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TELEX COMMUNICATIONS, INC.
$20,000,000
18% Adjusted Interest PIK Senior Secured Notes
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NOTE PURCHASE AGREEMENT
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Dated as of April 11, 2001
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TABLE OF CONTENTS
Page
ARTICLE 1. THE SENIOR SECURED NOTES..............................................................................1
1.1 Authorization of Senior Secured Notes...............................................................1
1.2 Interest on the Senior Secured Notes................................................................1
1.3 Priority............................................................................................2
1.4 Commitment Fees.....................................................................................2
ARTICLE 2. SALE AND PURCHASE OF SENIOR SECURED NOTES.............................................................3
ARTICLE 3. CLOSING...............................................................................................3
ARTICLE 4. CONDITIONS TO CLOSING.................................................................................3
4.1 Representations and Warranties; Material Adverse Change.............................................3
4.2 Performance; No Default.............................................................................4
4.3 Senior Secured Notes................................................................................4
4.4 Documents Required..................................................................................4
4.5 Opinions of Counsel.................................................................................7
4.6 Purchase Permitted by Applicable Law, etc...........................................................7
4.7 No Litigation or Other Proceedings..................................................................8
4.8 No Material Adverse Change..........................................................................8
4.9 Fees and Expenses...................................................................................8
4.10 Proceedings and Documents..........................................................................8
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................8
5.1 Corporate Existence; Qualification; Power; Licenses and Permits.....................................9
5.2 Corporate and Governmental Authorization; Contravention.............................................9
5.3 Binding Effect......................................................................................9
5.4 Financial Information..............................................................................10
5.5 Litigation and Judgments...........................................................................10
5.6 Compliance with ERISA..............................................................................10
5.7 Taxes..............................................................................................11
5.8 Capitalization; Subsidiaries.......................................................................12
5.9 Not an Investment Company..........................................................................12
5.10 No Conflicting Requirements.......................................................................13
5.11 Indebtedness......................................................................................13
5.12 Title to Properties and Assets; Intellectual Property.............................................13
5.13 Compliance with Law...............................................................................14
5.14 Compliance with Environmental Laws................................................................14
5.15 Security Interests and Liens......................................................................15
5.16 Labor Relations...................................................................................15
5.17 Solvency; Material Adverse Effect.................................................................16
5.18 Margin Security...................................................................................16
5.19 Affiliate Transactions............................................................................16
(i)
5.20 Accuracy and Completeness of Information..........................................................17
5.21 Status of Accounts................................................................................17
5.22 Use of Proceeds...................................................................................17
5.23 No Default........................................................................................17
5.24 Collateral........................................................................................17
5.25 Survival of Representations.......................................................................18
ARTICLE 6. REPRESENTATIONS OF THE PURCHASER.....................................................................19
ARTICLE 7. AFFIRMATIVE COVENANTS................................................................................19
7.1 Financial Statements...............................................................................19
7.2 Certificates; Other Information....................................................................20
7.3 Payment of Obligations.............................................................................21
7.4 Conduct of Business and Maintenance of Existence...................................................21
7.5 Maintenance of Property; Insurance.................................................................21
7.6 Inspection-of Property; Books and Records; Discussions.............................................21
7.7 Notices............................................................................................22
7.8 Environmental Laws.................................................................................24
7.9 After-Acquired Real Property and Fixtures..........................................................24
7.10 Pledged Stock and Pledged Notes...................................................................25
7.11 Conditions Subsequent to Closing..................................................................26
ARTICLE 8. NEGATIVE COVENANTS...................................................................................27
8.1 Minimum Consolidated EBITDA........................................................................27
8.2 Limitation on Indebtedness.........................................................................28
8.3 Limitation on Liens................................................................................29
8.4 Limitation on Guarantee Obligations................................................................31
8.5 Limitation on Fundamental Changes..................................................................32
8.6 Limitation on Sale of Assets.......................................................................32
8.7 Limitation on Restricted Payments..................................................................33
8.8 Limitation on Capital Expenditures.................................................................34
8.9 Limitation on Investments, Loans and Advances......................................................34
8.10 Limitation on Transactions with Affiliates........................................................35
8.11 Limitation on Sale and Leaseback Transactions.....................................................37
