be bound to an agreement
similar to this Agreement with respect to which the Company is a party and which
is in form and substance satisfactory to the Company and Wellspring.
7
SECTION 4. SPOUSAL CONSENTS; TRANSFER OF SHARES.
(a) Subject to all additional restrictions on transfers contained
herein, no Stockholder shall effect a Disposition of any of his, her or
its Shares, whether to a Permitted Transferee or otherwise, to an
individual unless in connection with such Disposition, the spouse of such
proposed transferee executes and delivers to the Company a consent in the
form attached hereto as Exhibit A. Any purported transfer in violation
hereof shall be null and void ab initio and the Company shall not
recognize any such Disposition or accord to such purported transferee any
rights as a Stockholder.
(b) No Stockholder shall effect a Disposition of any of his, her or
its Shares, except to a Permitted Transferee or as otherwise permitted
pursuant to Sections 5, 6 or 7 of this Agreement; provided, that neither
the foregoing nor any other provision of this Agreement shall apply to the
Disposition of Shares by Antares Capital Corporation to the Company on the
date hereof. Any purported Disposition in violation of this Agreement
shall be null and void ab initio, and the Company shall not recognize any
such Disposition or accord to any such purported transferee any rights as
a Stockholder.
(c) Notwithstanding anything to the contrary herein, except for
transfers permitted pursuant to Sections 6 and 7 hereof or to ▇▇▇▇▇▇▇'▇
Permitted Transferees, for so long as ▇▇▇▇▇▇▇ remains employed by the
Company or a Subsidiary of the Company, ▇▇▇▇▇▇▇ may not transfer any
Shares to any Person (i) for a period of two years from the date hereof,
or (ii) who is, or whose Affiliate is, in competition with, or is involved
in pending or threatened litigation with, Wellspring or the Company, in
each case without the express prior written consent of the Company, which
consent may be withheld in the Company's sole discretion. Any purported
transfer in violation hereof shall be null and void ab initio and the
Company shall not recognize any such Disposition or accord to such
purported transferee any rights as a Stockholder.
SECTION 5. RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER.
5.1 Right of First Refusal
(a) Subject to Section 4(b) and (c) hereof, if any Other Stockholder
shall desire at any time to effect a Disposition of any of his, her or its
Shares (the "OFFERED SHARES") and shall receive a purchase offer therefor
or the terms of a potential purchase offer therefor from a Bona Fide
Purchaser (such offers being hereinafter referred to as a "PURCHASE
OFFER"), then such selling Stockholder ("FIRST REFUSAL SELLING
STOCKHOLDER") shall promptly notify the Company and each Institutional
Investor of the terms and conditions of such Purchase Offer; provided,
however, that this Section 5.1 shall not apply to any Disposition by any
Other Stockholder to such Stockholder's Permitted Transferees or by any
Institutional Investor to any Person or to a Disposition by an Eligible
Co-Sale Stockholder pursuant to Section 6 hereof; and
8
provided, further, that this Section 5.1 shall not apply to Knightsbridge
from and after February 7, 2005 (the "THIRD ANNIVERSARY"), after which
time Section 5.2 shall become applicable with respect to any such proposed
Disposition by Knightsbridge.
(b) Upon receipt of such notice of the Purchase Offer, each
Institutional Investor shall have the right to elect to purchase, at the
price and on the terms stated in such notice, a number of the Offered
Shares subject to the Purchase Offer equal to the product obtained by
multiplying (i) the aggregate number of Offered Shares covered by the
Purchase Offer by (ii) a fraction the numerator of which is the number of
shares of Common Stock (calculated on a fully-diluted basis) at the time
owned by such Institutional Investor and the denominator of which is the
aggregate number of shares of Common Stock (calculated on a fully-diluted
basis) owned by all Institutional Investors. Such election is to be made
by written notice ("NOTICE OF ELECTION") to the First Refusal Selling
Stockholder, to each other Institutional Investor and to the Company
within 30 days after receipt by such Institutional Investor of the notice
of a Purchase Offer (the "ACCEPTANCE PERIOD"). Each Institutional Investor
who elects to exercise his, her or its rights under this Section 5.1
("ELECTING STOCKHOLDER") shall also have the option, exercisable by so
specifying in the Notice of Election, to purchase on a pro rata basis
similar to that described above any remaining Offered Shares covered by
the Purchase Offer not purchased by other Institutional Investors, in
which case the Institutional Investors exercising such further option
shall be deemed to have elected to purchase such remaining Offered Shares
on such pro rata basis, up to the aggregate number of Shares which such
Electing Stockholder shall have specified.
(c) If effective acceptances shall not have been received pursuant
to paragraph 5.1(b) above in respect of all of the Offered Shares subject
to the Purchase Offer, then the First Refusal Selling Stockholder may, at
his, her or its election, either (i) subject to Section 6, sell to the
Electing Stockholders, if any, pursuant to their elections and sell any
remaining Offered Shares subject to the Purchase Offer to the Bona Fide
Purchaser in accordance with this Section 5.1(c); provided, that if after
compliance with the provisions of this Section 5.1 the Bona Fide Purchaser
no longer desires to purchase all or any of the remaining Offered Shares,
if any, the First Refusal Selling Stockholder may sell to the Electing
Stockholders pursuant to their elections and sell to the Bona Fide
Purchaser Offered Shares pursuant to the Purchase Offer and keep all of
the Offered Shares, if any, remaining after such sales, or (ii) rescind
the notice of the Purchase Offer, which rescission shall be effected by
notice in writing delivered to each Institutional Investor that shall have
elected to purchase and to the Company within 10 days after expiration of
the Acceptance Period, and keep all, but not less than all, of the Offered
Shares subject to the Purchase Offer. In the event that the First Refusal
Selling Stockholder elects to sell any Offered Shares pursuant to the
Purchase Offer pursuant to clause (i) of this Section 5.1(c), the Bona
Fide Purchaser and the Electing Stockholders must purchase such Offered
Shares no more than 90 days after the end of the Acceptance Period
strictly in accordance with the terms and conditions of the Purchase
Offer; provided, however, that, in the event the First Refusal Selling
Stockholder shall so elect to sell Offered Shares to the Bona Fide
Purchaser, the prospective Bona Fide Purchaser, as a condition precedent
to the purchase of the Offered Shares, or any part thereof, shall
subscribe to this Agreement and agree to be
9
bound by all of the terms and conditions hereof in the same capacity as the
First Refusal Selling Stockholder. In the event that a First Refusal Selling
Stockholder shall not have Disposed of all of his, her or its Offered Shares
subject to a Purchase Offer within 120 days after the date of the notice given
pursuant to Section 5.1(a), such First Refusal Selling Stockholder shall not
thereafter Dispose of any Shares pursuant to the Purchase Offer or otherwise
without first reoffering such Shares to each Institutional Investor in the
manner set forth in Section 5.1 hereof. No Disposition of such Shares shall be
made on terms and conditions, including the form of consideration, more
favorable to the purchaser thereof than those contained in the Purchase Offer
unless the First Refusal Selling Stockholder re-offers the Offered Shares
subject to the Purchase Offer to the Stockholders in accordance with this
Section 5.1.
