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EXHIBIT 10.29
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THE GNI GROUP, INC.
$20,000,000
12.00% Senior Subordinated Notes due 2003
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NOTE AND WARRANT
PURCHASE AGREEMENT
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Dated as of December 31, 1996
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TABLE OF CONTENTS
1. Authorization of Notes and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Sale and Purchase of Notes and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Issue Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Closing; Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. Transaction Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3. Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2. Performance; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.3. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.4. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.5. Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.6. Satisfaction of Company Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.7. Consents, Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.8. Compliance with Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.9. No Adverse U.S. Legislation, Action or Decision,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.10. No Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.11. Purchase Permitted By Applicable Law, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.12. Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.13. Sale of Other Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.14. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.15. Private Placement Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Representations and Warranties, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1. Organization, Standing, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3. Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.4. Business; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5. Changes, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.6. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.7. Capital Stock and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.8. Compliance with Other Instruments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.9. Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.10. Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.11. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.12. Title to Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.13. Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.14. Patents, Trademarks, Authorizations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.15. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.16. Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.17. Foreign Assets Control Regulations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.18. Status Under Certain Federal Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.19. Solvency of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.20. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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5.21. Offer of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.22. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.23. Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6. Purchase Intent; Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.1. Purchase Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2. Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7. Accounting; Financial Statements and Other
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8. Inspection; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.2. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9. Prepayment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.1. Optional Prepayments with Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.2. Optional Prepayment upon Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.3. Contingent Prepayment Upon Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.4. Contingent Prepayment Upon Sale of Certain
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.5. Notice of Optional Prepayments; Officers'
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.6. Allocation of Partial Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.7. Maturity; Surrender, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.8. Acquisition of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10. Business and Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.1. Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.2. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.3. Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.4. Restricted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.5. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.6. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.7. Consolidation, Merger, Sale of Assets, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.8. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.9. Corporate Existence, etc.; Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.10. Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.11. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.12. Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.13. Additional Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.14. Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11. Events of Default; Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12. Remedies on Default, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13. Subordination of Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.2. Superior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.3. Default in Respect of Superior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.4. Insolvency, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.5. Payments and Distributions Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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13.6. No Prejudice or Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.7. Payment of Superior Debt, Subrogation, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.8. No Commencement of Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15. Registration, Transfer and Substitution of
Notes; Action by Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
15.1. Note Register; Ownership of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
15.2. Transfer and Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
15.3. Replacement of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
15.4. Notes held by Company, etc., Deemed Not
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
16. Payments on Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
16.1. Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
16.2. Home Office Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
17. Expenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
18. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
19. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
20. Notices, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
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SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule of Purchasers
SCHEDULE B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule of Debt and Liens
SCHEDULE C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule of Subsidiaries
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of 12.00% Senior Subordinated Note
EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Warrant
EXHIBIT C-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Opinion of Counsel to Company
EXHIBIT C-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Opinion of Counsel to Purchaser
EXHIBIT D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Guaranty Agreement
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The GNI Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
12.00% Senior Subordinated Notes due December 31, 2003
Warrants to Purchase Common Stock
Dated as of December 31, 1996
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A
Ladies and Gentlemen:
The GNI Group, Inc., a Delaware corporation (the "Company"),
agrees with you as follows:
1. Authorization of Notes and Warrants. The Company will
(pursuant to this Agreement and the Other Agreements referred to below)
authorize the issue and sale of (a) $20,000,000 aggregate principal amount of
its 12.00% Senior Subordinated Notes due December 31, 2003 (the "Notes", such
term to include any such notes issued in substitution therefor pursuant to
section 15), to be substantially in the form of the Note set out in Exhibit A,
with such changes therefrom, if any, as may be approved by you and the Company,
and (b) warrants (the "Warrants", such term to include any warrants issued in
substitution therefor pursuant to section 15) to purchase an aggregate of
428,400 shares of the Common Stock, par value $.01 per share (the "Common
Stock"), of the Company at an initial exercise price of $.01 per share, to be
substantially in the form of the Warrant set out in Exhibit B, with such
changes therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in section 14; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
2. Sale and Purchase of Notes and Warrants. 2.1. Purchase
Price. The Company will issue and sell to you and, subject to the terms and
conditions of this Agreement, you will purchase from the Company, at the
Closing provided for in section 3, (a) Notes in the principal amount specified
opposite your name in Schedule A and (b) Warrants for the number of shares of
Common Stock specified opposite your name in Schedule A; at the purchase price
specified opposite your name in Schedule A. Contemporaneously with
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entering into this Agreement, the Company is entering into separate Note
Agreements (the "Other Agreements") identical with this Agreement with the
other purchasers named in Schedule A (the "Other Purchasers"), providing for
the sale to each Other Purchaser, at such Closing, of Notes in the principal
amount specified opposite its name in Schedule A.
2.2. Issue Price. The Company and you agree for U.S. federal
income tax purposes (a) that (x) the present value as of the Closing Date of
all payments under the Notes, using a discount rate based on a yield which the
Company and you agree is the original yield of comparable debt instruments not
issued as part of an investment unit (which rate is not less than the
applicable federal rate on the date the Notes are issued), is $923.10 per
$1,000 principal amount, and that (y) the aggregate "issue price" under Section
1273(b) of the Code of all of the Notes to be issued hereunder and under the
Other Agreements is $18,462,044; and (b) that the aggregate purchase price
under Section 1273(b) of the Code of all of the Warrants to be issued hereunder
and under the Other Agreements is $1,537,956. The Company and you agree to use
the foregoing issue price, purchase price, value and the yield which results in
such issue price for U.S. federal income tax purposes with respect to this
transaction.
3. Closing; Fees. 3.1. Closing. The sales of the Notes and
the Warrants to be purchased by you shall take place at the offices of Becker,
Glynn, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, at 10:00 a.m., New York City time, at a closing
(the "Closing") on December 31, 1996 or on such other Business Day thereafter
as may be agreed upon by the Company and you. At the Closing the Company will
deliver to you (a) the Notes to be purchased by you in the form of a single
Note (or such greater number of Notes in denominations of at least $100,000 as
shall be set forth in Schedule A or as you may request) dated the date of the
Closing and registered in your name (or in the name of your nominee), and (b)
the Warrants to be purchased by you in the form of a single warrant certificate
(or such greater number of warrant certificates as shall be set forth in
Schedule A or as you may request) dated the date of the Closing and registered
in your name (or in the name of your nominee); against delivery by you to the
Company or its order of immediately available funds in the amount of the
purchase price therefor. If at the Closing the Company shall fail to tender
such Notes or such Warrants to you as provided above in this section 3, or any
of the conditions specified in section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any other rights you
may
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have by reason of such failure or such nonfulfillment.
3.2. Transaction Fees. On the date of the Closing, the
Company will pay to you (or to the Person designated by you for payment in
Schedule A), in immediately available funds, a transaction fee equal to 2.0% of
the aggregate purchase price for the Notes and Warrants purchased by you on the
Closing Date, by crediting the account specified below your name in Schedule A
for the payment of transaction fees.
3.3. Legal Fees. On the date of the Closing, the Company
will pay the reasonable fees and disbursements of your special counsel and your
special environmental counsel incurred in connection with the transactions
contemplated by this Agreement and set forth in a statement delivered to the
Company on or prior to the date of the Closing, and thereafter the Company will
pay, promptly upon receipt of a supplemental statement therefor, additional
reasonable fees and disbursements of your special counsel, if any, incurred in
connection with such transactions.
4. Conditions to Closing. Your obligation to purchase and
pay for the Notes and Warrants to be sold to you at the Closing is subject to
the fulfillment to your satisfaction, or waiver, prior to or at the Closing, of
the following conditions:
4.1. Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be correct when
made and at the time of the Closing, except as affected by the consummation of
such transactions.
4.2. Performance; No Default. The Company shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing and at the time of the Closing no Event of Default or Potential Event
of Default shall have occurred and be continuing.
4.3. Compliance Certificate. The Company shall have
delivered to you an Officers' Certificate, dated the date of the Closing,
certifying that the conditions specified in sections 4.1 and 4.2 have been
fulfilled.
4.4. Opinions of Counsel. You shall have received (a) from
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., counsel for the Company, and (b) from Becker,
Glynn, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, your special counsel in connection with the
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transactions contemplated by this Agreement, favorable opinions substantially
in the forms set forth in Exhibits C-1 and C-2, respectively, and covering such
other matters incident to such transactions as you may reasonably request, each
addressed to you, dated the date of the Closing and otherwise satisfactory in
substance and form to you.
4.5. Guaranties. Each of the Company's Restricted
Subsidiaries shall have executed and delivered to you the Guaranty Agreement,
substantially in the form of Exhibit D, unconditionally and irrevocably
guaranteeing to you the full and prompt payment and performance of the
Company's obligations under the Notes.
4.6. Satisfaction of Company Obligations. All of the
obligations of the Company shown on Schedule B as obligations that are required
or intended to be satisfied on or prior to the Closing Date shall have been
satisfied in full and all Liens securing any of such obligations shall have
been released.
4.7. Consents, Agreements. The Company shall have obtained
all consents and waivers, under any term of any agreement or instrument to
which it is a party or by which it or any of its properties is bound, or any
term of any applicable law, ordinance, rule or regulation of any governmental
authority, or any term of any applicable order, judgment or decree of any
court, arbitrator or governmental authority, necessary in order for the Company
to execute and deliver this Agreement and to perform its obligations under this
Agreement, and such consents and waivers shall be in full force and effect on
the Closing Date. A complete and correct copy of each of such consents and
waivers shall have been delivered to you.
4.8. Compliance with Securities Laws. The offering and sale
of the Notes and Warrants to you and the Other Purchasers shall have complied
with all applicable requirements of federal and state securities laws and you
shall have received evidence thereof in form and substance reasonably
satisfactory to you.
4.9. No Adverse U.S. Legislation, Action or Decision, etc.
No legislation shall have been enacted by either house of Congress or favorably
reported by any committee thereof, no other action shall have been taken by any
governmental authority, whether by order, regulation, rule, ruling or
otherwise, and no decision shall have been rendered by any court of competent
jurisdiction, which would have a Material Adverse Effect.
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4.10. No Actions Pending. There shall be no suit, action,
investigation, inquiry or other proceeding by any governmental body or any
other Person or any other legal or administrative proceeding pending or, to the
Company's knowledge, threatened which questions the validity or legality of the
transactions contemplated by this Agreement or the other Operative Agreements
or which seeks damages or injunctive or other equitable relief in connection
therewith.
4.11. Purchase Permitted By Applicable Law, etc. On the date
of the Closing your purchase of Notes and Warrants (a) shall be permitted by
the laws and regulations of each jurisdiction to which you are subject and (b)
shall not subject you to any tax, penalty or, in your reasonable judgment,
other onerous condition by reason of any change after the date of this
Agreement in any applicable law or governmental regulation. If requested by
you, you shall have received, at least five Business Days prior to the Closing,
an Officers' Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.
4.12. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.
4.13. Sale of Other Notes. Contemporaneously with the
Closing the Company shall sell to the Other Purchasers the Notes and Warrants
to be purchased by them at the Closing as specified in Schedule A.
4.14. Fees. The fees required to be paid by sections 3.2 and
3.3 shall have been paid as therein provided.
4.15. Private Placement Numbers. The Company shall have
obtained from Standard & Poor's, CUSIP Service Bureau, private placement
numbers for the Notes and the Warrants.
5. Representations and Warranties, etc. The Company
represents and warrants that:
5.1. Organization, Standing, etc. The Company is a
corporation duly organized, validly existing and in good
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standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own and operate its properties, to carry on
its business as now conducted and as proposed to be conducted, to enter into
this Agreement, to issue and sell the Notes and the Warrants and to carry out
the terms of this Agreement, the Notes and the Warrants.
5.2. Subsidiaries. Schedule C correctly lists as to each
Subsidiary on the date of this Agreement (a) its name, (b) the jurisdiction of
its incorporation, (c) the percentage of its issued and outstanding shares
owned by the Company or another Subsidiary (specifying such other Subsidiary)
and (d) whether it is a Restricted Subsidiary. Each Subsidiary is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Guaranty
Agreement and to carry out the terms of the Guaranty Agreement. All the
outstanding shares of capital stock of each Subsidiary are validly issued,
fully paid and non-assessable, and all such shares indicated in Schedule C as
owned by the Company or by any other Subsidiary are so owned beneficially and
of record by the Company or by such other Subsidiary and are (except as
contemplated by the Credit Agreement) free and clear of any Lien.
5.3. Qualification. Each of the Company and its Subsidiaries
is duly qualified and in good standing as a foreign corporation authorized to
do business in each jurisdiction (other than the jurisdiction of its
incorporation) in which the nature of its activities or the character of the
properties it owns or leases makes such qualification necessary and in which
the failure so to qualify would have a Material Adverse Effect.