(d) Notwithstanding any provision in this Section 5.1 to the
contrary or any notice given hereunder, the provisions of this Section 5.1 shall
be suspended immediately upon the occurrence of any event within the scope of
Section 7.
5.2 Right of First Offer. From and after the Third Anniversary, Section
5.1 shall not apply to a proposed Disposition by Knightsbridge and in lieu
thereof this Section 5.2 shall become applicable with respect to any such
proposed Disposition by Knightsbridge, as follows:
(a) If Knightsbridge, or any of its Permitted Transferees, desires
at any time after the Third Anniversary to effect the Disposition of any of its
Shares (the "FIRST OFFER SHARES") then Knightsbridge or such Permitted
Transferee, as the case may be (the "FIRST OFFER SELLING STOCKHOLDER") shall
promptly notify the Company and each Institutional Investor of the terms and
conditions pursuant to which it proposes to sell such First Offer Shares (the
"FIRST OFFER NOTICE"); provided, however, that this Section 5.2(a) shall not
apply to any Disposition by Knightsbridge to its Permitted Transferees.
(b) Upon receipt of such First Offer Notice, each Institutional
Investor shall have the right to elect to purchase, at the price and on the
terms stated in the First Offer Notice, a number of the First Offer Shares,
equal to the product obtained by multiplying (A) the aggregate number of First
Offer Shares covered by the First Offer Notice by (B) a fraction the numerator
of which is the number of Shares of Common Stock (calculated on a fully diluted
basis) at the time then owned by such Institutional Investor and the denominator
of which is the aggregate number of Shares (calculated on a fully diluted basis)
then owned by all Institutional Investors. Such election is to be made by
written notice ("FIRST OFFER NOTICE OF ELECTION") to the First Offer Selling
Stockholder, to each other Institutional Investor and to the Company within 30
days after such Institutional Investor receives the First Offer Notice ("FIRST
OFFER ACCEPTANCE PERIOD"). Each Institutional Investor who elects to exercise
his, her or its rights under this Section 5.2(b) ("FIRST OFFER ELECTING
STOCKHOLDER") shall also have the option, exercisable by so specifying in the
First Offer Notice of Election, to purchase on a pro rata basis similar to that
described above any remaining First Offer Shares covered by the First Offer
Notice but which were not purchased by the other Institutional Investors, in
which case the Institutional Investors exercising such further
10
option shall be deemed to have elected to purchase such remaining First Offer
Shares on such pro rata basis, up to the aggregate number of First Offer Shares
which such First Offer Electing Stockholder shall have specified.
(c) If effective acceptances shall not have been received pursuant
to Section 5.2(b) in respect of all of the First Offer Shares, then the First
Offer Selling Stockholder may, at his, her or its election, either (i) subject
to Section 6, sell such First Offer Shares to the First Offer Electing
Stockholders, if any, pursuant to their respective elections and sell any
remaining First Offer Shares to any unrelated third party (a "THIRD PARTY
PURCHASER") at a price equal to or greater than the price set forth in the First
Offer Notice and on terms (including the form of consideration) that are not
materially more favorable to the Third Party Purchaser as the terms set forth in
the First Offer Notice, or (ii) rescind the First Offer Notice which rescission
shall be effected by notice in writing delivered to the Company and to each
First Offer Electing Stockholder within 10 days after the First Offer Acceptance
Period expires, and keep all, but not less than all, of the First Offer Shares
subject to the First Offer Notice. If the First Offer Selling Stockholder elects
to sell any First Offer Shares pursuant to the First Offer Notice, pursuant to
clause (i) of this Section 5.2(c), the Third Party Purchaser and the First Offer
Electing Stockholders must purchase such First Offer Shares no more than 90 days
after the end of the First Offer Acceptance Period, (x) in the case of the First
Offer Electing Stockholders, in accordance with the terms and conditions of the
First Offer Notice and (y) in the case of the Third Party Purchaser, on the
terms negotiated between the Third Party Purchaser and the First Offer Selling
Stockholder complying with the requirements of clause (i) of this Section 5.2(c)
(such terms, the "THIRD PARTY TERMS"); provided, however, that the Third Party
Purchaser shall, as a condition precedent to the purchase of the First Offer
Shares, or any part thereof, shall in writing subscribe to this Agreement and
agree to be bound by, and shall be entitled to the benefit of, all of the terms
and conditions hereof. If the First Offer Selling Stockholder shall not have
Disposed of all of his, her or its First Offer Shares subject to a First Offer
Notice within 120 days after the date thereof, such First Offer Selling
Stockholder shall not thereafter Dispose of any Shares pursuant to the First
Offer Notice or otherwise without first re-offering such Shares to each
Institutional Investor in the manner set forth in this Section 5.2. No
Disposition of such Shares shall be made on terms and conditions, including the
form of consideration, materially more favorable to the purchaser thereof than
those contained in the First Offer Notice unless the First Offer Selling
Stockholder re-offers the First Offer Shares to the Institutional Investors in
accordance with this Section 5.2.
(d) Notwithstanding any provision in this Section 5.2 to the
contrary or any notice given hereunder, the provisions of this Section 5.2 shall
be suspended immediately upon the occurrence of any event within the scope of
Section 7.
SECTION 6. RIGHT OF CO-SALE.
(a) In the event that (i) the First Refusal Selling Stockholder
(other than Knightsbridge) shall so elect to sell the Offered Shares to the Bona
Fide Purchaser and/or the Electing Stockholders, if any, pursuant to clause (i)
of Section 5.1(c), (ii) the
11
First Offer Selling Stockholder (other than Knightsbridge) shall so elect to
sell the First Offer Shares to a Third Party Purchaser and/or the First Offer
Electing Stockholders, if any, pursuant to clause (i) of Section 5.2(c) or (iii)
an Institutional Investor has arranged to sell Shares (for purposes of this
Section 6, "INSTITUTIONAL OFFERED SHARES") to a Bona Fide Purchaser (in which
case, for purposes of this Section 6, such Institutional Investor shall be
deemed to be a "SELLING STOCKHOLDER"; for purposes of this Section 6, First
Refusal Selling Stockholders and First Offer Selling Stockholders shall also be
referred to as "Selling Stockholders") pursuant to an offer therefor from a Bona
Fide Purchaser (for purposes of this Section 6, the "INSTITUTIONAL PURCHASE
OFFER"), then the Selling Stockholder shall deliver a written notice setting
forth the terms and conditions of such offer (the "OUTSIDE SALE NOTICE") to the
Other Stockholders who are not a Selling Stockholder ("APPLICABLE STOCKHOLDER")
and each Institutional Investor who is neither a Selling Stockholder nor an
Electing Stockholder, as the case may be ("APPLICABLE INSTITUTIONAL INVESTOR"),
and no such sale shall be made unless and until each Applicable Stockholder and
each such Applicable Institutional Investor (collectively, the "ELIGIBLE CO-SALE
STOCKHOLDERS") shall have been afforded the right (the "CO-SALE RIGHT"),
exercisable upon written notice to the Company and the Selling Stockholder
within 30 days after receipt of the Outside Sale Notice, to participate in the
sale of Shares at the same time and on the same terms and conditions under which
the Selling Stockholder will sell the Selling Stockholder's Offered Shares,
First Offer Shares or Institutional Offered Shares, as the case may be. Each of
the Eligible Co-Sale Stockholders may sell all or any part of that number of
Shares held by such Eligible Co-Sale Stockholder equal to the product obtained
by multiplying (x) the aggregate number of Offered Shares, First Offer Shares or
Institutional Offered Shares, as the case may be (calculated on a fully-diluted
basis), covered by the Purchase Offer by (y) a fraction the numerator of which
is the number of shares of Common Stock (calculated on a fully-diluted basis) at
the time owned by such Eligible Co-Sale Stockholder and the denominator of which
is the aggregate number of shares of Common Stock (calculated on a fully-diluted
basis) owned by the Selling Stockholder and all Eligible Co-Sale Stockholders
exercising their Co-Sale Right. To the extent that Eligible Co-Sale Stockholders
participate in the subject sale of Offered Shares, First Offer Shares or
Institutional Offered Shares hereunder, as the case may be, the Selling
Stockholder shall be required to reduce the number of its Shares included in the
Offered Shares, First Offer Shares or Institutional Offered Shares, as the case
may be.
(b) If the Company so requests, each Eligible Co-Sale Stockholder
receiving an Outside Sale Notice in accordance with Section 6(a) and exercising
his, her or its Co-Sale Right shall deliver to the Company, as agent for such
Eligible Co-Sale Stockholder, for transfer to the Bona Fide Purchaser one or
more certificates, properly endorsed for transfer, which represent the number of
Shares of which such Eligible Co-Sale Stockholder elects to Dispose pursuant to
this Section 6.
(c) The certificate or certificates delivered by the Eligible
Co-Sale Stockholders to the Company pursuant to Section 6(b) shall be
transferred by the Company to the Bona Fide Purchaser in consummation of the
Disposition of the Shares pursuant to the terms and conditions specified in the
Purchase Offer, the First Offer
12
Notice, the Third Party Terms or Institutional Purchase Offer, as the case may
be, and the Company shall promptly thereafter remit to each Eligible Co-Sale
Stockholder that portion of the Disposition proceeds to which such Eligible
Co-Sale Stockholder is entitled by reason of his, her or its participation in
such Disposition.
(d) Notwithstanding any provision in this Section 6 to the contrary
or any notice given hereunder, the provisions of this Section 6 shall be
suspended immediately upon the occurrence of any event within the scope of
Section 7.
(e) Notwithstanding any provisions in Section 5.1 and 5.2 to the
contrary, no Eligible Co-Sale Stockholder need comply with the provisions of
Section 5.1 and 5.2 in connection with the exercise by such Stockholder of its
Co-Sale Rights hereunder.
(f) The Bona Fide Purchaser shall, as a condition precedent to the
purchase of the Institutional Offered Shares, or any part thereof, shall in
writing subscribe to this Agreement and agree to be bound by, and shall be
entitled to the benefit of, all of the terms and conditions hereof.
SECTION 7. RIGHT OF BRING-ALONG.
(a) If Institutional Investors (the "SELLING INSTITUTIONAL
INVESTORS") owning an aggregate of Shares equal to or in excess of the Threshold
Amount propose to Dispose (whether by merger or otherwise) of all (but not less
than all) of the Shares owned by them to a Bona Fide Purchaser, other than any
transfers by such Institutional Investors to such Institutional Investors'
respective Permitted Transferees, then, notwithstanding anything in this
Agreement to the contrary, the Selling Institutional Investors may require all
the Other Stockholders (the "NON-SELLING HOLDERS") to Dispose of all of their
Shares (the "BRING-ALONG RIGHT") to such Bona Fide Purchaser for the same
consideration per Share (subject to appropriate adjustments to reflect any
differences in the rights, preferences and privileges of Shares of a different
class, series or type) and otherwise on the same terms and conditions upon which
the Selling Institutional Investors effect the Disposition of their Shares.
(b) In the event that the Selling Institutional Investors desire to
exercise their Bring Along Rights, the Selling Institutional Investors shall
deliver to the Company and the Non-Selling Holders written notice ("SALE
NOTICE") setting forth the consideration per share to be paid by such Bona Fide
Purchaser and the other terms and conditions of such Disposition. Within ten
(10) days following the date of such notice, each of the Non-Selling Holders
shall deliver to the Selling Institutional Investors (i) a certificate(s) or
other document or instrument evidencing such Non-Selling Holder's Shares, as the
case may be, together with an appropriate assignment separate from certificate
duly executed in a proper form to effect the Disposition of such Shares from the
Non-Selling Holders to the Bona Fide Purchaser on the books and records of the
Company, and (ii) a limited power-of-attorney authorizing one of the Selling
Institutional Investors to effect the Disposition of such Shares pursuant to the
terms of such Bona Fide Purchaser's offer as such terms may be reasonably
modified by the
13
Selling Institutional Investors, provided, that all of the Non-Selling Holder's
Shares are disposed of for the same consideration per Share (as adjusted for any
difference in the rights, preferences and privileges of Shares of a different
class, series or type) and otherwise on the same terms and conditions upon which
the Selling Institutional Investors effect the Disposition of their Shares. In
the event that any Non-Selling Holder shall fail to deliver such stock
certificate(s) or other document or instrument, as the case may be, assignment
separate from certificate and limited power-of-attorney to the Selling
Institutional Investors, the Company shall cause a notation to be made on its
books and records to reflect that the Shares of such Non-Selling Holder are
bound by the provisions of this Section 7 and that the Disposition of such
Shares may be effected without such Non-Selling Holder's consent or surrender of
its Shares. For purposes of this Section 7: (i) all options, warrants and other
rights to acquire capital stock of the Company that are "in the money" shall be
treated as the number of Shares issuable upon the full exercise thereof, less
such number of Shares the aggregate fair market value of which (based on the
value attributed to such Disposition) would be required to pay the aggregate
exercise price therefor, and (ii) all options, warrants and other rights to
acquire Shares that are not "in the money" shall be cancelled effective on the
closing of the Disposition of Shares contemplated hereunder.
In addition, in the event the Selling Institutional Investors
exercise their Bring Along Rights, the Non-Selling Holders shall be required to
make to a Bona Fide Purchaser such unqualified (except as provided in Section
7(e)) representations and warranties with respect to their Shares as are set
forth in Section 7(e) hereof provided that the Non-Selling Holders will only be
required to indemnify the Bona Fide Purchaser against breaches of such
representations and warranties up to an aggregate dollar amount not to exceed
their pro rata portion of such indemnification obligation up to their respective
consideration received other than with respect to representations and warranties
regarding ownership of stock and authority to consummate the transaction in
question.