5.4. Business; Financial Statements. The Company has
delivered to you complete and correct copies of (a) its annual reports to
stockholders for the fiscal years ended June 30, 1993 through 1996 (the "Annual
Reports"), (b) its annual reports on Form 10-K for such fiscal years as filed
with the Securities and Exchange Commission (the "Forms 10-K") and (c) the
Private Placement Memorandum. The Annual Reports, the Forms 10-K and the
Private Placement Memorandum correctly describe, in all material respects, as
of their respective dates, the business then conducted and proposed to be
conducted by the Company. There are included in the Forms 10-K financial
statements of the Company for each of the fiscal years ended June 30, 1993
through 1996,
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accompanied in each case by the unqualified opinion thereon of KPMG Peat
Marwick LLP, independent public accountants. The Company has also delivered to
you complete and correct copies of its quarterly reports to stockholders sent
or made available to stockholders, and its quarterly reports on Form 10-Q filed
with the Securities and Exchange Commission, in each case for fiscal periods
subsequent to June 30, 1996, and current reports on Form 8-K, proxy statements,
registration statements and prospectuses, if any, filed by the Company with the
Securities and Exchange Commission since such date. All financial statements
included in the foregoing materials delivered to you (except as otherwise
specified therein) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
specified and present fairly in all material respects the financial position of
the Company and its Subsidiaries as of the respective dates specified and the
results of their operations and cash flows for the respective periods
specified.
5.5. Changes, etc. Since June 30, 1996, (a) there has been
no change in the assets, liabilities or financial condition of the Company or
any of its Subsidiaries, other than (i) the transaction with EMPAK Inc.
described in the Private Placement Memorandum and (ii) changes in the ordinary
course of business which have not had a Material Adverse Effect, (b) neither
the business, operations or affairs nor any of the properties or assets of the
Company or its Subsidiaries have been affected by any occurrence or development
(whether or not insured against) which has had, either in any case or in the
aggregate, a Material Adverse Effect and (c) neither the Company nor any
Subsidiary has as of the date of this Agreement directly or indirectly
declared, ordered, paid, made or set apart any sum or property for any
Restricted Payment or agreed to do so.
5.6. Debt. Schedule B-1 correctly describes all secured and
unsecured Debt of the Company and its Subsidiaries outstanding, for which the
Company or any of its Subsidiaries has commitments, on the date of this
Agreement, and identifies the collateral securing any secured Debt. Schedule
B-2 correctly describes all such Debt that, on the Closing Date and after
giving effect to the transactions contemplated by this Agreement, will remain
outstanding. Neither the Company nor any of its Subsidiaries is in default
with respect to any Debt or any instrument or agreement relating thereto; and
no instrument or agreement applicable to or binding on the Company (other than
the Credit Agreement) contains any restrictions on the
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incurrence by the Company or any of its Subsidiaries of additional Debt.
5.7. Capital Stock and Related Matters. As of the Closing
Date, the authorized capital stock of the Company will consist of 20,000,000
shares of Common Stock and 1,000,000 shares of Preferred Stock, par value $.01
per share. On the Closing Date after giving effect to the transactions
contemplated by this Agreement and the Operative Agreements, 6,569,025 shares
of the Common Stock and no shares of such Preferred Stock will be issued and
outstanding. The shares of Common Stock issuable upon exercise of the Warrants
have been duly authorized and validly reserved for issuance upon such exercise
and, when so issued, will be validly issued, fully paid and non-assessable. As
of the Closing Date, the Company will not have outstanding securities
convertible into or exchangeable for any shares of its capital stock, nor will
it have outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments or claims of any character relating
to, any shares of its capital stock or any securities convertible into or
exchangeable for any shares of its capital stock, other than options to be
issued to certain employees of the Company and its Subsidiaries from time to
time in the manner contemplated by the Option Plans.
5.8. Compliance with Other Instruments, etc. Neither the
Company nor any of its Subsidiaries is in violation of any term of its
certificate or articles of incorporation or by-laws, and neither the Company
nor any of its Subsidiaries is in violation of any term of any material
agreement or instrument to which it is a party or by which it is bound or any
term of any applicable law, ordinance, rule or regulation of any governmental
authority or any term of any applicable order, judgment or decree of any court,
arbitrator or governmental authority, the consequences of which violation could
reasonably have a Material Adverse Effect; the execution, delivery and
performance of this Agreement, the Notes and the Warrants will not result in
any violation of or be in conflict with or constitute a default under any such
term or result in the creation of (or impose any obligation on the Company or
any of its Subsidiaries to create) any Lien upon any of the properties or
assets of the Company or any of its Subsidiaries pursuant to any such term; and
there is no such term which now or in the future may (so far as the Company can
now foresee) have a Material Adverse Effect.
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5.9. Governmental Consent. No consent, approval or
authorization of, or declaration or filing with, any governmental authority on
the part of the Company or any of its Subsidiaries is required for the valid
execution and delivery of this Agreement or the valid offer, issue, sale and
delivery of the Notes or the Warrants pursuant to this Agreement.
5.10. Litigation, etc. There is no action, proceeding or
investigation pending or threatened (or any basis therefor known to the
Company) which questions the validity of this Agreement, the Notes or the
Warrants or any action taken or to be taken pursuant to this Agreement, the
Notes or the Warrants, or which could reasonably have, either in any case or in
the aggregate, a Material Adverse Effect.
5.11. Environmental Matters. (a) The Company and each of
its Subsidiaries has complied and is in full compliance with all applicable
Environmental Laws, except de minimis violations.
(b) Each of the Company and its Subsidiaries has obtained and
complied with, and is in compliance with, all Material Environmental Permits
and is in compliance in all material respects with all other permits, licenses
and other authorizations that are required pursuant to Environmental Laws for
the occupation of its facilities and the operation of its businesses, without
transfer, reissuance, or other governmental approval or action.
(c) Neither the Company nor any of its Subsidiaries has
received any communication (written or oral), whether from a Governmental
Authority, citizens or environmental group, employee, or otherwise, that
alleges that the Company or any of its Subsidiaries, or any person or entity
whose liability the Company or any of its Subsidiaries has or may have retained
or assumed either contractually or by operation of law, is not in full
compliance with applicable Environmental Laws, including without limitation any
claim, complaint, citation, report or other written or oral notice regarding
any liabilities or potential liabilities, including any investigatory, remedial
or corrective action obligations, arising under Environmental Laws, other than
de minimis liabilities.
(d) No radioactive materials (except as previously disclosed
to you in writing), lead-based paint, polychlorinated biphenyls, or
asbestos-containing material in any form or condition exists at any property
owned or
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occupied by the Company or any of its Subsidiaries, except de minimis amounts
thereof, and all such materials are stored or handled in full compliance with
applicable Environmental Laws.
(e) Neither the Company nor any of its Subsidiaries has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without limitation
any radioactive or hazardous substance, or owned or operated any facility or
property, in a manner that would reasonably be expected to give rise to
liabilities of the Company or any of its Subsidiaries for response costs,
natural resource damages or attorneys' fees pursuant to CERCLA or other
Environmental Laws, other than de minimis liabilities.
(f) No facts, events or conditions relating to the past or
present facilities, properties or operations of the Company or its Subsidiaries
will prevent, hinder or limit continued compliance in all material respects
with Environmental Laws, give rise to any material investigatory, remedial or
corrective obligations pursuant to Environmental Laws, or give rise to any
other material liabilities pursuant to Environmental Laws, including without
limitation any relating to onsite or offsite Releases (as defined in CERCLA) or
threatened Releases of hazardous or otherwise regulated materials, substances
or wastes, personal injury, property damage or natural resources damage.
(g) All storage, disposal or treatment and all transportation
for storage, disposal or treatment of radioactive or hazardous substances at
facilities, properties or operations not owned or operated by the Company or
its Subsidiaries have been undertaken by licensed providers in full compliance
with Environmental Laws, except for de minimis violations, and neither the
Company nor any of its Subsidiaries has received any notice from any person
(including any Governmental Authority) that the Company or any of its
Subsidiaries may be a "potentially responsible party" (as defined in CERCLA) in
connection with any storage, disposal, treatment, or transportation of
radioactive or hazardous substances.
(h) The Company has previously disclosed to you in writing
two legal proceedings which may constitute exceptions to the foregoing
paragraphs, but which the Company believes, if adversely determined, would not
have a Material Adverse Effect.
5.12. Title to Properties; Liens. Each of the Company and
its Subsidiaries has good and sufficient title
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to its properties and assets, including the properties and assets reflected in
the financial statements referred to in section 5.4 (except properties and
assets disposed of since such date in the ordinary course of business and
properties and assets held under Capital Leases referred to in Schedule B), and
none of such properties or assets is subject to any Liens except such as are
required or permitted by the Credit Agreement. The Company and its
Subsidiaries enjoy peaceful and undisturbed possession under all leases
necessary in any material respect for the operation of their respective
properties and assets, and all such leases are valid and subsisting and are in
full force and effect. Except to perfect and protect security interests
required or permitted by the Credit Agreement, no presently effective financing
statement under the Uniform Commercial Code which names the Company or any
Subsidiary as debtor is on file in any jurisdiction and neither the Company nor
any Subsidiary has signed any presently effective financing statement or any
presently effective security agreement authorizing any secured party thereunder
to file any such financing statement. All material properties used by the
Company and its Restricted Subsidiaries in conducting their business as now
conducted and as proposed to be conducted are in a sufficient state of repair
to enable the Company and its Subsidiaries to conduct such business.
5.13. Tax Returns and Payments. The Company and its
Subsidiaries have filed all tax returns required by law to be filed by them and
have paid all taxes, assessments and other governmental charges levied upon the
Company and its Subsidiaries, and any of their respective properties, assets,
income or franchises which are due and payable, other than those presently
payable without penalty or interest and, those presently being contested in
good faith by appropriate proceedings diligently conducted for which such
reserves or other appropriate provision, if any, as shall be required by
generally accepted accounting principles shall have been made. The Federal
income tax liabilities of the Company and its Subsidiaries have been finally
determined by the Internal Revenue Service and satisfied, or the time for audit
has expired, for all fiscal periods through June 30, 1992. The charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of Federal, state and foreign income taxes for all fiscal periods are
adequate in the opinion of the Company, and the Company knows of no unpaid
assessment for additional Federal, state or foreign income taxes for any period
or any basis for any such assessment.
5.14. Patents, Trademarks, Authorizations, etc. The Company
and its Subsidiaries own or possess all patents,
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trademarks, service marks, trade names, copyrights, licenses and
authorizations, and all rights with respect to the foregoing, necessary for the
conduct of their respective businesses as now conducted, without any known
material conflict with the rights of others.
5.15. Compliance with ERISA. (a) Neither the Company nor
any of its Subsidiaries has breached the fiduciary rules of ERISA or engaged in
any prohibited transaction in connection with which the Company or any of its
Subsidiaries could be subjected to (in the case of any such breach) a suit for
damages or (in the case of any such prohibited transaction) either a civil
penalty assessed under section 502(i) of ERISA or a tax imposed by section 4975
of the Code, which suit, penalty or tax, in any case, could have a Material
Adverse Effect.
(b) No Plan (other than a Multiemployer Plan) or any trust
created under any such Plan has been terminated since September 2, 1974.
Neither the Company nor any Related Person has within the past six years
contributed to a single employer plan which has at least two contributing
sponsors not under common control or ceased operations at a facility in a
manner which could result in liability under section 4062(f) of ERISA. No
liability to the PBGC has been or is expected by the Company to be incurred
with respect to any Plan (other than a Multiemployer Plan) by the Company or
any Subsidiary which is or would have a Material Adverse Effect. There has
been no reportable event (within the meaning of section 4043(b) of ERISA) or
any other event or condition with respect to any Plan (other than a
Multiemployer Plan) which presents a risk of termination of any such Plan by
the PBGC under circumstances which in any case could result in liability which
would have a Material Adverse Effect.
(c) Full payment has been made of all amounts which the
Company or any Related Person is required under the terms of each Plan to have
paid as contributions to such Plan as of the last day of the most recent fiscal
year of such Plan ended prior to the date hereof, and no accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, exists with respect to any Plan (other than a
Multiemployer Plan).
(d) The present value of all vested accrued benefits under
all Plans (other than Multiemployer Plans), determined as of the end of the
Company's most recently ended fiscal year on the basis of reasonable actuarial
assumptions, did not exceed the current value of the assets of such Plans
allocable to such vested accrued benefits.
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The terms "present value", "current value", and "accrued benefit" have the
meanings specified in section 3 of ERISA.
(e) The Company is not and has never been obligated to
contribute to any "multiemployer plan" (as such term is defined in section
4001(a)(3) of ERISA).
(f) The execution and delivery of this Agreement and the
issue and sale of the Notes hereunder will not involve any transaction which is
subject to the prohibitions of section 406 of ERISA or in connection with which
a tax could be imposed pursuant to section 4975 of the Code. The
representation by the Company in the preceding sentence is made in reliance
upon and subject to the accuracy of your representation in section 6.2 of this
Agreement as to the source of the funds used to pay the purchase price of the
Notes purchased by you. The Company has delivered to you, if requested by you,
a complete and correct list of all employee benefit plans with respect to which
the Company is a party in interest and with respect to which its securities are
employer securities. As used in this section 5.20(f), the terms "employee
benefit plans" and "party in interest" have the respective meanings specified
in section 3 of ERISA and the term "employer securities" has the meaning
specified in section 407(d)(1) of ERISA.
5.16. Federal Reserve Regulations. The Company will not,
directly or indirectly, use any of the proceeds of the sale of the Notes and
Warrants for the purpose, whether immediate, incidental or ultimate, of buying
a "margin stock" or of maintaining, reducing or retiring any indebtedness
originally incurred to purchase a stock that is currently a "margin stock", or
for any other purpose which might constitute this transaction a "purpose
credit", in each case within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 C.F.R. 207, as amended) or
Regulation U of such Board (12 C.F.R. 221, as amended), or otherwise take or
permit to be taken any action which would involve a violation of such
Regulation G or Regulation U or of Regulation T (12 C.F.R. 220, as amended) or
Regulation X (12 C.F.R. 224, as amended) or any other regulation of such Board.
No Debt being reduced or retired out of the proceeds of the sale of the Notes
and Warrants was incurred for the purpose of purchasing or carrying any such
"margin stock", and neither the Company nor any of its Subsidiaries either owns
or has any present intention of acquiring any such "margin stock".
5.17 Foreign Assets Control Regulations, etc. Neither the
issue and sale of the Notes and Warrants by the Company nor its use of the
proceeds thereof as contemplated
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by this Agreement will violate the Foreign Assets Control Regulations, the
Transaction Control Regulations, the Cuban Assets Control Regulations, the
Foreign Funds Control Regulations, the Iranian Assets Control Regulations, the
Iranian Transactions Regulations, the Iraqi Sanctions Regulations, the Libyan
Sanctions Regulations, or any similar foreign assets control or export control
regulations of the United States Treasury Department (31 C.F.R., Subtitle B,
Chapter V, as amended) or the restrictions set forth in Executive Orders No.
8389, 9193, 12543 (Libya), 12544 (Libya), 12801 (Libya), 12722 (Iraq) or 12724
(Iraq), as amended, of the President of the United States of America or of any
rules or regulations issued thereunder.
5.18 Status Under Certain Federal Statutes. The Company is
not (a) an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended;
(b) a "holding company" or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended; (c) a "public utility" as such term is defined in the
Federal Power Act, as amended; or (d) a "rail carrier or a person controlled by
or affiliated with a rail carrier", within the meaning of Title 49, U.S.C., or
a "carrier" to which 49 U.S.C. Section 11301(b)(1) is applicable.
5.19 Solvency of the Company. As of the Closing Date and
after giving effect to the transactions contemplated hereby, (a) the aggregate
value of all of the assets of each of the Company and its Restricted
Subsidiaries, at a fair valuation, will exceed the total liabilities of the
Company or such Restricted Subsidiary (including contingent, subordinated,
unmatured and unliquidated liabilities); (b) each of the Company and its
Restricted Subsidiaries will be able to pay its debts as they mature; (c) none
of the Company or its Restricted Subsidiaries will have unreasonably small
capital for the business in which it is proposed to be engaged; and (d) each of
the Company and its Restricted Subsidiaries will be able to satisfy in full any
final judgment which either results from an action for money damages pending
against it on the Closing Date or was a judgment in such an action docketed
against it on the Closing Date. For purposes of this section 5.19, the "fair
valuation" of any asset will be that amount which may be realized within a
reasonable time, either through collection or sale of such asset at fair market
value, defining the latter as the amount which could be obtained for the
property in question within such period by a willing seller from a willing
buyer, each having
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reasonable knowledge of the relevant facts, neither being under any compulsion
to act, with equity to both. None of the Company or its Restricted
Subsidiaries has any intent to hinder, delay or defraud any entity to which it
is, or will become, on or after the Closing Date, indebted or to incur debts
that would be beyond its ability to pay as they mature.
5.20. Disclosure. Neither this Agreement, the Memorandum,
the Annual or Quarterly Reports, the Forms 10-K or 10-Q nor any other document,
certificate or instrument delivered to you by or on behalf of the Company in
connection with the transactions contemplated by this Agreement contains (in
each case, as of its date) any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained in
this Agreement and in such other documents, certificates or instruments not
misleading. There is no fact (other than matters of a general economic or
political nature which do not affect the Company or its Subsidiaries uniquely)
known to the Company which has a Material Adverse Effect or in the future may
(so far as the Company can now foresee) have a Material Adverse Effect which
has not been set forth in this Agreement or in the other documents,
certificates and instruments delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated by this
Agreement.
5.21. Offer of Notes. Neither the Company nor NationsBanc
Capital Markets, Inc. (the only Person authorized by the Company as financial
adviser or otherwise as agent in connection with the offering or sale of the
Notes or Warrants or any similar securities of the Company) has directly or
indirectly offered the Notes or the Warrants or any part thereof or any similar
securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, anyone other than
you and not more than 41 other institutional investors. Neither the Company
nor anyone acting on its behalf has taken or will take any action which would
subject the issuance and sale of the Notes or the Warrants to the registration
and prospectus delivery provisions of the Securities Act.
5.22. Use of Proceeds. The Company will apply the proceeds
of the sale of the Notes and Warrants, simultaneously with the Closing, to (a)
the repayment of $15,000,000 principal amount of the bridge loan portion of the
Credit Agreement, (b) the repayment of approximately $3,800,000 principal
amount of the revolving credit portion of the Credit Agreement and (c) the
payment of fees and
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expenses incurred in connection with the offering and sale of the Notes and
Warrants, and the balance, if any, of such proceeds will be used for general
corporate purposes.
5.23. Certain Fees. Except for the fees referred to in
section 3 and except for a placement fee payable to NationsBanc Capital
Markets, Inc. in the amount of $700,000, no broker's or finder's fee or
commission has been paid or will be payable by the Company with respect to the
offer, issue and sale of the Notes or the Warrants, and the Company hereby
indemnifies you against, and will hold you harmless from, any claim, demand or
liability asserted against you for broker's or finder's fees alleged to have
been incurred by the Company or any other Person (other than you or your
affiliates) in connection with any such offer, issue and sale or any of the
other transactions contemplated by this Agreement or any of the other Operative
Agreements.
6. Purchase Intent; Source of Funds. 6.1. Purchase Intent.
You represent that (a) you are purchasing the Notes and Warrants hereunder for
your own account, not with a view to the distribution thereof or with any
present intention of distributing or selling any of such Notes or Warrants
except in compliance with the Securities Act and any applicable state
securities laws, provided that the disposition of your property shall at all
times be within your control; (b) you understand that the Notes and Warrants
have not been registered under the Securities Act; (c) you are an "accredited
investor" within the meaning of Rule 501 under the Securities Act; (d) you have
received and reviewed the Private Placement Memorandum and any other
information requested by you from the Company, and you have obtained sufficient
information to enable you to make an informed decision with respect to your
purchase of the Notes and Warrants; and (e) you understand that the Company and
its counsel will rely upon the truth and accuracy of the foregoing
representations and acknowledgments.
6.2. Source of Funds. You represent that all or a portion of
the funds to be used by you to pay the purchase price of the Notes and Warrants
consists of funds which do not constitute assets of any employee benefit plan
(other than a governmental plan exempt from the coverage of ERISA), and the
remaining portion, if any, of such funds constitutes assets of an "insurance
company general account" as such term is defined in section V(e) of Prohibited
Transaction Class Exemption 95-60, issued July 12, 1995 ("PTE 95-60"), and your
purchase with such funds is exempt under the provisions of PTE 95-60.
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7. Accounting; Financial Statements and Other Information.
The Company will maintain, and will cause each of its Restricted Subsidiaries
to maintain, a system of accounting established and administered in accordance
with generally accepted accounting principles, and will accrue, and will cause
each of its Restricted Subsidiaries to accrue, all such liabilities as shall be
required by generally accepted accounting principles. The Company will deliver
(in duplicate) to you, so long as you shall be entitled to purchase Notes under
this Agreement or you or your nominee shall be the holder of any Notes, and to
each other holder of any Notes:
(a) not later than the earlier to occur of (i) the
forty-seventh day after the end of each of the first three quarterly
fiscal periods in each fiscal year of the Company, (ii) the second day
following the date of the filing thereof with the Securities and
Exchange Commission and (iii) the date quarterly financial statements
are delivered to the lender pursuant to the Credit Agreement,
consolidated and consolidating balance sheets of the Company and its
Restricted Subsidiaries as at the end of such period and the related
consolidated and (as to statements of income and cash flows)
consolidating statements of income, stockholders' equity and cash
flows of the Company and its Restricted Subsidiaries for such period
and (in the case of the second and third quarterly periods) for the
period from the beginning of the current fiscal year to the end of
such quarterly period, setting forth in each case in comparative form
the consolidated and (where applicable) consolidating figures for the
corresponding periods of the previous fiscal year, all in reasonable
detail and certified by a principal financial officer of the Company
as presenting fairly, in accordance with generally accepted accounting
principles (except for the absence of notes thereto) applied (except
as specifically set forth therein) on a basis consistent with such
prior fiscal periods, the information contained therein, subject to
changes resulting from normal year-end audit adjustments;
(b) not later than the earlier to occur of (i) the
ninety-second day after the end of each fiscal year of the Company,
(ii) the second day following the date of the filing thereof with the
Securities and Exchange Commission and (iii) the date annual financial
statements are delivered to the lender pursuant to the Credit
Agreement, consolidated and consolidating
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balance sheets of the Company and its Restricted Subsidiaries as at
the end of such year and the related consolidated and (as to
statements of income and cash flows) consolidating statements of
income, stockholders' equity and cash flows of the Company and its
Restricted Subsidiaries for such fiscal year, setting forth in each
case in comparative form the consolidated and (where applicable)
consolidating figures for the previous fiscal year, all in reasonable
detail and (i) in the case of such consolidated financial statements,
accompanied by a report thereon of KPMG Peat Marwick LLP or other "Big
Six" independent public accountants, which report shall state that
such consolidated financial statements present fairly the financial
position of the Company and its Restricted Subsidiaries as at the
dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with generally accepted
accounting principles applied on a basis consistent with prior years
(except as otherwise specified in such report) and that the audit by
such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted
auditing standards and (ii) in the case of such consolidating
financial statements, certified by a principal financial officer of
the Company as presenting fairly, in accordance with generally
accepted accounting principles applied (except a specifically set
forth therein) on a basis consistent with such prior fiscal periods,
the information contained therein;
(c) together with each delivery of financial statements
pursuant to subdivisions (a) and (b) of this section 7, an Officers'
Certificate (i) stating that the signers have reviewed the terms of
this Agreement and of the Notes and have made, or caused to be made
under their supervision, a review in reasonable detail of the
transactions and condition of the Company and its Restricted
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during
or at the end of such accounting period, and that the signers do not
have knowledge of the existence as at the date of the Officers'
Certificate, of any condition or event which constitutes an Event of
Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence
thereof and what action the Company has taken or is taking or proposes
to take with respect thereto and (ii) demonstrating in reasonable
detail
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compliance during and at the end of such accounting period with the
restrictions contained in sections 10.1 through 10.4, inclusive;
(d) together with each delivery of financial statements
pursuant to subdivision (b) of this section 7, a written statement by
the independent public accountants giving the report thereon (i)
stating that their audit examination has included a review of the
terms of this Agreement and of the Notes as they relate to accounting
matters and that such review is sufficient to enable them to make the
statement referred to in clause (iii) of this subdivision (d) (it
being understood that no special audit procedures, other than those
required by generally accepted auditing standards, shall be required),
(ii) stating whether, in the course of their audit examination, they
obtained knowledge (and whether, as of the date of such written
statement, they have knowledge) of the existence of any condition or
event which constitutes an Event of Default or Potential Event of
Default, and, if so, specifying the nature and period of existence
thereof, and (iii) stating that they have examined the Officers'
Certificate delivered in connection therewith pursuant to subdivision
(c) of this section 7 and that the matters set forth in such Officers'
Certificate pursuant to clause (ii) of such subdivision (c) have been
properly stated in accordance with the terms of this Agreement;
(e) promptly upon receipt thereof, copies of all final
reports submitted to the Company by independent public accountants in
connection with each annual, interim or special audit of the books of
the Company or any Subsidiary made by such accountants, including,
without limitation, the comment letter submitted by such accountants
to management in connection with their annual audit;
(f) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or
made available generally by the Company to its public security
holders, of all regular and periodic reports and all registration
statements and prospectuses filed by the Company or any Subsidiary
with any securities exchange or with the Securities and Exchange
Commission or any governmental authority succeeding to any of its
functions, and of all press releases and other statements made
available generally by the Company or any Subsidiary to the public
concerning material developments in the business
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of the Company or its Subsidiaries;
(g) immediately upon any principal officer of the Company or
any other officer of the Company involved in its financial
administration obtaining knowledge of any condition or event which
constitutes an Event of Default or Potential Event of Default, or that
the holder of any Note has given any notice or taken any other action
with respect to a claimed Event of Default or Potential Event of
Default under this Agreement or that any Person has given any notice
to the Company or any Restricted Subsidiary or taken any other action
with respect to a claimed default or event or condition of the type
referred to in section 11(f), an Officers' Certificate describing the
same and the period of existence thereof and what action the Company
has taken, is taking and proposes to take with respect thereto;
(h) promptly upon any principal officer of the Company or any
other officer of the Company involved in its financial administration
obtaining knowledge of the occurrence of any (i) "reportable event",
as such term is defined in section 4043 of ERISA, or (ii) "prohibited
transaction", as such term is defined in section 4975 of the Code, in
connection with any Plan or any trust created thereunder, a written
notice specifying the nature thereof, what action the Company has
taken, is taking and proposes to take with respect thereto, and, when
known, any action taken or threatened by the Internal Revenue Service
or the PBGC with respect thereto, provided that, with respect to the
occurrence of any "reportable event" as to which the PBGC has waived
the 30-day reporting requirement, such written notice need be given
only at the time notice is given to the PBGC; and
(i) with reasonable promptness, such other financial reports
and information and data with respect to the Company or any of its
Subsidiaries as from time to time may be reasonably requested.