(c) Promptly (but in no event later than two (2) business days after
the day of receipt) after the consummation of the Disposition of Shares pursuant
to this Section 7, the Selling Institutional Investors shall (i) deliver notice
thereof to the Non-Selling Holders, (ii) remit to the Non-Selling Holders the
total sales price of their respective Shares Disposed of pursuant hereto, and
(iii) furnish such other evidence of the completion and time of completion of
such Disposition and the terms thereof as may be reasonably requested in writing
by the Non-Selling Holders.
(d) If, within ninety (90) days after the date the Selling
Institutional Investors delivered the Sale Notice required pursuant to Section
7(b), the Selling Institutional Investors have not completed the Disposition of
their Shares and that of the Non-Selling Holders in accordance herewith, the
Selling Institutional Investors shall return to the Non-Selling Holders (i) the
stock certificates, documents or instruments, as the case may be, and
assignments of certificates with respect to the Non-Selling Holders' Shares
which the Non-Selling Holder delivered pursuant to this Section 7 and (ii) the
related limited power-of-attorney delivered pursuant to this Section 7. Upon the
Non-Selling Holder's receipt of such materials, all the restrictions on
Disposition
14
contained in this Agreement with respect to the Shares owned by the Stockholders
shall again be in effect.
(e) All sales of Shares to be made pursuant to this Section 7 shall
be subject to the following terms:
(i) the Disposing Stockholder shall deliver to the Bona Fide
Purchaser the certificates, documents or instruments, as the case may be,
evidencing the Shares being sold, free and clear of Encumbrances, together
with duly executed stock transfer powers or similar instruments of
transfer, as the case may be, in favor of the Bona Fide Purchaser or its
nominees and such other documents, including evidence of ownership and
authority, as the Bona Fide Purchaser may reasonably request;
(ii) the Disposing Stockholder shall not be required to make
any representations or warranties to any Person in connection with such
sale, except as to (A) its separate and individual good title to the
Shares being sold, (B) the absence of Encumbrances with respect to the
Shares being sold, (C) its valid existence and good standing (if
applicable), (D) the authority for, and validity and binding effect
(subject only to the usual and customary qualifications) of (as against
such Disposing Stockholder), any agreement entered into by such Disposing
Stockholder in connection with such sale, (E) the fact that Disposing
Stockholder's sale will not conflict with or result in a breach of or
constitute a default under, or violation of, its governing documents or
any indenture, lease, loan or other agreement or instrument by which it is
bound or affected, (F) all required material consents to Disposing
Stockholder's sale and material governmental approvals having been
obtained (excluding any securities laws), and (G) the fact that no
broker's commission is payable by the Disposing Stockholder as a result of
Disposing Stockholder's conduct in connection with the sale; and
(iii) the Disposing Stockholder shall not be required to
provide any indemnities in connection with such sale except for breach of
the representations and warranties specifically required by the terms of
this Agreement.
SECTION 8. INCIDENTAL REGISTRATION; FORM S-3 REGISTRATION.
(a) For purposes of this Section 8, the term "REGISTRABLE SHARES"
shall mean only shares of Common Stock of the same class and series as shall
have been offered and sold in the Initial Public Offering or in the registration
giving rise to the rights under this Section 8. The Company hereby agrees that
the Initial Public Offering shall be of the same class of Common Stock of the
Company as the Common Stock issuable upon exercise of the Equity Equivalents
issued with the Notes. If the Company at any time after the Initial Public
Offering proposes to register any of its securities under the Securities Act for
sale to the public, whether for its own account or for the account of other
security holders or both (except with respect to registration
15
statements on Form S-8 or another form, which is not available for registering
Registrable Shares for sale to the public), each such time it will give prompt
written notice to each Other Stockholder and each Institutional Investor of its
intention to do so. Upon the written request of any such Person, given within 20
days after the date of any such notice, to register any of its Registrable
Shares (which request shall state the intended method of disposition thereof),
the Company will cause the Registrable Shares as to which registration shall
have been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the holder (in accordance
with its written request) of such Registrable Shares so registered. The Company
may withdraw any such registration statement before it becomes effective or
postpone the offering of securities contemplated by such registration statement
without any obligation to the holders of any Registrable Shares. In the event
that any registration pursuant to this Section 8 shall be, in whole or in part,
an underwritten public offering of Common Stock, any request by a holder
pursuant to this Section 8 to register Registrable Shares shall specify that (i)
such Registrable Shares are to be included in the underwriting on the same terms
and conditions as the shares of Common Stock otherwise being sold through
underwriters under such registration or (ii) such Registrable Shares are to be
sold in the open market without any underwriting, on terms and conditions
comparable to those normally applicable to offerings of common stock in
reasonably similar circumstances. The number of shares of Common Stock to be
included in such an underwriting may be reduced (pro rata among the requesting
holders of Registrable Shares pursuant to this Section 8) if and to the extent
that the managing underwriter shall be of the opinion (and shall so state in
writing) that such inclusion would adversely affect the marketing of the
securities to be sold by the Company, or in the case of an underwriting pursuant
to a Stockholder's demand registration rights, if any, such demanding
Stockholder, therein. If the Company elects to reduce pro rata the amount of
Registrable Shares proposed to be offered in the underwriting for the accounts
of all persons other than the Company or the demanding Stockholder, as the case
may be, for purposes of making any such reduction, each holder of Registrable
Shares which is a partnership, together with the affiliates, partners,
employees, retired partners and retired employees of such holder, the estates
and family members of any such partners, employees, retired partners and retired
employees and of their spouses, and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "person," and any pro rata
reduction with respect to such "person" shall be based upon the aggregate number
of Registrable Shares owned by all entities and individuals included as such
"person", as defined in this sentence (and the aggregate number so allocated to
such "person" shall be allocated among the entities and individuals included in
such "person" in such manner as such holder of Registrable Shares may reasonably
determine). Notwithstanding any contrary provision in this Section 8, in the
event that there is an underwritten offering of securities of the Company
pursuant to a registration statement covering Registrable Shares and a selling
holder of Registrable Shares does not elect to sell his, her or its Registrable
Shares to the underwriters of the Company's securities in connection with such
offering, such holder shall refrain from selling such Registrable Shares not
registered pursuant to this Section 8 during the period of distribution of the
Company's
16
securities by such underwriters and the period in which the underwriting
syndicate participates in the after market; provided, however, that such holder
shall, in any event, be entitled to sell its Registrable Shares commencing on
the 120th day after the effective date of such registration statement.