8. Inspection; Confidentiality. 8.1. Inspection. The
Company will permit any authorized representatives designated by you, so long
as you shall be entitled to purchase Notes under this Agreement or you or your
nominee shall be the holder of any Notes, or by any other holder of any Notes,
without expense to the Company (unless at the time a condition or event shall
exist that constitutes an Event of Default or Potential Event of Default), to
visit and inspect any of the properties of the Company or any of its
Subsidiaries, including its and their
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books of account, and to make copies and take extracts therefrom, and to
discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants, all at such reasonable times and
as often as may be reasonably requested.
8.2. Confidentiality. You agree that you will not disclose
without the prior consent of the Company (other than to your employees,
officers, directors, advisors, auditors or counsel or to another holder of the
Notes) any information with respect to the Company or any Subsidiary which is
furnished pursuant to section 7 or this section 8 and which is designated by
the Company to you in writing as confidential, provided that you may disclose
any such information (a) as has become generally available to the public, (b)
as may be required in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over you or to the National Association of Insurance Commissioners
or similar organizations or their successors, (c) as may be required in
response to any summons or subpoena or in connection with any litigation, (d)
to the extent that you believe it necessary in order to protect your investment
in the Notes or in order to comply with any law, order, regulation or ruling
applicable to you or (e) to the prospective transferee in connection with any
contemplated transfer of any of the Notes by you, provided that (i) prior to
any disclosure pursuant to clause (c) or (d) above, you will to the extent
reasonably practicable give to the Company prior written notice of such pending
disclosure and provide the Company with an opportunity to contest such
disclosure with the relevant governmental or other authority, but in no event
will you be required to violate any law, order, regulation or ruling and (ii)
in connection with any disclosure pursuant to clause (e) above, the prospective
transferee will be deemed to have become bound by this confidentiality
agreement.
9. Prepayment of Notes. 9.1. Optional Prepayments with
Premium. The Company may, at its option, upon notice as provided in section
9.5, prepay at any time all, or from time to time any part (in an amount of at
least $100,000 in the aggregate or an integral multiple of $1,000 in excess
thereof) of, the Notes at the principal amount so prepaid, plus the Make-Whole
Premium.
9.2. Optional Prepayment upon Public Offering. (a) The
Company may, at its option, upon notice as provided in section 9.5, prepay at
any time, on one occasion, concurrently with or within five days after the
occurrence of any Qualified Public Offering, up to $5,000,000 principal
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amount (in an amount of at least $100,000 in the aggregate or an integral
multiple of $1,000 in excess thereof) of the Notes, at the principal amount so
prepaid, plus a premium equal to the lesser of (i) the Make-Whole Premium or
(ii) a premium (a percentage of such principal amount) applicable in accordance
with subdivision (b) of this section 9.2, depending upon the 12-month period in
which the date fixed for such prepayment occurs.
(b) For the purposes of clause (ii) of subdivision (a) of
this sections 9.2, whenever a premium is required to be paid upon prepayment,
the applicable premium shall be (x) 3.0%, if such prepayment occurs on or prior
to December 31, 1997; (y) 2.0%, if such prepayment occurs after December 31,
1997 and on or prior to December 31, 1998; and (z) 1.0%, if such prepayment
occurs after December 31, 1998.
9.3. Contingent Prepayment Upon Change of Control. In the
event of the occurrence of a Change of Control, then the Company shall give
prompt written notice thereof to each holder of the Notes, by registered mail
(and shall confirm such notice by prompt telephonic advice to an investment
officer of each such holder), which notice shall contain a written, irrevocable
offer by the Company to prepay, on a date specified in such notice (which date
shall be not less than 30 days and not more than 60 days after the date of such
notice), the Notes held by such holder in full (and not in part). Upon the
acceptance of such offer by such holder mailed to the Company at least 10 days
prior to the date of prepayment specified in the Company's offer, such
prepayment shall be made at the principal amount of the Notes so prepaid, plus
a premium equal to 1.0% of the principal amount of the Notes so prepaid. Any
offer by the Company to prepay the Notes pursuant to this section 9.3 shall be
accompanied by an Officers' Certificate certifying that the conditions of this
section 9.3 have been fulfilled and specifying the particulars of such
fulfillment. If the holder of any Notes shall accept such offer, the principal
amount of such Notes shall become due and payable on the date specified in such
offer. In the event that there shall have been a prepayment of some but not
all of the Notes under this section 9.3, the Company shall promptly give notice
to the holders of the Notes, accompanied by an Officers' Certificate setting
forth the principal amount of each of the Notes that was prepaid and specifying
how each such amount was determined.
9.4. Contingent Prepayment Upon Sale of Certain Assets. If
required by section 10.7, then the Company shall give prompt written notice
thereof to each holder of the Notes, by registered mail (and shall confirm such
notice by
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prompt telephonic advice to an investment officer of each such holder), which
notice shall contain a written, irrevocable offer by the Company to prepay, on
a date specified in such notice (which date shall be not less than 30 days and
not more than 60 days after the date of such notice), the Notes in an aggregate
principal amount equal to the amount of Excess Sale Proceeds. Upon the
acceptance of such offer by such holder mailed to the Company at least 10 days
prior to the date of prepayment specified in the Company's offer, such
prepayment shall be made at the principal amount of the Notes so prepaid, plus
the Make-Whole Premium. Any offer by the Company to prepay the Notes pursuant
to this section 9.4 shall be accompanied by an Officers' Certificate certifying
that the conditions of this section 9.4 have been fulfilled and specifying the
particulars of such fulfillment. If the holder of any Notes shall accept such
offer, the principal amount of such Notes to be prepaid shall become due and
payable on the date specified in such offer. In the event that there shall
have been a partial prepayment of the Notes under this section 9.4, the Company
shall promptly give notice to the holders of the Notes, accompanied by an
Officers' Certificate setting forth the principal amount of each of the Notes
that was prepaid and specifying how each such amount was determined.
9.5. Notice of Optional Prepayments; Officers' Certificate.
The Company will give each holder of any Notes written notice of each optional
prepayment under section 9.1 or 9.2 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment, in each case specifying such
date, the aggregate principal amount of the Notes to be prepaid, the principal
amount of each Note held by such holder to be prepaid, and the premium, if any,
applicable to such prepayment. Such notice shall be accompanied by an
Officers' Certificate certifying that the conditions of such section have been
fulfilled and specifying the particulars of such fulfillment.
9.6. Allocation of Partial Prepayments. In the case of each
partial prepayment paid or to be prepaid (except a prepayment pursuant to
section 9.3 or 9.4 of the Notes held by some but not all holders), the
principal amount of the Notes to be prepaid shall be allocated (in integral
multiples of $1,000) among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof not theretofore called for prepayment, with adjustments, to the
extent practicable, to compensate for any prior prepayments not made exactly in
such proportion.
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9.7. Maturity; Surrender, etc. In the case of each
prepayment, the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
premium, if any. From and after such date, unless the Company shall fail to
pay such principal amount when so due and payable, together with the interest
and premium, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and canceled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
9.8. Acquisition of Notes. The Company will not, and will
not permit any Subsidiary or Affiliate to, purchase, redeem or otherwise
acquire any Note except upon the payment or prepayment thereof in accordance
with the terms of this Agreement and such Note.
10. Business and Financial Covenants. The Company covenants
that from the date of this Agreement through the Closing and thereafter so long
as any of the Notes are outstanding:
10.1. Minimum Net Worth. The Company will not as of any date
permit Consolidated Tangible Net Worth to be less than the sum of $18,000,000
plus, for the interim period from the Closing Date to June 30, 1997 and for
each fiscal year thereafter (a) 50% of Consolidated Net Income for any such
period or fiscal year in which the Company has positive Consolidated Net Income
and (b) zero for any other such period or fiscal year.
10.2. Debt. (a) The Company will not at any time permit the
ratio of Consolidated Funded Debt to Consolidated Net Tangible Capitalization
to be greater than 0.75 to 1.0.
(b) The Company will not at any time permit the ratio of
Consolidated Senior Funded Debt to Consolidated Net Tangible Capitalization to
be greater than 0.45 to 1.0.
(c) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume, guarantee, or
otherwise become or remain directly or indirectly liable with respect to, any
Debt, unless, on the date the Company becomes liable with respect to such Debt
and immediately after giving effect thereto and to the concurrent retirement of
any other Debt, (i) the
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Company is in compliance with the requirements of the foregoing paragraphs (a)
and (b) and section 10.3 and (ii) no condition or event shall exist which
constitutes an Event of Default or Potential Event of Default.
10.3. Interest Coverage. The Company will not as of any date
permit the ratio of Consolidated EBITDA to Consolidated Interest Expense, for
the period of four consecutive fiscal quarters ended on or most recently prior
to such date, to be less than 2.00 to 1.0 (if the date of determination occurs
prior to September 30, 1997); and 2.50 to 1.0 (if the date of determination
occurs on or after September 30, 1997).
10.4. Restricted Investments. The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly make or own any
Investment in any Person, except:
(a) the Company and its Restricted Subsidiaries may make and
own Investments in
(i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or
issued by any agency thereof maturing within one year from the
date of acquisition thereof,
(ii) marketable direct obligations issued by any
state of the United States of America or any political
subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition
thereof and having as at any date of determination a rating
from either Standard & Poor's of A- or better or ▇▇▇▇▇'▇ of A3
or better,
(iii) commercial paper maturing no more than 270
days from the date of creation thereof and having as at any
date of determination a rating from either Standard & Poor's
of A-1 or ▇▇▇▇▇'▇ of P-1,
(iv) Eurodollar deposits or time deposits with, or
certificates of deposit issued by, commercial banks, each
having as at any date of determination (x) combined capital
and surplus of not less than $250,000,000 and (y) with respect
to its long-term debt or deposits a rating from either
Standard & Poor's of A- or better or ▇▇▇▇▇'▇ of A3 or better
("Permitted Banks"), in
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each case maturing within one year from the date of
acquisition thereof, and
(v) bankers' acceptances eligible for rediscount
under requirements of The Board of Governors of the Federal
Reserve System and accepted by Permitted Banks;
(b) the Company and its Restricted Subsidiaries may make and
own Investments in any Subsidiary or any Person which simultaneously
therewith becomes a Subsidiary; provided that the Company shall at all
times continue to own at least 70% (by number of votes) of the Voting
Stock of all Restricted Subsidiaries;
(c) the Company and its Restricted Subsidiaries may make and
continue to own Investments in the ordinary course of business,
consistent with past practice;
(d) the Company and its Restricted Subsidiaries may, in
addition to the Investments permitted by the foregoing subdivisions of
this section 10.4, make and continue to own Investments in any Person
(other than a Restricted Subsidiary or any Person which would
simultaneously therewith become a Restricted Subsidiary) if,
immediately after giving effect to any such Investment, the aggregate
outstanding amount of Investments made pursuant to this paragraph (d)
shall not exceed $1,000,000; and
(e) the Company and its Restricted Subsidiaries may, in
addition to the Investments permitted by the foregoing subdivisions of
this section 10.4, make and continue to own Investments in any Person
(other than a Subsidiary or any Person which would simultaneously
therewith become a Subsidiary) if the Company would be permitted to
make such Investment pursuant to, and within the limitations specified
in, section 10.5 (any such Investment made pursuant to this
subdivision (e) being referred to as a "Restricted Investment").
10.5. Restricted Payments and Restricted Investments. (a)
The Company will not directly or indirectly declare, order, pay, make or set
apart any sum or property for any Restricted Payment, and the Company will
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not and will not permit any Restricted Subsidiary to make or become obligated
to make any Restricted Investment, unless, immediately after giving effect to
any such proposed action, (i) no condition or event shall exist which
constitutes an Event of Default or Potential Event of Default, and (ii) the
Company could incur $1.00 of additional Debt in compliance with section 10.2;
provided that any dividend which could be paid in compliance with this section
10.5 at the date of its declaration may continue to be paid notwithstanding any
subsequent change.
(b) For the purposes of this section 10.5, the amount
involved in any Restricted Payment directly or indirectly declared, ordered,
paid, made or set apart in property shall be the greater of the fair market
value of such property (as determined in good faith by the Board) and the net
book value thereof on the books of the Company (determined in accordance with
generally accepted accounting principles) on the date such Restricted Payment
is declared, ordered, paid, made or set apart. The Company will not declare
any dividend (other than a dividend payable solely in shares of its own stock)
on any shares of any class of its stock which is payable more than 60 days
after the date of declaration thereof. The Company will not permit any
Restricted Subsidiary, directly or indirectly, to declare, order, pay or make
any Restricted Payment or to set apart any sum or property for any such
purpose.