(b) If, at a time when Form S-3 is available for such registration,
the Company shall receive (x) from any Institutional Investor (the
"INSTITUTIONAL INVESTOR DEMAND RIGHT HOLDERS") a written request or requests or
(y) subject to Section 8(c) below, from Knightsbridge (the "KNIGHTSBRIDGE DEMAND
RIGHT HOLDER") or from the holders of a majority of the Equity Equivalents
originally issued to the Mezzanine Investors on the date of the issuance of the
Notes (the "MEZZANINE INVESTOR DEMAND RIGHT HOLDERS", and together with the
Institutional Investor Demand Right Holders and the Knightsbridge Demand Right
Holder, the "DEMAND RIGHT HOLDERS"), a written request, that the Company effect
a registration on Form S-3 of any of such holder's Registrable Shares, the
Company will promptly give written notice of the proposed registration to the
non-demanding Stockholders and, as soon as practicable, effect such registration
and all such related qualifications and compliances as may be requested and as
would permit or facilitate the sale and distribution of all Registrable Shares
as are specified in such request and any written requests of such other holders
of Registrable Shares given within 20 days after receipt of such notice. The
Company shall have no obligation to effect a registration under this Section
8(b) unless either (i) all the outstanding Registrable Shares then held by the
demanding Demand Right Holders are requested to be sold pursuant to such
registration or (ii) the aggregate offering price of the securities requested to
be sold pursuant to such registration by the demanding Demand Right Holders is,
in the good faith judgment of the Company, expected to be equal to or greater
than $2,500,000. The number of shares of Common Stock proposed to be included in
such registration by any demanding Demand Right Holder shall not be reduced
unless there first shall have been eliminated from such registration all shares
sought to be included in such registration by the Company or any other holder of
stock of the Company (whether pursuant to the exercise of registration rights or
otherwise). Any reduction among demanding Demand Right Holders shall be made on
a pro rata basis in proportion to the number of shares sought to be included by
each such Demand Right Holder in such registration.
(c) The Knightsbridge Demand Right Holder and the Mezzanine
Investors Demand Right Holders shall each separately have the right to request a
registration on Form S-3 pursuant to Section 8(b) above on not more than one (1)
occasion; provided, that if following such a request, for any reason the
Knightsbridge Demand Right Holder or the Mezzanine Investors Demand Right
Holders, as the case may be, are unable to sell at least eighty percent (80%) of
the Registrable Shares requested to be sold pursuant to their respective
requested registration, such request shall not be counted for purposes of this
Section 8(c), and the Knightsbridge Demand Right Holder or the Mezzanine
Investors Demand Right Holders, as the case may be, shall again be entitled to
make one (1) request pursuant to Section 8(b) above.
(d) All expenses incurred by the Company in complying with Section 8
hereof, including, without limitation, all registration and filing fees, fees
and expenses
17
of compliance with securities and blue sky laws, fees and expenses in connection
with any listing of the Common Stock on a securities exchange or inter-dealer
quotation system, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, and the fees and disbursements
of the underwriters, fees of the National Association of Securities Dealers,
Inc., transfer taxes, fees of transfer agents and registrars and costs of
insurance and fees and expenses of one counsel for the sellers of Registrable
Shares, but excluding any Selling Expenses (as defined below), are herein called
"Registration Expenses". All underwriting discounts and selling commissions
applicable to the sale of Registrable Shares are herein called "Selling
Expenses." The Company will pay all Registration Expenses in connection with
each registration statement filed pursuant to Section 8 hereof. All Selling
Expenses incurred in connection with any sale of Registrable Shares by any
participating seller shall be borne by such participating seller, or by such
persons other than the Company (except to the extent the Company shall be a
seller) as they may agree.
SECTION 9. REPURCHASE RIGHTS UPON CERTAIN EVENTS AFFECTING ▇▇▇▇▇▇▇ SHARES.
(a) In the event ▇▇▇▇▇▇▇ (x) is no longer employed by the Company or
any of its Subsidiaries and (y) either (i) ▇▇▇▇▇▇▇ voluntarily terminated his
employment with the Company and/or its Subsidiaries (other than for Good Reason
(as defined in ▇▇▇▇▇▇▇'▇ employment agreement with American Coin Merchandising,
Inc. (the "EMPLOYMENT AGREEMENT")), as the case may be, (ii) ▇▇▇▇▇▇▇'▇
employment with the Company or such Subsidiary is terminated by the Company or
such Subsidiary for Cause (as defined in the Employment Agreement) or (iii) his
employment with the Company or such Subsidiary is terminated by the Company or
such Subsidiary other than for Cause or by ▇▇▇▇▇▇▇ voluntarily for Good Reason,
then the Company, or Wellspring, if the Company declines to so purchase, shall
have the right, but not the obligation, to purchase, and to require ▇▇▇▇▇▇▇ and
any of ▇▇▇▇▇▇▇'▇ Permitted Transferees (▇▇▇▇▇▇▇ and such Permitted Transferees,
collectively, the "TERMINATED PARTY") to sell to the Company and/or Wellspring,
as the case may be, up to all of the Shares then owned by the Terminated Party.
The Company shall deliver written notice to Wellspring of such termination
within twenty (20) business days after the date ▇▇▇▇▇▇▇'▇ employment is so
terminated (the "TERMINATION DATE"), which notice shall specify, in reasonable
detail, (A) the Termination Date, (B) the circumstances of such termination, (C)
the number of Shares then held by the Terminated Party, (D) the number of Shares
then held by the Terminated Party that the Company shall elect to purchase
hereunder, and (E) the purchase price per Share payable under this Section 9(a),
as determined below. Wellspring shall have the right to exercise its rights
under this Section 9 as to any or all Shares held by the Terminated Party that
the Company does not ultimately purchase hereunder. Upon termination of
▇▇▇▇▇▇▇'▇ employment by the Company or any of its Subsidiaries, the Company
and/or Wellspring, as the case may be, may exercise such repurchase right at any
time within ninety (90) days after the Termination Date (the "REPURCHASE
PERIOD"). During such Repurchase Period, a Terminated Party shall be prohibited
from otherwise Disposing of any Shares then owned by the Terminated Party
without the prior written consent of the Company and
18
Wellspring. Such repurchase right may be exercised by the Company and/or
Wellspring, as the case may be, giving notice to the Terminated Party, with a
copy to Wellspring or the Company, as the case may be. The purchase price per
Share payable for any Shares purchased under this Section 9(a) shall be equal to
(1) in the case of a purchase following a termination described in clause (y)(i)
of this Section 9(a) occurring during the two year period beginning on the date
hereof, or clause (y)(ii) of this Section 9(a), the lower of Cost or the Current
Market Price thereof or (2), in the case of a purchase following a termination
described in clause (y)(i) of this Section 9(a) occurring after the second
anniversary of the date hereof or in clause (y)(iii) of this Section 9(a), the
Current Market Price thereof. The purchase price per share shall be subject to
adjustment as set forth in Section 9(d). If the determination of Current Market
Price of a Share is made by the Board of Directors and ▇▇▇▇▇▇▇ disagrees with
such determination, then ▇▇▇▇▇▇▇ may challenge the judgment of the Board of
Directors as to its fair market value analysis of the Common Stock by delivering
written notice (the "Challenge Notice") thereof to the Company within three days
of receiving notice of the determination of Current Market Price, which
Challenge Notice shall include the valuation asserted by ▇▇▇▇▇▇▇. The Company
shall retain an investment banking firm mutually acceptable to ▇▇▇▇▇▇▇ and the
Board of Directors to determine the fair market value of the Shares being
repurchased. Such investment bank shall be empowered solely to choose between
the valuation determined by the Board of Directors and the valuation asserted by
▇▇▇▇▇▇▇ as most closely approximating the fair market value of a Share. The
decision of said investment bank shall be delivered in writing to the Board of
Directors, not more than 14 days after the Company's receipt of the Challenge
Notice. The cost and expense of the investment bank shall be borne equally by
the Company and ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇'▇ failure to exercise his right to challenge
the Board's determination of Current Market Price shall be deemed to be an
acceptance of the Board's valuation.