10.6. Transactions with Affiliates. The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly,
engage in any transaction (or series of related transactions) material to the
Company or any of its Restricted Subsidiaries (including, without limitation,
the purchase, sale or exchange of assets or the rendering of any service) with
any Affiliate of the Company, except in the ordinary course of and pursuant to
the reasonable requirements of the Company's or such Restricted Subsidiary's
business and upon fair and reasonable terms that are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than those which
might be obtained, in the good faith judgment of the Company, in an arm's
length transaction at the time from Persons which are not such an Affiliate.
In the case of any such transaction with an Affiliate involving aggregate
consideration in excess of $60,000, such transaction shall have been approved
by a committee of disinterested members of the Board, and in the case of any
such transaction with an Affiliate involving aggregate consideration in excess
of $500,000, such transaction shall have been approved by the holders of more
than 50% in principal amount of the Notes at the time outstanding (subject to
section 15.4).
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10.7. Consolidation, Merger, Sale of Assets, etc. The Company
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly,
(a) consolidate with or merge into any other Person or permit
any other Person to consolidate with or merge into it, except that:
(i) any Restricted Subsidiary may consolidate with
or merge into the Company or a Wholly-Owned Restricted
Subsidiary if the Company or such Wholly-Owned Restricted
Subsidiary, as the case may be, shall be the surviving
corporation and if, immediately after giving effect to such
transaction, no condition or event shall exist which
constitutes an Event of Default or Potential Event of Default;
(ii) any Restricted Subsidiary may consolidate with
or merge into any other Person if such Person, concurrently
with such transaction, shall become a Restricted Subsidiary
and if, immediately after giving effect to such transaction,
no condition or event shall exist which constitutes an Event
of Default or Potential Event of Default;
(iii) any corporation (other than a Subsidiary) may
consolidate with or merge into the Company if the Company
shall be the surviving corporation and if, immediately after
giving effect to such transaction, (x) no condition or event
shall exist which constitutes an Event of Default or Potential
Event of Default and (y) the Company could incur at least
$1.00 of additional Debt in compliance with section 10.2; and
(iv) the Company may consolidate with or merge into
any other corporation if (x) the surviving corporation is a
corporation organized and existing under the laws of the
United States of America or a state thereof or Canada, (y) the
Company shall have delivered to the holders of the Notes an
opinion of counsel satisfactory in substance and form to the
holders of more than 50% in principal amount of the Notes
outstanding (subject to section 15.4) to the effect that such
corporation has assumed, expressly or by operation of law, the
obligations of the Company under this Agreement and under the
Notes and to such other effect as such holders may reasonably
require, and
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(z) immediately after giving effect to such transaction (and
such assumption) (A) such corporation shall not be liable with
respect to any Debt which it could not become liable with
respect to under this Agreement on the date of such
transaction, (B) such corporation could incur at least $1.00
of additional Debt in compliance with section 10.2 and (C) no
condition or event shall exist which constitutes an Event of
Default or a Potential Event of Default; or
(b) sell, lease, abandon or otherwise dispose of all or
substantially all its assets, except that:
(i) any Restricted Subsidiary may sell, lease or
otherwise dispose of all or substantially all its assets to
the Company or a Wholly-Owned Restricted Subsidiary;
(ii) any Restricted Subsidiary may sell, lease or
otherwise dispose of all or substantially all its assets to
any corporation into which such Restricted Subsidiary could be
consolidated or merged in compliance with subdivision (a)(ii)
of this section 10.7, provided that (x) each of the conditions
set forth in such subdivision (a)(ii) shall have been
fulfilled, and (y) no such disposition shall relieve such
Restricted Subsidiary from its obligations under this
Agreement or the Notes; or
(iii) the Company may sell, lease or otherwise
dispose of all or substantially all its assets to any
corporation into which the Company could be consolidated or
merged in compliance with subdivision (a)(iv) of this section
10.7, provided that (x) each of the conditions set forth in
such subdivision (a)(iv) shall have been fulfilled, and (y) no
such disposition shall relieve the Company from its
obligations under this Agreement or the Notes; or
(c) sell, lease, abandon or otherwise dispose of any of its
assets (except in a transaction permitted by subdivision (b) of this
section 10.7), except that
(i) the Company and its Restricted Subsidiaries may
sell assets, including goods and obsolete equipment, in the
ordinary course of business;
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(ii) the Company and its Restricted Subsidiaries may
sell additional assets if (x) such assets, together with all
assets sold during the then current fiscal year of the
Company, shall not constitute assets having an aggregate book
value that exceeds 15% of the Consolidated Assets of the
Company and its Restricted Subsidiaries determined as at the
end of the immediately preceding fiscal year and (y) such
assets, together with all assets sold during the period from
the Closing to the date of such sale, shall not constitute
assets having an aggregate book value that exceed 40% of the
Consolidated Assets of the Company and its Restricted
Subsidiaries determined as at June 30, 1996; and
(iii) the Company and its Restricted Subsidiaries
may sell additional assets if the proceeds thereof, together
with all proceeds of sales of assets made pursuant to the
foregoing paragraph (ii), shall, on or prior to the first
anniversary of such sale, be applied either (x) to the
prepayment of Superior Debt of the Company up to a maximum
amount of $10,000,000 or to the acquisition of assets
consisting of Core Businesses or plant and equipment to be
used in Core Businesses; or (y) to the prepayment of the Notes
in the manner contemplated by section 9.4 (or a combination of
(x) and (y) above; it being agreed that if the Company shall
not prior to such first anniversary have performed or given
notice to the holders of the Notes of its election to perform
under one of the foregoing clauses (x) or (y), it shall be
deemed to have elected to perform the obligation set forth in
the foregoing clause (y), and the provisions of section 9.4
shall be applicable.
10.8. Environmental Matters. The Company and its
Subsidiaries will at all times be in compliance in all material respects with
Environmental Laws. The Company will maintain in full force and effect all
Material Environmental Permits and will be in compliance in all material
respects with all other permits, licenses and other authorizations that are
required pursuant to Environmental Laws for the occupation of its facilities
and the operation of its businesses, without transfer, reissuance or other
governmental approval or action.
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10.9. Corporate Existence, etc.; Business. The Company will
at all times preserve and keep in full force and effect its corporate
existence, and rights and franchises deemed material to its business, and those
of each of its Restricted Subsidiaries, except as otherwise specifically
permitted by section 10.7 and except that the corporate existence of any
Restricted Subsidiary may be terminated if, in the good faith judgment of the
Board, such termination is in the best interest of the Company and is not
disadvantageous to the holders of the Notes. The Company will not, and will
not permit any Restricted Subsidiary to, engage in any business other than the
Core Businesses.
10.10. Payment of Taxes and Claims. The Company will, and
will cause each Restricted Subsidiary to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or in
respect of any of its franchises, business, income or profits before any
penalty or interest accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or might become a Lien upon
any of its properties or assets, provided that no such charge or claim need be
paid if being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and if such reserves or other appropriate
provision, if any, as shall be required by generally accepted accounting
principles shall have been made therefor.
10.11. Compliance with ERISA. The Company will not, and will
not permit any Subsidiary to,
(a) engage in any transaction in connection with which the
Company or any Subsidiary could be subject to either a civil penalty
assessed pursuant to section 502(i) of ERISA or a tax imposed by
section 4975 of the Code, terminate or withdraw from any Plan (other
than a Multiemployer Plan) in a manner, or take any other action with
respect to any such Plan (including, without limitation, a substantial
cessation of operations within the meaning of section 4062(f) of
ERISA), which could result in any liability of the Company or any
Subsidiary to the PBGC, to a trust established pursuant to section
4041(c)(3)(B)(ii) or (iii) or 4042(i) of ERISA, or to a trustee
appointed under section 4042(b) or (c) of ERISA, incur any liability
to the PBGC on account of a termination of a Plan under section 4064
of ERISA, fail to make full payment when due of all amounts which,
under the
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provisions of any Plan, the Company or any Subsidiary is required to
pay as contributions thereto, or permit to exist any accumulated
funding deficiency, whether or not waived, with respect to any Plan
(other than a Multiemployer Plan), if, in any such case, such penalty
or tax or such liability, or the failure to make such payment, or the
existence of such deficiency, as the case may be, could have a
material adverse effect on the Company or any of its Subsidiaries;
(b) permit the present value of all vested accrued benefits
under all Plans maintained at such time by the Company and any
Subsidiary (other than Multiemployer Plans) guaranteed under Title IV
of ERISA to exceed the current value of the assets of such Plans
allocable to such vested accrued benefits by more than $1,000,000;
(c) permit the aggregate complete or partial withdrawal
liability under Title IV of ERISA with respect to Multiemployer Plans
incurred by the Company and its Subsidiaries to exceed $1,000,000; or
(d) permit the sum of (i) the amount by which the current
value of all vested accrued benefits referred to in subdivision (b) of
this section 10.11 exceeds the current value of the assets referred to
in such subdivision (b) and (ii) the amount of the aggregate incurred
withdrawal liability referred to in subdivision (c) of this section
10.11 to exceed $1,000,000.
For the purposes of subdivisions (c) and (d) of this section 10.11, the amount
of the withdrawal liability of the Company and its Subsidiaries at any date
shall be the aggregate present value of the amount claimed to have been
incurred less any portion thereof as to which the Company reasonably believes,
after appropriate consideration of possible adjustments arising under sections
4219 and 4221 of ERISA, it and its Subsidiaries will have no liability,
provided that the Company shall obtain prompt written advice from independent
actuarial consultants supporting such determination. The Company agrees (i)
once in each calendar year to request and obtain a current statement of
withdrawal liability from each Multiemployer Plan and (ii) to transmit a copy
of such statement to each holder of any Notes, within 15 days after the Company
receives the same. As used in this section 10.11, the term "accumulated
funding deficiency" has the meaning specified in section 302 of ERISA and
section 412 of the Code, and the terms "present value", "current value" and
"accrued benefit" have the
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meanings specified in section 3 of ERISA.
10.12. Maintenance of Properties; Insurance. The Company
will maintain or cause to be maintained in good repair, working order and
condition all properties used or useful in the business of the Company and its
Restricted Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. The Company will
maintain or cause to be maintained, with financially sound and reputable
insurers, insurance with respect to its properties and business and the
properties and business of its Restricted Subsidiaries against loss or damage
of the kinds customarily insured against by corporations of established
reputation engaged in the same or similar business and similarly situated, of
such types and in such amounts as are customarily carried under similar
circumstances by such other corporations. Such insurance may be subject to
co-insurance, deductibility or similar clauses which, in effect, result in
self-insurance of certain losses, provided that such self-insurance is in
accord with the approved practices of corporations similarly situated and
adequate insurance reserves are maintained in connection with such
self-insurance.
10.13. Additional Guaranties. The Company shall cause any
Person that hereafter becomes a Restricted Subsidiary of the Company to execute
and deliver to the holders of the Notes a Guaranty Agreement with respect to
the obligations of the Company hereunder and under the Notes, substantially in
the form of Exhibit D, with such changes to such form as may be appropriate to
reflect the identity and circumstances of the guarantor.
10.14. Restrictions Affecting Subsidiaries. The Company will
not, and will not permit any Restricted Subsidiary to, create or otherwise
permit to exist any restriction on the ability of any Restricted Subsidiary to
pay dividends or make any other distributions on its capital stock or any other
interest in its profits owned by the Company or any other Restricted
Subsidiary, or pay any Debt owed to the Company or any other Restricted
Subsidiary, other than any such restriction in effect pursuant to the Credit
Agreement as in effect on the date of this Agreement.
11. Events of Default; Acceleration. If any of the following
conditions or events ("Events of Default") shall occur and be continuing:
(a) if the Company shall default in the payment of any
principal of or premium, if any, on any Note when the same becomes due
and payable, whether at
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maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) if the Company shall default in the payment of any
interest on any Note for more than five Business Days after the same
becomes due and payable; or
(c) if the Company shall default in the performance of or
compliance with any term contained in section 10.1 through 10.7,
inclusive; or
(d) if the Company shall default in the performance of or
compliance with any term contained in this Agreement other than those
referred to above in this section 11 and such default shall not have
been remedied within 30 days after such failure shall first have
become known to any officer of the Company or written notice thereof
shall have been received by the Company from any holder of any Note;
or
(e) if any representation or warranty made in writing by or
on behalf of the Company in this Agreement or in any instrument
furnished in compliance with or in reference to this Agreement or
otherwise in connection with the transactions contemplated by this
Agreement shall prove to have been false or incorrect in any material
respect on the date as of which made; or
(f) if the Company or any Restricted Subsidiary shall default
(as principal or guarantor or other surety) in the payment of any
principal of or premium or interest on any Debt which is outstanding
in a principal amount of at least $1,000,000 (other than the Notes),
and as a result of which default the holder or holders of such Debt
shall have caused, or shall have the right to cause (whether or not
exercised), the acceleration, of the payment of such Debt before its
stated maturity or before its regularly scheduled dates of payment; or
if any other event shall occur or condition shall exist in respect of
any such Debt which is outstanding in a principal amount of at least
$1,000,000 or under any evidence of any such Debt or of any mortgage,
indenture or other agreement relating thereto, and as a result of
which event or condition the holder or holders of such Debt shall have
caused the acceleration of the payment of such Debt before its stated
maturity or before its regularly scheduled dates of payment; or
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(g) if a final judgment or judgments shall be rendered
against the Company or any Restricted Subsidiary for the payment of
money in excess of $1,000,000 in the aggregate and any one of such
judgments shall not be discharged or execution thereon stayed pending
appeal, within 30 days after entry thereof, or, in the event of such a
stay, such judgment shall not be discharged within 30 days after such
stay expires; or
(h) if the Company or any Restricted Subsidiary shall (i) be
generally not paying its debts as they become due, (ii) file, or
consent by answer or otherwise to the filing against it of, a petition
for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, (iii) make an assignment for the
benefit of its creditors, (iv) consent to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) be adjudicated insolvent or (vi) take corporate action for the
purpose of any of the foregoing; or
(i) if a court or governmental authority of competent
jurisdiction shall enter an order appointing, without consent by the
Company or any Restricted Subsidiary, a custodian, receiver, trustee
or other officer with similar powers with respect to it or with
respect to any substantial part of its property, or if an order for
relief shall be entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any Restricted Subsidiary,
or if any petition for any such relief shall be filed against the
Company or a Restricted Subsidiary and such petition shall not be
dismissed within 30 days;
then, (x) upon the occurrence of any Event of Default described in subdivision
(h) or (i) of this section 11 with respect to the Company (other than such an
Event of Default described in clause (i) of subdivision (h) or described in
clause (vi) of subdivision (h) by virtue of the reference in such clause (vi)
to such clause (i)), the unpaid principal amount of and accrued interest on the
Notes shall automatically become due and payable or (y) upon the occurrence of
any other Event of Default, any holder or holders of 25% or more (in the case
of any Event of Default
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described in subdivision (a) or (b) of this section 11) or any holder or
holders of 40% or more (in the case of any Event of Default described in any
other subdivision of this section 11), in principal amount of the Notes at the
time outstanding (subject to section 15.4) may at any time (unless all defaults
shall theretofore have been remedied) at its or their option, by written notice
or notices to the Company, declare all the Notes to be due and payable,
whereupon (A) if at the time there shall be no Superior Debt outstanding, the
Notes shall forthwith mature and become due and payable, and (B) if at the time
there shall be Superior Debt outstanding, the Notes shall mature and become due
and payable upon the earlier to occur of (1) the acceleration of the maturity
of any Superior Debt by the holder or holders thereof and (2) (X) the thirtieth
day (in the case of an Event of Default described in subdivision (c) of this
section 11 which arises from a default in the performance of or compliance with
any term contained in section 10.2, 10.5 or 10.7 or an Event of Default
described in subdivision (a) of this section 11 which arises from a default in
any payment required to be made pursuant to section 9.3) or (Y) the 120th day
(in the case of any other Event of Default) following the date of such
declaration, in each case together with interest accrued thereon; and, in the
case of any Event of Default described in this section 11, there shall also be
due and payable, to the extent permitted by applicable law, a premium equal to
the Make-Whole Premium, all without presentment, demand, protest or notice,
which are hereby waived.
At any time after the principal of, and interest accrued on,
any or all of the Notes are declared due and payable, the holders of not less
than 75% in aggregate principal amount of the Notes then outstanding (subject
to section 15.4), by written notice to the Company may rescind and annul any
such declaration and its consequences if (x) the Company has paid all overdue
interest on the Notes, the principal of and premium, if any, on any Notes which
have become due otherwise than by reason of such declaration, and interest on
such overdue principal and premium and (to the extent permitted by applicable
law) any overdue interest in respect of the Notes at the rate of 14% per annum,
(y) all Events of Default, other than non-payment of amounts which have become
due solely by reason of such declaration, and all conditions and events which
constitute Events of Default or Potential Events of Default have been cured or
waived pursuant to section 19, and (z) no judgment or decree has been entered
for the payment of any monies due pursuant to the Notes or this Agreement; but
no such rescission and annulment shall extend to or affect any subsequent Event
of Default or Potential Event of Default or impair any right
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consequent thereon.
12. Remedies on Default, etc. In case any one or more Events
of Default or Potential Events of Default shall occur and be continuing, the
holder of any Note at the time outstanding may proceed to protect and enforce
the rights of such holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein or in such Note, or for an injunction against a violation of
any of the terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise. In case of a default in the
payment of any principal of or premium, if any, or interest on any Note, the
Company will pay to the holder thereof such further amount as shall be
sufficient to cover the cost and expenses of collection, including, without
limitation, reasonable attorneys' fees, expenses and disbursements. No course
of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred
by this Agreement or by any Note upon any holder thereof shall be exclusive of
any other right, power or remedy referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.
13. Subordination of Subordinated Notes. 13.1. General.
The payment of principal of and interest and premium on, and all fees,
expenses, reimbursements and other amounts payable by the Company under, the
Notes and this Agreement (the "Subordinated Debt") shall be subordinate and
junior in right of payment to all Superior Debt (as defined in section 13.2) to
the extent and in the manner provided in this section 13.
13.2. Superior Debt. As used in this section 13, the term
"Superior Debt" shall mean (a) all principal of and interest (including
interest accrued during a bankruptcy proceeding) on Debt of the Company
outstanding from time to time under the Credit Agreement, all obligations of
the Company in respect of any interest rate swap, cap or other hedging
arrangement entered into with the Lender under the Credit Agreement and all
fees, expenses, reimbursements and other amounts payable by the Company under
the Credit Agreement, and all Guaranties with respect to the foregoing, and (b)
other Debt of the Company outstanding in compliance with section 10.2, and all
fees, expenses, reimbursements and other amounts payable by the Company with
respect to such Debt, other than (i) Debt which by its terms is expressly
subordinated to any other Debt of the Company and
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(ii) Debt outstanding between the Company and any Subsidiary; or between any
Subsidiary and another Subsidiary; or (unless such Debt meets the standard for
transactions with Affiliates set forth in section 10.6) between the Company and
any Affiliate of the Company or between any Subsidiary and an Affiliate of the
Company. The Superior Debt shall continue to be Superior Debt and entitled to
the benefits of these subordination provisions irrespective of any amendment,
modification or waiver of any term of the Superior Debt or extension or renewal
of the Superior Debt.
13.3. Default in Respect of Superior Debt. (a) In the event
the Company shall default in the payment of any principal of, or premium, if
any, or interest on any Superior Debt when the same becomes due and payable,
whether at maturity or at a date fixed for payment or prepayment thereof or by
declaration or otherwise, then, unless and until such default shall have been
remedied or waived in writing or shall have ceased to exist, no direct or
indirect payment (in cash, property or securities or by set-off or otherwise,
except securities which are subordinate and junior in right of payment to the
payment of Superior Debt at least to the extent provided in this section 13)
shall be made on account of the principal of, or premium, if any, or interest
on any Subordinated Debt, or as a sinking fund for Subordinated Debt, or in
respect of any redemption, retirement, purchase or other acquisition of any
Subordinated Debt.
(b) Upon the happening of an event of default with respect to
any Superior Debt, as defined therein or in the instrument under which the same
is outstanding, permitting the holders thereof to accelerate the maturity
thereof (other than under circumstances when the terms of section 13.3(a) are
applicable), then, unless and until such event of default shall have been
remedied or waived in writing or shall have ceased to exist, no direct or
indirect payment (in cash, property or securities or by set-off or otherwise,
except securities which are subordinate and junior in right of payment to the
payment of Superior Debt at least to the extent provided in this section 13)
shall be made on account of the principal of or premium, if any, or interest on
any Subordinated Debt or as a sinking fund for the Subordinated Debt, or in
respect of any redemption, retirement, purchase or other acquisition of any
Subordinated Debt, during any period:
(i) of up to 180 days after written notice of such
default shall have been given to the Company and each holder
of Subordinated Debt by
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the holders of 25% in principal amount of the Superior Debt,
provided that (x) only one such notice may be given by the
holders of the Superior Debt in any 360-day period and (y)
only two such notices of default pertaining to a specific
covenant of any such Superior Debt may be given during the
terms of the Notes; or
(ii) in which any judicial proceeding shall be
pending in respect of such default or an effective notice of
acceleration of the maturity of the Superior Debt shall have
been transmitted to the Company in respect of such default.
13.4. Insolvency, etc. In the event of:
(a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Company, its creditors as such or its property,
(b) any proceeding for the liquidation, dissolution or other
winding-up of the Company, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings,
(c) any assignment by the Company for the benefit of
creditors, or
(d) any other marshaling of the assets of the Company,
all Superior Debt shall first be paid in full in cash or cash equivalents (or
with other assets acceptable to the holders of the Superior Debt) before
payment or distribution, whether in cash, securities or other property, shall
be made to any holder of any Subordinated Debt on account of any Subordinated
Debt. Any payment or distribution, whether in cash, securities or other
property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which
is subordinate, at least to the extent provided in this section 13 with respect
to the Subordinated Debt, to the payment of all Superior Debt at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), which would otherwise (but for these
subordination provisions) be payable or deliverable in respect of Subordinated
Debt shall be paid or delivered directly to the holders of Superior Debt in
accordance with the priorities then existing among such holders until all
Superior Debt
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shall have been paid in full in cash or cash equivalents (or with other assets
acceptable to the holders of the Superior Debt).
13.5. Payments and Distributions Received. If any payment or
distribution of any character or any security, whether in cash, securities or
other property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which
is subordinate, at least to the extent provided in this section 13 with respect
to Subordinated Debt, to the payment of all Superior Debt at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), shall be received by any holder of any
Subordinated Debt in contravention of any of the terms hereof and before all
the Superior Debt shall have been paid in full in cash or cash equivalents (or
with other assets acceptable to the holders of the Superior Debt), such payment
or distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Superior
Debt at the time outstanding in accordance with the priorities then existing
among such holders for application to the payment of all Superior Debt
remaining unpaid, to the extent necessary to pay all such Superior Debt in full
in cash (or with other assets acceptable to the holders of the Superior Debt).
13.6. No Prejudice or Impairment. No present or future
holder of any Superior Debt shall be prejudiced in the right to enforce
subordination of the Subordinated Debt by any act or failure to act on the part
of the Company or the holders of the Subordinated Debt. Nothing contained
herein shall impair, as between the Company and the holder of any Subordinated
Debt, the obligation of the Company to pay to the holder thereof the principal
thereof and interest thereon as and when the same shall become due and payable
in accordance with the terms thereof and of this Agreement, or prevent the
holder of any Subordinated Debt from exercising all rights, powers and remedies
otherwise permitted by applicable law or hereunder upon a Potential Event of
Default or Event of Default hereunder, all subject to the terms of this section
13 and the rights of the holders of the Superior Debt to receive cash,
securities or other property otherwise payable or deliverable to the holders of
Subordinated Debt.
13.7. Payment of Superior Debt, Subrogation, etc. Upon the
payment in full of all Superior Debt in cash (or with other assets acceptable
to the holders of the Superior Debt), the holders of Subordinated Debt shall be
subrogated
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to all rights of any holders of Superior Debt to receive any further payments
or distributions applicable to the Superior Debt until the Subordinated Debt
shall have been paid in full, and, for the purposes of such subrogation, no
payment or distribution received by the holders of Superior Debt of cash,
securities, or other property to which the holders of Subordinated Debt would
have been entitled except for this section 13 shall, as between the Company and
its creditors other than the holders of Superior Debt, on the one hand, and the
holders of Subordinated Debt, on the other, be deemed to be a payment or
distribution by the Company on account of Superior Debt.
13.8. No Commencement of Proceeding. In the case of an Event
of Default or Potential Event of Default hereunder, no holder of Subordinated
Debt will ▇▇▇ for or demand from the Company or any of its Subsidiaries payment
or performance of all or any part of the Subordinated Debt, or commence or join
with any creditor (other than the holders of Superior Debt) in commencing, or
cause the Company or any of its Subsidiaries to commence, any case or
proceeding under any Federal or state bankruptcy or similar law, until the
earliest to occur of (a) the payment in full of all Superior Debt in cash (or
other assets acceptable to the holders of the Superior Debt), (b) the
commencement by the holders of Superior Debt of any case or proceeding under
any Federal or state bankruptcy or similar law, (c) the acceleration of the
maturity of any Superior Debt by the holder or holders thereof, and (d) the
thirtieth day (in the case of an Event of Default described in subdivision (c)
of section 11 which arises from a default in the performance of or compliance
with any term contained in section 10.2, 10.5 or 10.7 or an Event of Default
described in subdivision (a) of section 11 which arises from a default in any
payment required to be made pursuant to section 9.3) or the 120th day (in the
case of any other Event of Default) following the date of declaration of such
Event of Default.
14. Definitions. As used herein the following terms have the
following respective meanings:
Affiliate: any Person directly or indirectly controlling or
controlled by or under common control with the Company or any Subsidiary,
including (without limitation) any Person beneficially owning or holding 5% or
more of any class of voting securities of the Company or any Subsidiary or any
other corporation of which the Company or any Subsidiary owns or holds 5% or
more of any class of voting securities, provided that, for purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"),
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as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise, and provided further that neither you nor any other
Person which is an institution shall be deemed to be an Affiliate of the
Company or any of its Subsidiaries solely by reason of ownership of the Notes
or other securities issued in exchange for the Notes or by reason of having the
benefits of any agreements or covenants of the Company contained in this
Agreement.