(b) Breach of Restrictive Covenants. In addition to the general
repurchase rights of the Company and Wellspring set forth in Section 9(a) above,
if following a termination of ▇▇▇▇▇▇▇'▇ employment with the Company and its
Subsidiaries for any reason, ▇▇▇▇▇▇▇ breaches any of the restrictive covenants
set forth in Section 7 of the Employment Agreement, then the Company and/or
Wellspring (to the extent the Company elects not to fully exercise its rights
hereunder), shall have the right in addition to any other rights available to it
at law or in equity (including, without limitation, obtaining an injunction, as
described in Section 15 of the Employment Agreement), either (x) to purchase the
Shares then owned by ▇▇▇▇▇▇▇ and his Permitted Transferees at a purchase price
per Share which, notwithstanding any contrary provision in this Agreement or the
Employment Agreement, shall be equal to the lower of Cost or Current Market
Price of the Shares (such lower value, the "Section 9(b) Value") or (y) if the
Shares had previously been purchased pursuant to Section 9(a) above at a price
per share greater than the Section 9(b) Value, then ▇▇▇▇▇▇▇ and/or his Permitted
Transferees, as the case may be, shall promptly upon request therefor pay to the
purchasers of such Shares pursuant to Section 9(a) the amount equal to the
excess of the aggregate purchase price actually paid for the Shares over the
aggregate Section 9(b) Value of the Shares.
19
The Company shall provide Wellspring with prompt written notice of its becoming
aware of any event that would give rise to the rights set forth in this Section
9(b), which notice shall specify, in reasonable detail, (A) the nature of such
event, (B) the number of Shares then held by ▇▇▇▇▇▇▇ and any of his Permitted
Transferees, (C) the number of Shares then held by ▇▇▇▇▇▇▇ and any of his
Permitted Transferees that the Company shall elect to purchase hereunder, (D)
the purchase price per Share payable under this Section 9(b), as determined
above, and (E) the nature of any other remedies the Company or any of its
Subsidiaries intends to exercise against ▇▇▇▇▇▇▇. The rights described in this
Section 9(b) may be exercised by the Company and/or Wellspring, as the case may
be, delivering written notice to ▇▇▇▇▇▇▇, with a copy to Wellspring or the
Company, as the case may be.
(c) Closing Mechanics. The closing of any purchase and sale under
this Section 9 shall be held at the principal offices of the Company at 10:00
a.m. local time on a date specified by the Company and/or Wellspring, as the
case may be, not later than 30 days after the date of its notice of such
closing. At such closing, ▇▇▇▇▇▇▇ and his Permitted Transferees, as the case may
be, shall deliver the certificates, documents or instruments, as the case may
be, representing the Shares to be purchased, duly endorsed for transfer and
accompanied by all requisite stock transfer taxes, if any, and such Shares shall
be free and clear of any Encumbrances (other than restrictions imposed pursuant
to this Agreement and applicable federal and state securities laws), and ▇▇▇▇▇▇▇
shall so represent and warrant, and further represent and warrant that he is the
record and beneficial owner of such Shares. The Company and/or Wellspring, as
the case may be, shall deliver at such closing, payment for such Shares in such
form and upon such reasonable terms as the Company and/or Wellspring, as the
case may be, shall specify.
(d) Adjustment of Purchase Price. In the event that (i) either (x)
▇▇▇▇▇▇▇'▇ employment with the Company and/or its Subsidiaries is terminated by
the Company or such Subsidiary other than for Cause or (y) ▇▇▇▇▇▇▇ voluntary
terminates his employment with the Company and/or its Subsidiaries for Good
Reason and (ii) within six months following the Termination Date, a Sale of the
Company (as hereinafter defined) occurs, then the purchase price per Share
payable by the Company and/or Wellspring with respect to any Shares purchased by
them pursuant to Section 9(a) of this Agreement shall be adjusted upward and
▇▇▇▇▇▇▇ shall be entitled to receive the same price per share of common stock as
was paid to the Company's shareholders pursuant to such Sale of the Company (the
"SALE PRICE"). If the Shares had previously been purchased pursuant to Section
9(a) above at a price per share lower than the Section 9(d) Sale Price, then the
Company and/or Wellspring, as the case may be, shall promptly following the Sale
of the Company pay to ▇▇▇▇▇▇▇ the amount equal to the difference between (1) the
aggregate Section 9(d) Sale Price of the Shares and (2) the aggregate net
purchase price (after deducting all expenses reasonably attributable to such
Sale of the Company) actually paid for the Shares. As used herein, the term
"Sale of the Company" means (x) the reorganization of the Company or the
consolidation or merger of the Company with or into another entity or entities,
or the sale of stock by the shareholders of the Company, in each case if the
holders of the Company's equity securities immediately prior to such transaction
do not, immediately after such
20
transaction, have voting securities with the power (under ordinary
circumstances) to elect a majority of the surviving entity's board of directors
or (ii) a sale, lease, disposition or other transfer of all or substantially all
of the assets of the Company and its subsidiaries on a consolidated basis
(measured by either book value in accordance with generally accepted accounting
principles consistently applied or fair market value determined in the
reasonable good faith judgment of the Company's Board of Directors) in any
transaction or series of related transactions (other than sales in the ordinary
course of business and pledges in connection with financing transactions).
SECTION 10. ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS.
(a) From and after the date hereof, at any annual or special
stockholders' meeting called for such purpose, or by written consent in lieu of
a meeting, the Stockholders agree to vote the Shares owned of record or
beneficially by them to maintain a six-member Board of Directors and to elect
(i) to the Board of Directors of the Company (A) four nominees designated by
Wellspring, one of which may be the Chief Executive Officer of the Company, (B)
▇▇▇▇▇ ▇▇▇▇▇▇▇ and (C) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and (ii) one nominee of Wellspring, and,
so long as he chooses to so serve, either ▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (as
shall be determined by them), provided that such person continues to be a member
of the Company's Board of Directors, to each of the Company's executive
committee, audit committee, stock option committee, compensation committee and
each other committee of the Board of Directors. All such directors shall hold
office until their respective successors shall have been elected and shall have
qualified. The Company shall provide to such directors the same information
concerning the Company and its Subsidiaries, and access thereto, provided to
other members of the Company's Board of Directors and such committees. The
reasonable travel expenses incurred by any such director in attending any such
meetings shall be reimbursed by the Company to the extent consistent with the
Company's then existing policy of reimbursing directors generally for such
expenses. Within two months following the date hereof, the Company shall
purchase directors' and officers' insurance upon terms and pricing customary for
a company of its size and operating in its industry; provided, however, the
Company shall not be obligated to purchase such insurance in the event that such
terms and pricing are not commercially available.