Board: the Board of Directors of the Company or a committee
of three or more directors lawfully exercising the relevant powers of the
Board.
Business Day: any day except a Saturday, a Sunday or other
day on which commercial banks in New York City are required or authorized by
law to be closed.
Capital Lease: as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which
would, in accordance with generally accepted accounting principles, be required
to be classified and accounted for as a capital lease on a balance sheet of
such Person, other than, in the case of the Company or a Subsidiary, any such
lease under which the Company or a Wholly-Owned Subsidiary is the lessor.
Capital Lease Obligation: with respect to any Capital Lease,
the amount of the obligation of the lessee thereunder which would, in
accordance with generally accepted accounting principles, appear on a balance
sheet of such lessee in respect of such Capital Lease.
CERCLA: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
Change of Control: (a) the sale, lease or transfer of all or
substantially all of the Company's assets to any Person or "group" (within the
meaning of Section 13(d) of the Exchange Act, hereinafter a "Group") together
with any Affiliates thereof, (b) the liquidation of the Company, (c) the
acquisition by any Person or Group, together with any Affiliates thereof, of in
excess of 35% of the Voting Stock of the Company, or (d) the success by any
Person or Group, together with any Affiliates thereof (other than the then
current Board of the Company), in causing its or their nominees to be elected
to the Board such that such
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nominees, when added to any director remaining on the Board who is an Affiliate
of such Person or Group, shall constitute 50% or more of the Board.
Closing Date: the date of the Closing hereunder.
Code: the Internal Revenue Code of 1986, as amended from time
to time.
Common Stock: the meaning specified in section 1.
Consolidated Assets: as of any date of determination, total
assets of the Company and its Restricted Subsidiaries as of such date,
determined in accordance with generally accepted accounting principles.
Consolidated EBITDA: with reference to any period,
Consolidated Net Income for such period, plus Consolidated Interest Expense,
taxes, depreciation and amortization to the extent deducted in arriving at
Consolidated Net Income for such Period.
Consolidated Funded Debt: as of any date of determination,
Funded Debt of the Company and its Restricted Subsidiaries as of such date,
determined in accordance with generally accepted accounting principles.
Consolidated Interest Expense: with reference to any period,
interest expense of the Company and its Restricted Subsidiaries for such
period, including amortization of debt discount and expense and imputed
interest on Capital Lease Obligations properly chargeable to income during such
period in accordance with generally accepted accounting principles.
Consolidated Net Income: with reference to any period, the
net income (or deficit) of the Company and its Restricted Subsidiaries for such
period (taken as a cumulative whole), after deducting all operating expenses,
provisions for all taxes and reserves and all other proper deductions, all
determined in accordance with generally accepted accounting principles on a
consolidated basis, after eliminating all intercompany transactions and after
deducting portions of income properly attributable to minority interests, if
any, in the stock and surplus of Subsidiaries, provided that there shall be
excluded (a) the income (or deficit) of any Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or a Restricted Subsidiary, (b) the income (or deficit) of any Person
(other than a Restricted Subsidiary) in which the Company or any
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Restricted Subsidiary has an ownership interest, except to the extent that any
such income has been actually received by the Company or such Subsidiary in the
form of dividends or similar distributions, (c) the undistributed earnings of
any Restricted Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Restricted Subsidiary is not at the
time permitted by the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Restricted Subsidiary, (d) any aggregate net gain or any aggregate net
loss during such period arising from the sale, exchange or other disposition of
capital assets, (e) any write-up or write-down of any asset and (f) any net
income or gain or any net loss during such period from any change in
accounting, from any discontinued operations or the disposition thereof, from
any extraordinary events or from any prior period adjustments.
Consolidated Net Tangible Capitalization: the total assets of
the Company and its Restricted Subsidiaries appearing on a consolidated balance
sheet of the Company and its Restricted Subsidiaries prepared in accordance
with generally accepted accounting principles as of the date of determination,
after eliminating all intercompany transactions and all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Subsidiaries and after deducting therefrom (without duplication of deductions),
(a) Intangible Assets; (b) all Investments owned by the Company and its
Restricted Subsidiaries other than Permitted Investments; and (c) all items
that would appear on the liability side of a balance sheet of the Company and
its Restricted Subsidiaries prepared in accordance with generally accepted
accounting principles, other than capital stock, surplus and Funded Debt.
Consolidated Senior Funded Debt: Consolidated Funded Debt
other than Subordinated Funded Debt.
Consolidated Tangible Net Worth: Consolidated Net Tangible
Capitalization less Consolidated Funded Debt, determined in accordance with
generally accepted accounting principles.
Core Businesses: the treatment, storage, transportation and
disposal of hazardous and non-hazardous liquid and solid industrial waste and
by-product streams; and specialized chemical manufacturing, recovery and
processing services.
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Credit Agreement: the Credit Agreement, dated as of June 30,
1993, among the Company, Disposal Systems, Inc., a Delaware corporation,
Resource Transportation Services, Inc., a Delaware corporation, GNI Chemicals
Corporation, a Delaware corporation, Disposal Systems of Corpus Christi Inc., a
Delaware corporation, and NationsBank of Texas, N.A., a national banking
association, as amended from time to time, consisting of (a) term loans in an
aggregate principal amount of not more than $10,000,000 and (b) revolving
credit loans in an aggregate principal amount of not more than $20,000,000; and
all renewals, rearrangements, amendments, modifications, restatements and
replacements thereof.
Current Debt: as applied to any Person, all Debt of such
Person for borrowed money which by its terms or by the terms of any instrument
or agreement relating thereto matures on demand or within one year from the
date of the creation thereof and is not directly or indirectly renewable or
extendible at the option of the debtor to a date more than one year from the
date of the creation thereof.
Debt: as applied to any Person (without duplication):
(a) any indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed;
(b) any indebtedness secured by any Lien in respect of
property owned by such Person, whether or not such Person has assumed
or become liable for the payment of such indebtedness;
(c) any indebtedness, including any Capital Lease Obligation,
with respect to which such Person has become directly or indirectly
liable and which represents or has been incurred to finance the
purchase price (or a portion thereof) of any property or services or
business acquired by such Person, whether by purchase, consolidation,
merger or otherwise; and
(d) any indebtedness of any other Person of the character
referred to in subdivision (a), (b) or (c) of this definition with
respect to which the Person whose Debt is being determined has become
liable by way of a Guaranty.
Environmental Laws: all Federal, state, local and foreign
laws, rules and regulations relating to protection of human health, safety, or
the environment, the
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conservation or preservation of natural resources, including flora and fauna,
the control, prohibition, or restriction of emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land or subsurface
strata), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes.
ERISA: the Employee Retirement Income Security Act of 1974,
as amended from time to time.
Exchange Act: the Securities Exchange Act of 1934, as amended
from time to time.
Event of Default: the meaning specified in section 11.
Funded Debt: as applied to any Person, (a) all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, more than
one year from, or is directly or indirectly renewable or extendible at the
option of the debtor to a date more than one year from, the date of the
creation thereof, excluding any portion thereof which matures within one year
and which would be classified on a balance sheet of such Person as current
liabilities in accordance with generally accepted accounting principles; (b)
all Guaranties incurred by such Person with respect to Funded Debt of others;
and (c) as of any date of determination, the amount of Current Debt of such
Person outstanding, if any, at the last day of a thirty day period within the
previous twelve months representing the lowest daily levels of Current Debt for
a thirty-day period during such previous twelve months.
Governmental Authority: all governmental agencies,
authorities, departments, commissions, boards, bureaus, or instrumentalities of
the United States, states and political subdivisions thereof with jurisdiction
or responsibility for the promulgation, enforcement, or oversight of
Environmental Laws.
Guaranty: as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed
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(otherwise than for collection or deposit in the ordinary course of business)
or discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
the solvency or any balance sheet or other financial condition of the obligor
of such obligation, or to make payment for any products, materials or supplies
or for any transportation or services regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof. The amount of any Guaranty shall be equal to the outstanding
principal amount of the obligation guaranteed.
Guaranty Agreement: the Guaranty Agreement, dated as of
December 31, 1996, executed and delivered by the Restricted Subsidiaries of the
Company, substantially in the form of Exhibit D.
Intangible Assets: any assets which would be treated as
intangible under generally accepted accounting principles, but excluding (a)
any such intangible assets existing as of June 30, 1996 and (b) additional
intangible assets of up to $16,700,000 in the aggregate added after June 30,
1996 through the acquisition of businesses similar in nature to the Core
Businesses.
Investment: as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of stock or other securities of
any other Person, or any direct or indirect loan, advance (other than advances
to employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
such Person to any other Person, including all Debt and accounts receivable
from such other Person which are not current assets or did not arise from sales
to such other Person in the ordinary course of business. In computing the
amount involved in any Investment at the time outstanding, (a) undistributed
earnings of, and interest accrued in respect of Debt owing by, such other
Person accrued after the date of such Investment shall not be included, (b)
there shall not be deducted from the amounts
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invested in such other Person any amounts received as earnings (in the form of
dividends, interest or otherwise) on such Investment or as loans from such
other Person, and (c) unrealized increases or decreases in value, or write-ups,
write-downs or write-offs, of Investments in such other Person shall be
disregarded.
Lien: as to any Person, any mortgage, lien, pledge, adverse
claim, charge, security interest or other encumbrance in or on, or any interest
or title of any vendor, lessor, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or Capital
Lease with respect to, any property or asset owned or held by such Person, or
the signing or filing of a financing statement which names such Person as
debtor, or the signing of any security agreement authorizing any other party as
the secured party thereunder to file any financing statement.
Make-Whole Premium: with respect to any Note, a premium equal
to the excess, if any, of the Discounted Value of the Called Principal of such
Note over the sum of (a) such Called Principal plus (b) interest accrued
thereon as of (including interest due on) the Settlement Date with respect to
such Called Principal. The Make-Whole Premium shall in no event be less than
zero. As used in this definition, the following terms have the following
meanings:
Called Principal: with respect to any Note, the principal of
such Note that is to be prepaid, subject to a Make-Whole Premium,
pursuant to section 9.1, 9.2 or 9.4 or is declared to be immediately
due and payable pursuant to section 11, as the context requires.
Discounted Value: with respect to the Called Principal of any
Note, the amount obtained by discounting such Called Principal from
its scheduled due date to the Settlement Date, in accordance with
accepted financial practice and at a discount factor (applied on a
semiannual basis) equal to the Reinvestment Yield with respect to such
Called Principal.
Reinvestment Yield: with respect to the Called Principal of
any Note, the sum of (a) 2.50% plus (b) the yield to maturity
determined by reference to the Treasury Constant Maturity Series
yields reported, for the latest day for which such yields shall have
been reported as of the Business Day next preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or,
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if such Statistical Release is not published, any publicly available
source of similar market data acceptable to the holders of more than
50% in principal amount of the Notes being prepaid or accelerated) for
actively traded U.S. Treasury securities having a constant maturity
equal to the final maturity of such Called Principal as of such
Settlement Date. Such implied yield shall be determined, if
necessary, (x) by converting U.S. Treasury ▇▇▇▇ quotations to
bond-equivalent yields in accordance with accepted financial practice
and (y) by linear interpolation between reported yields.
Settlement Date: with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid
pursuant to section 9.1, 9.2 or 9.4 or is declared to be immediately
due and payable pursuant to section 11, as the context requires.
Material Adverse Effect: a material adverse effect on (a) the
business, operations, affairs, condition (financial or otherwise), properties
or assets of the Company and its Restricted Subsidiaries taken as a whole, (b)
the ability of the Company to perform its obligations hereunder and under the
Operative Agreements or (c) the validity of the Notes or the Operative
Agreements.
Material Environmental Permits: permits, registrations,
consents and approvals reasonably required to carry on the businesses of the
Company and its Subsidiaries as now conducted or as proposed to be conducted,
including, without limitation, the hazardous/solid waste facility permits for
storage, treatment and disposal operations at Deer Park and Corpus Christi,
Texas issued by TNRCC or its predecessors as Part B RCRA permits under
delegated authority from USEPA and as provided and required by applicable state
law; Class I Underground Injection Permits issued by TNRCC pursuant to the
federal Safe Drinking Water Act's underground injection control program and in
accordance with state law; the exemption from RCRA land disposal restrictions
issued by USEPA authorizing the injection and disposal of hazardous waste in
the Company's Deer Park and Corpus Christi underground injection ▇▇▇▇▇; all air
permits covering the Company's facilities and operations now required or
hereafter required, including without limitation, any required by Title V of
the federal Clean Air Act as amended; and all general permits for stormwater
discharge as provided by rules and regulations of the USEPA pursuant to the
federal Clean Water Act, as amended.
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Moody's: ▇▇▇▇▇'▇ Investors Service.
Multiemployer Plan: any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
Officers' Certificate: a certificate executed on behalf of
the Company by the Chairman of the Board of Directors (if an officer) or its
President or one of its Vice Presidents and its Treasurer or one of its
Assistant Treasurers.
Operative Agreements: the Warrants and the Guaranty
Agreement.
Option Plans: The GNI Group, Inc. 1995 Management Equity
Incentive/Stock Option Plan and The GNI Group, Inc. 1991 Stock Option Plan.
PBGC: the Pension Benefit Guaranty Corporation or any
governmental authority succeeding to any of its functions.
Permitted Investments: all Investments of the Company and its
Restricted Subsidiaries of the types described in sections 10.4(a) through (d),
inclusive.
Person: a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
Plan: an "employee pension benefit plan" (as defined in
section 3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company or any of its Related
Persons, or an employee pension benefit plan as to which the Company or any of
its Related Persons would be treated as a contributory sponsor under section
4069 of ERISA if it were to be terminated.
Potential Event of Default: any condition or event which,
with notice or lapse of time or both, would become an Event of Default.
Private Placement Memorandum: the Private Placement
Memorandum, dated October 1996, prepared by NationsBanc Capital Markets, Inc.
for use in connection with the Company's private placement of the Notes and
Warrants.
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Qualified Public Offering: an underwritten primary public
offering of Common Stock of the Company pursuant to an effective registration
statement under the Securities Act as a result of which the Company shall have
received net proceeds of at least $10,000,000.
RCRA: the federal Resource Conservation and Recovery Act, as
amended, the state programs authorized thereby, and the regulations promulgated
thereunder.
Related Person: any trade or business, whether or not
incorporated, which, together with the Company, is under common control, as
described in section 414(b) or (c) of the Code.
Restricted Payment: (a) any declaration or payment of any
dividend or other distribution, direct or indirect, on account of any shares of
any class of stock of the Company now or hereafter outstanding, except a
dividend payable solely in shares of stock of the Company; and (b) any
redemption, retirement, purchase or other acquisition, direct or indirect, of
any shares of any class of stock of the Company now or hereafter outstanding,
or of any warrants, rights or options to acquire any such shares, except to the
extent that the consideration therefor consists of shares of stock of the
Company.
Restricted Subsidiary: any Subsidiary existing on the date of
this Agreement and designated on Schedule C as a Restricted Subsidiary; and any
Subsidiary which has been designated as a Restricted Subsidiary after the date
of this Agreement by resolution of the Board; provided that no such designation
shall be effective unless immediately after giving effect to such designation
(a) at least 70% (by number of votes) of the Voting Stock of such Subsidiary is
at the time owned by the Company or by one or more Wholly-Owned Restricted
Subsidiaries, (b) such Subsidiary shall not be liable with respect to any Debt
or hold any Investment which it could not become liable with respect to or hold
under this Agreement on the date of such designation if it were then a
Restricted Subsidiary, (c) no condition or event shall exist which constitutes
an Event of Default or Potential Event of Default, and (d) such Subsidiary
shall not have in its chain of ownership any Subsidiary which is not a
Wholly-Owned Restricted Subsidiary. No Subsidiary which has been designated as
a Restricted Subsidiary may thereafter be redesignated as a Subsidiary which is
not a Restricted Subsidiary.
Securities Act: the Securities Act of 1933, as amended from
time to time.
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Standard & Poor's: Standard & Poor's, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
Subordinated Debt: the meaning specified therefor in section
13.1.
Subordinated Funded Debt: (a) the Notes and (b) any other
Funded Debt of the Company or any Restricted Subsidiary which is created under
or evidenced by an instrument containing provisions for the subordination of
such Funded Debt to other Debt of the Company or such Restricted Subsidiary (i)
substantially the same as those set forth in section 13 or (ii) otherwise
satisfactory to the holders of more than 50% in principal amount of the Notes
at the time outstanding (subject to section 15.4).
Subsidiary: any corporation at least 50% (by number of votes)
of the Voting Stock of which is at the time owned by the Company or by one or
more Subsidiaries or by the Company and one or more Subsidiaries.
Superior Debt: the meaning specified therefor in section
13.2.
TNRCC: the Texas Natural Resource Conservation Commission.
USEPA: the United States Environmental Protection Agency.
Voting Stock: with reference to any corporation, stock of any
class or classes (or equivalent interests), if the holders of the stock of such
class or classes (or equivalent interests) are ordinarily, in the absence of
contingencies, entitled to vote for the election of the directors (or Persons
performing similar functions) of such corporation, even though the right so to
vote has been suspended by the happening of such a contingency.
Warrants: the meaning specified in section 1.
Wholly-Owned: as applied to any Restricted Subsidiary, a
Restricted Subsidiary all the outstanding shares (other than directors'
qualifying shares, if required by law) of every class of stock of which are at
the time owned by the Company or by one or more Wholly-Owned Restricted
Subsidiaries or by the Company and one or more Wholly- Owned Restricted
Subsidiaries.
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15. Registration, Transfer and Substitution of Notes; Action
by Noteholders.
15.1. Note Register; Ownership of Notes. The Company will
keep at its principal office a register in which the Company will provide for
the registration of Notes and the registration of transfers of Notes. The
Company may treat the Person in whose name any Note is registered on such
register as the owner thereof for the purpose of receiving payment of the
principal of and the premium, if any, and interest on such Note and for all
other purposes, whether or not such Note shall be overdue, and the Company
shall not be affected by any notice to the contrary. All references in this
Agreement to a "holder" of any Note shall mean the Person in whose name such
Note is at the time registered on such register.
15.2. Transfer and Exchange of Notes. Upon surrender of any
Note for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will execute and deliver in
exchange therefor a new Note or Notes in denominations of at least $1,000,000
and integral multiples of $100,000 in excess thereof (unless the unpaid
principal amount of the surrendered Note is less than $1,000,000 or is not
evenly divisible by $100,000), as requested by the holder or transferee, which
aggregate the unpaid principal amount of such surrendered Note, registered as
such holder or transferee may request, dated so that there will be no loss of
interest on such surrendered Note and otherwise of like tenor.
15.3. Replacement of Notes. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Note and, in the case of any such loss, theft or destruction
of any Note, upon delivery of an indemnity bond in such reasonable amount as
the Company may determine (or, in the case of any Note held by you or another
institutional holder or your or its nominee, of an indemnity agreement from you
or such other holder) or, in the case of any such mutilation, upon the
surrender of such Note for cancellation to the Company at its principal office,
the Company at its expense will execute and deliver, in lieu thereof, a new
Note in the unpaid principal amount of such lost, stolen, destroyed or
mutilated Note, dated so that there will be no loss of interest on such Note
and otherwise of like tenor. Any Note in lieu of which any such new Note has
been so executed and delivered by the Company shall not be deemed to be an
outstanding Note for any purpose of this Agreement.
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15.4. Notes held by Company, etc., Deemed Not Outstanding.
For the purposes of determining whether the holders of the Notes of the
requisite principal amount at the time outstanding have taken any action
authorized by this Agreement with respect to the giving of consents or
approvals or with respect to acceleration upon an Event of Default, any Notes
directly or indirectly owned by the Company or any of its Subsidiaries or
Affiliates shall be disregarded and deemed not to be outstanding.
16. Payments on Notes. 16.1. Place of Payment. Payments of
principal, premium, if any, and interest becoming due and payable on the Notes
shall be made at the principal office of The Chase Manhattan Bank, N.A., in the
Borough of Manhattan, the City and State of New York, unless the Company, by
written notice to each holder of any Notes, shall designate the principal
office of another bank or trust company in such Borough as such place of
payment, in which case the principal office of such other bank or trust company
shall thereafter be such place of payment.
16.2. Home Office Payment. So long as you or your nominee
shall be the holder of any Note, and notwithstanding anything contained in
section 16.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, premium, if any, and interest by the
method and at the address specified for such purpose in Schedule A, or by such
other method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
any Note paid or prepaid in full shall be surrendered to the Company at its
principal office or at the place of payment maintained by the Company pursuant
to section 16.1 for cancellation. Prior to any sale or other disposition of
any Note held by you or your nominee you will surrender such Note to the
Company in exchange for a new Note or Notes pursuant to section 15.2. The
Company will afford the benefits of this section 16.2 to any institutional
investor which is the direct or indirect transferee of any Note purchased by
you under this Agreement and which has made the same agreement relating to such
Note as you have made in this section 16.2.
17. Expenses, etc. Whether or not the transactions
contemplated by this Agreement shall be consummated, the Company will pay all
expenses in connection with such transactions and in connection with any
amendments or waivers (whether or not the same become effective) under or in
respect of this Agreement or the Notes, including, without limitation: (a) the
cost and expenses of preparing
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and reproducing this Agreement and the Notes, of furnishing all opinions by
counsel for the Company (including any opinions requested by your special
counsel as to any legal matter arising hereunder) and all certificates on
behalf of the Company, and of the Company's performance of and compliance with
all agreements and conditions contained herein on its part to be performed or
complied with; (b) the cost of delivering to your principal office, insured to
your satisfaction, the Notes sold to you hereunder and any Notes delivered to
you upon any substitution of Notes pursuant to section 15 and of your
delivering any Notes, insured to your satisfaction, upon any such substitution;
(c) the reasonable fees, expenses and disbursements of one special counsel for
the holders of the Notes (and, in addition, any local counsel determined by the
holders of the Notes to be necessary in the circumstances) in connection with
such transactions and any such amendments or waivers; and (d) the reasonable
out-of-pocket expenses incurred by you in connection with such transactions and
any such amendments or waivers. The Company also will pay, and will save you
and each holder of any Notes harmless from, all claims in respect of the fees,
if any, of brokers and finders and any and all liabilities with respect to any
taxes (including interest and penalties) which may be payable in respect of the
execution and delivery of this Agreement, the issue of the Notes and any
amendment or waiver under or in respect of this Agreement or the Notes. The
obligation of the Company under this section 17 shall survive any disposition
or payment of the Notes and the termination of this Agreement.
18. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement or made in writing
by or on behalf of the Company in connection with the transactions contemplated
by this Agreement shall survive the execution and delivery of this Agreement,
any investigation at any time made by you or on your behalf, the purchase of
the Notes by you under this Agreement and any disposition or payment of the
Notes. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement shall be deemed
representations and warranties of the Company under this Agreement.
19. Amendments and Waivers. Any term of this Agreement or of
the Notes may be amended and the observance of any term of this Agreement or of
the Notes may be waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Company and the holders of more than 50% in
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principal amount of the Notes at the time outstanding (subject to section
15.4), provided that, without the prior written consent of the holders of all
the Notes at the time outstanding (subject to section 15.4), no such amendment
or waiver shall (a) change the maturity or the principal amount of, or reduce
the rate or change the time of payment of interest on, or change the amount or
the time of payment of any principal or premium payable on any prepayment of,
any Note, (b) reduce the aforesaid percentages of the principal amount of the
Notes the holders of which are required to consent to any such amendment or
waiver, (c) change the percentage of the principal amount of the Notes the
holders of which may declare the Notes to be due and payable as provided in
section 11, and (d) decrease the percentage of the principal amount of the
Notes the holders of which may rescind and annul any such declaration as
provided in section 11. Any amendment or waiver effected in accordance with
this section 19 shall be binding upon each holder of any Note at the time
outstanding, each future holder of any Note and the Company. No amendment of
section 13 will be effective without the consent of the majority in interest of
the Lenders under the Credit Agreement and the majority in interest of the
holders of any other Superior Debt.
20. Notices, etc. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement shall be in
writing and shall be delivered by hand or courier service, or mailed by
registered or certified mail, return receipt requested, addressed, (a) if to
you, at the address set forth in Schedule A or at such other address as you
shall have furnished to the Company in writing, except as otherwise provided in
section 16.2 with respect to payments on Notes held by you or your nominee, or
(b) if to any other holder of any Note, at such address as such other holder
shall have furnished to the Company in writing, or, until any such other holder
so furnishes to the Company an address, then to and at the address of the last
holder of such Note who has furnished an address to the Company, or (c) if to
the Company, at its address set forth at the beginning of this Agreement, to
the attention of Chief Financial Officer, or at such other address, or to the
attention of such other officer, as the Company shall have furnished to you and
each such other holder in writing. Any notice so addressed and delivered by
hand or courier shall be deemed to be given when received, and any notice so
addressed and mailed by registered or certified mail shall be deemed to be
given three business days after being so mailed.
21. Miscellaneous. This Agreement shall be binding upon and
inure to the benefit of and be enforceable
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by the respective successors and assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of and be
enforceable by any holder or holders at the time of the Notes or any part
thereof. Except as stated in section 18, this Agreement embodies the entire
agreement and understanding between you and the Company and supersedes all
prior agreements and understandings relating to the subject matter hereof.
This Agreement and the Notes shall be construed and enforced in accordance with
and governed by the law of the State of New York. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterparts of this letter and return
one of the same to the Company, whereupon this letter shall become a binding
agreement between you and the Company.
Very truly yours,
THE GNI GROUP, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Title: Chief Financial Officer
The foregoing Agreement is
hereby agreed to as of the
date thereof.
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By: U. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: U. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Investment Officer
▇▇▇▇ ▇▇▇▇▇▇▇ MUTUAL LIFE INSURANCE COMPANY
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Second Vice President
SIGNATURE 1A (CAYMAN), LTD.
By: ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company,
Portfolio Advisor
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Second Vice President