(b) The Stockholders will cause the Company's Board of Directors to
meet at least once every quarter on as regular a basis as possible, or more
frequently to the extent that the directors designated by Wellspring reasonably
wishes the Board of Directors to meet.
(c) At the request of Wellspring, the Company shall use its best
efforts to cause the board of directors of the wholly owned Subsidiaries of the
Company to be composed of the same nominees designated by such Persons pursuant
to paragraph (a) of this Section 10, and, notwithstanding the foregoing, at the
request of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the Company shall use its best efforts to cause ▇▇.
▇▇▇▇▇ to be on each such board of directors.
21
(d) If either of the individuals serving as the Chief Executive
Officer or Chief Financial Officer of the wholly owned subsidiary of the Company
as of the date hereof no longer serve in such capacity, then Knightsbridge shall
be consulted with respect to the hiring of the individual to fill such vacancy
and the consent of Knightsbridge, not to be unreasonably withheld or delayed,
shall be required in connection with the hiring of any such individual and the
subsequent removal and replacement of such individual.
SECTION 11. LEGENDS ON STOCK CERTIFICATES. Each certificate of the
signatories hereto representing Shares shall bear the following legends until
such time as the Shares represented thereby are no longer subject to the
provisions hereof:
"THE SALE, TRANSFER OR ENCUMBRANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE SECOND AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT, DATED AS OF APRIL 15, 2003 AMONG
ACMI HOLDINGS, INC. AND CERTAIN HOLDERS OF ITS OUTSTANDING CAPITAL STOCK,
AS SUCH AGREEMENT MAY BE AMENDED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED
AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF ACMI HOLDINGS, INC."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
SECTION 12. DURATION OF AGREEMENT. The rights and obligations of each
Stockholder under this Agreement shall terminate as to such Stockholder upon the
Disposition of all Shares owned by such Stockholder in accordance with this
Agreement. Upon the earlier to occur of (i) consummation of a Qualified Public
Offering and (ii) February 11, 2010, except with respect to (a) the registration
rights provided in Section 8 hereof, (b) Sections 13 through 22, inclusive, the
rights and obligations of each Stockholder under this Agreement shall terminate
except as hereinafter provided. Notwithstanding the foregoing to the contrary,
the repurchase and other provisions affecting the Shares held by ▇▇▇▇▇▇▇ and his
Permitted Transferees set forth in Sections 4 and 5 hereof shall continue in
full force and effect until the earlier of (i) the second anniversary of the
consummation of a Qualified Public Offering and (ii) such time as Wellspring
owns less than 5% of the issued and outstanding Common Stock on a fully diluted
basis and Sections 7 and 9 shall continue in full force and effect until such
time as Wellspring owns less than 5% of the issued and outstanding
22
Common Stock on a fully diluted basis; provided, however, following a Qualified
Public Offering ▇▇▇▇▇▇▇ and his Permitted Transferees may sell in the aggregate
up to 25% of the Registerable Shares owned by such Persons pursuant to and in
accordance with the provisions of Section 8 hereof without complying with the
provisions of Sections 4 and 5 hereof. The rights of Knightsbridge, ▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to Section 10 hereof shall terminate upon
the Disposition by Knightsbridge of all of its Shares.
SECTION 13. REPRESENTATIONS AND WARRANTIES. Each Stockholder represents
and warrants to the other Stockholders as follows:
(a) The execution, delivery and performance of this Agreement by
such Stockholder will not violate any provision of law, any order of any court
or other agency of government, or any provision of any indenture, agreement or
other instrument to which such Stockholder or any of his, her or its properties
or assets is bound, or conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or imposition of any
lien, charge or Encumbrance of any nature whatsoever upon any of the properties
or assets of such Stockholder.
(b) This Agreement has been duly executed and delivered by such
Stockholder and constitutes the legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
(c) The Shares of such Stockholder listed on Schedule I hereto
constitute all the Shares of capital stock owned by such Stockholder and such
Stockholder does not have any right or obligation to acquire any additional
shares of capital stock of the Company.
(d) The representations and warranties contained in this Section 13
shall survive the execution and delivery of this Agreement.
SECTION 14. ERISA REGULATED STOCKHOLDERS. Notwithstanding the provisions
of Sections 5.1, 6 or 7 of this Agreement (the "RELEVANT PROVISIONS"), no
Stockholder that is, or is an entity using the assets of, an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended from time to time ("ERISA") and that is subject to Title I
of ERISA (an "ERISA STOCKHOLDER"), shall be obligated to comply with any
Relevant Provision if, and to the extent that, such ERISA Stockholder has
delivered to the Company a written opinion of counsel reasonably acceptable to
the Company that such compliance would require it to engage in a non-exempt
prohibited transaction within the contemplation of Section 406 of ERISA;
provided however, that if any obligation under a Relevant Provision is excused
by reason of this paragraph, the ERISA Stockholder so excused hereby agrees to
take all reasonable actions requested by the Company and/or the Institutional
Investor, that would not require engaging in a non-exempt prohibited
transaction, so as to give effect to the intent and economic results of the
obligations so excused; provided however that if the Company and/or the
Institutional Investor request
23
that the ERISA Stockholder engage in a non-exempt transaction that would require
a material expense (in relation to the amount of the investment by the ERISA
Stockholder in the Company), then the ERISA Stockholder shall not be obligated
to engage in such non-exempt transaction unless the Company and/or the
Institutional Investor bear such material expense.
SECTION 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED
IN ACCORDANCE WITH, AND ENFORCED UNDER, THE LAW OF THE STATE OF DELAWARE
APPLICABLE TO AGREEMENTS OR INSTRUMENTS ENTERED INTO AND PERFORMED ENTIRELY
WITHIN SUCH STATE.
SECTION 16. JURISDICTION.
(a) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT THE
ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT THE
SHARES, OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO
THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND
EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT THE SUCH COURTS
ARE AN INCONVENIENT FORUM. EACH PARTY OTHER THAN CIT HEREBY IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT,
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 18 HEREOF, SUCH
SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT OR THE SHARES, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
EXCEPT AS PROHIBITED BY LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING
SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
SECTION 17. BENEFITS OF AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, legal representatives and heirs. Any purported issuance of Equity
Equivalents by the
24
Company, or Disposition of the Shares, in violation of the provisions of this
Agreement shall be null and void ab initio.
SECTION 18. NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier
(with receipt confirmed), courier service or personal delivery:
(a) If to Wellspring: with a copy to:
Wellspring Capital Management LLC ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(b) If to Knightsbridge: with a copy to:
Knightsbridge Holdings, LLC ▇▇▇▇▇ ▇▇▇▇ LLP
c/▇ ▇▇▇▇▇▇▇ Investment Partners 3500 One Kansas Place
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Suite 3500
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(c) If to the Company: with a copy to:
ACMI Holdings, Inc. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(d) If to UCCC: with a copy to:
c/o Guggenheim Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇,
Managing Director
(e) If to RBS: with a copy to:
The Royal Bank of Scotland plc ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & Maw
25
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇
(f) If to Audax: with a copy to:
c/o Audax Management Company, LLC ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Attention: Mr. U. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(g) If to Wilton: with copies to:
Wilton Asset Management, LLC State Street Bank and Trust Company
▇/▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
c/o DuPont Capital Management
Delaware Corporate Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
(h) If to DuPont: with a copy to:
c/o DuPont Capital Management c/o DuPont Capital Management
Delaware Corporate Center Delaware Corporate Center
One ▇▇▇▇▇▇▇ Parkway, Suite 3200 ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇
26
(i) If to CIT: with a copy to:
c/o CIT Group Inc. c/o CIT Group Inc.
Business Credit/Corporate Finance Group Corporate ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇'▇▇▇▇▇ Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Managing Director/Corporate Vice President & Assistant
Finance Group Chief Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
TeleFacsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(j) If to ICP: with a copy to:
c/o Credit Agricole Indosuez
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(k) If to ▇▇▇▇▇▇▇: with a copy to:
c/o American Coin Merchandising, Inc. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier No.: (303) [592] - [3140]
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
or to such other address or addresses as shall have been furnished in writing to
the other parties hereto. Each Stockholder agrees, at all times, to provide the
Company with an address for notices hereunder.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; if mailed, five
business days after being deposited in the mail, postage prepaid; or if
telecopied, when receipt is acknowledged.
SECTION 19. MODIFICATION. Except as otherwise provided herein, neither
this Agreement nor any provision hereof shall be modified, changed, discharged
or terminated except by an instrument in writing signed by the party adversely
affected by such modification, change, discharge or termination or against whom
the enforcement of any modification, change, discharge or termination is sought
or by the agreement of all of the Stockholders subject to this Agreement.
27
SECTION 20. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the undersigned with respect to the subject matter contained
herein and supersedes any and all prior agreements or understandings, oral or
written, among any or all of the undersigned relating to such subject matter.
SECTION 21. SIGNATURES; COUNTERPARTS. Telefacsimile transmissions of any
executed original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties hereto shall
confirm telefacsimile transmissions by executing duplicate original documents
and delivering the same to the requesting party or parties. This Agreement may
be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 22. SEVERABILITY. If any one or more of the provisions contained
in this Agreement, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions of this Agreement. The parties hereto
further agree to replace such invalid, illegal or unenforceable provision of
this Agreement with a valid, legal and enforceable provision that will achieve,
to the extent possible, the economic, business and other purposes of such
invalid, illegal or unenforceable provision.
[SIGNATURE PAGE FOLLOWS]
28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first above written.
ACMI HOLDINGS, INC.
By: ________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WELLSPRING CAPITAL PARTNERS II, L.P.
By: Wellspring Capital Management, LLC
its management company
By: ____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Partner
KNIGHTSBRIDGE HOLDINGS, LLC
D/B/A ▇▇▇▇▇▇▇ ▇▇▇▇▇ & COMPANY
By: ________________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Manager
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT-ACMI HOLDINGS]
29
AUDAX MEZZANINE FUND, L.P.
By: Audax Mezzanine Business, L.P.
its general partner
By: Audax Mezzanine Business L.L.C.
its general partner
By: _____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signatory
AUDAX CO-INVEST, L.P.
By: 101 Huntington Holdings, LLC
Its: General Partner
By: _______________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signatory
AUDAX TRUST CO-INVEST, L.P.
By: 101 Huntington Holdings, LLC
Its: General Partner
By: _______________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signatory
AFF CO-INVEST, L.P.
By: 101 Huntington Holdings, LLC
Its: General Partner
By: _______________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signatory
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT-ACMI ▇▇▇▇▇▇▇]
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ CAPITAL
COMPANY, LLC
By: __________________________
Name:
Title
THE ROYAL BANK OF SCOTLAND PLC,
NEW YORK BRANCH
By: __________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE FOR THE DUPONT PENSION
TRUST
By: ____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
WILTON PRIVATE EQUITY FUND, LLC
By: Wilton Asset Management, L.L.C.,
its Manager
By: __________________________
Name:
Title:
CIT LENDING SERVICES CORPORATION
By: __________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Title: Vice President
31
INDOSUEZ CAPITAL PARTNERS 2003, L.L.C.
By: Indosuez CMII, Inc.,
its Managing Member
By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
[SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT-ACMI HOLDING]
32
EXHIBIT A
CONSENT OF SPOUSE
I acknowledge that I have read and understand the Second Amended and Restated
Stockholders' Agreement, dated as of April 15, 2003, as amended (the
"Agreement"; capitalized terms used herein and not defined have the meanings
ascribed thereto in the Agreement) by and among ACMI Holdings, Inc., a Delaware
corporation (the "Corporation"), Wellspring Capital Partners II, L.P.
("Wellspring"), Knightsbridge Holdings, LLC d/b/a ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company
("Knightsbridge"), Audax Mezzanine Fund, L.P., AFF Co-Invest, L.P., Audax
Co-Invest, L.P., Audax Trust Co-Invest, L.P. (collectively "Audax"), Wilton
Private Equity Fund, LLC ("Wilton"), State Street Bank and Trust Company, as
Trustee for DuPont Pension Trust ("DuPont"), Upper Colombia Capital Company, LLC
("UCCC"), The Royal Bank of Scotland, plc, New York Branch ("RBS") and together
with Audax, Wilton, DuPont and UCCC, the "Mezzanine Investors"), CIT Lending
Services Corporation (CIT"), Indosuez Capital Partners 2003, L.L.C. ("ICP" and
together with CIT, the "Senior Investors"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (and together
with Wellspring, Knightsbridge, and the Mezzanine Investors and the Senior
Investors and each other Person that becomes a party to the Agreement, the
"Stockholders"), who are the owners of all of the issued and outstanding Shares
of the Corporation. I either have, or hereby waive my ability to, review this
Consent and the Agreement with my attorney. I am aware that, pursuant to the
terms of the Agreement, my spouse agrees to sell all of his interest in Shares
upon the occurrence of certain events and agrees to limit his ability to sell or
transfer Shares or any interest in them.
In consideration of the execution of the Agreement by the Corporation and the
other Stockholders, and my spouse's continuing rights as a Stockholder, I hereby
approve of and consent to any and all of such sales and limitations, approve of
and consent to all other provisions of the Agreement and agree that all Shares
are subject to the provisions of the Agreement. I will take no action at any
time to hinder performance by anyone under the Agreement or to commit or omit
any act that would have a material adverse effect upon the ability of any party
to perform pursuant to the terms of the Agreement.
Dated: ________________________
__________________________
Name:
33