8.12 Limitation on Optional Payments and Modifications of Debt Instruments and Other Documents.........37
8.13 Limitations on Changes in Fiscal Year.............................................................39
8.14 Limitation on Negative Pledge Clauses.............................................................39
8.15 Limitation on Lines of Business; Creation of Subsidiaries.........................................39
8.16 Limitations on Currency and Commodity Hedging Transactions........................................40
8.17 Holding Company Status of Telex Communications International, Ltd.................................40
8.18 Payment of Special Bonuses to Management..........................................................40
ARTICLE 9. EVENTS OF DEFAULT....................................................................................40
9.1 Events of Default..................................................................................40
9.2 Acceleration.......................................................................................43
9.3 Remedies on Default................................................................................43
(ii)
ARTICLE 10. REGISTRATION; EXCHANGE; SUBSTITUTION OF SENIOR SECURED NOTES........................................44
10.1 Registration of Senior Secured Notes..............................................................44
10.2 Transfer and Exchange of Senior Secured Notes.....................................................44
10.3 Replacement of Senior Secured Notes...............................................................45
ARTICLE 11. PREPAYMENT; PAYMENT OF SENIOR SECURED NOTES.........................................................46
11.1 Voluntary Prepayments.............................................................................46
11.2 Allocation of Partial Prepayments.................................................................46
11.3 Payment...........................................................................................46
11.4 Maturity; Surrender, etc..........................................................................46
11.5 Purchase of Senior Secured Notes..................................................................46
ARTICLE 12. EXPENSES AND INDEMNIFICATION........................................................................47
12.1 Transaction Expenses..............................................................................47
12.2 Indemnification...................................................................................47
12.3 Survival..........................................................................................49
ARTICLE 13. ENTIRE AGREEMENT....................................................................................49
ARTICLE 14. AMENDMENT AND WAIVER................................................................................49
14.1 Requirements......................................................................................49
14.2 Solicitation of Holders of Senior Secured Notes...................................................50
14.3 Binding Effect, etc...............................................................................50
14.4 Senior Secured Notes Held by Company, Etc.........................................................50
ARTICLE 15. NOTICES.............................................................................................50
ARTICLE 16. REPRODUCTION OF DOCUMENTS...........................................................................51
ARTICLE 17. CONFIDENTIAL INFORMATION............................................................................51
ARTICLE 18. SUBSTITUTION OF PURCHASER...........................................................................52
ARTICLE 19. THE CO-AGENTS.......................................................................................53
19.1 Authorization and Action..........................................................................53
19.2 Co-Agents' Reliance...............................................................................53
19.3 TCII or GoldenTree and Affiliates.................................................................54
19.4 Purchaser Credit Decision.........................................................................54
19.5 Indemnification...................................................................................54
19.6 Successor Co-Agent................................................................................55
ARTICLE 20. MISCELLANEOUS.......................................................................................55
20.1 Successors and Assigns............................................................................55
20.2 Payments Due on Non-Business Days.................................................................55
20.3 Satisfaction Requirement..........................................................................55
20.4 Severability......................................................................................56
20.5 Construction......................................................................................56
(iii)
20.6 Counterparts......................................................................................56
20.7 Governing Law.....................................................................................56
20.8 Consent to Jurisdiction...........................................................................56
20.9 Intercreditor Agreement...........................................................................56
20.10 Waiver of Jury Trial.............................................................................58
(iv)
SCHEDULES
Schedule I - Purchasers
Schedule II - Defined Terms
Schedule 4.5 - Jurisdictions of Local Counsel Opinions
Schedule 5.5 - Litigation and Judgments
Schedule 5.6 - ERISA Matters
Schedule 5.7 - Tax Matters
Schedule 5.8 - Subsidiaries; Capitalization
Schedule 5.11 - Indebtedness
Schedule 5.12(a)- Property; Exceptions to Good Title
Schedule 5.12(b)- Intellectual Property
Schedule 5.14 - Environmental Matters
Schedule 5.15 - Liens
Schedule 5.17(b)- Material Adverse Effect
Schedule 5.19 - Existing Affiliate Transactions
Schedule 5.20(b)- Exchange Act Reports Matters
Schedule 5.24 - UCC Filing Jurisdictions and Office
Schedule 8.2(f) - Existing Indebtedness
Schedule 8.3(j) - Existing Liens
Schedule 8.4(a) - Existing Guarantee Obligations
Schedule 8.9(c) - Existing Investments
Schedule 8.10 - Permitted Affiliate Transactions
EXHIBITS
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Exhibit A - Form of Senior Secured Note
Exhibit B - Form of Guarantee and Collateral Agreement
Exhibit C - Form of Patent and Trademark Security Agreement
Exhibit D-1 - Form of Opinion of Counsel to the Company
Exhibit D-2 - Form of Opinion of General Counsel to the Company
Exhibit E - Form of Intercreditor Agreement
(v)
Telex Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
18% Adjusted Interest PIK Senior Secured Notes
As of April 11, 2001
TO EACH OF THE PURCHASERS LISTED
ON THE ATTACHED SCHEDULE I:
Ladies and Gentlemen:
Telex Communications, Inc., a Delaware corporation (the "Company"),
agrees with TCI Investments LLC ("TCII") and GoldenTree High Yield Opportunities
I, L.P. ("GoldenTree"), each as Co-Agent, and the purchasers parties hereto and
listed on Schedule I hereto (collectively, together with any transferee or
assign thereof pursuant to Section 10.2 hereof, the "Purchasers"), as follows.
ARTICLE 1. THE SENIOR SECURED NOTES.
1.1 Authorization of Senior Secured Notes. The Company will authorize the
issuance and sale of $20,000,000 aggregate principal amount (as such amount may
from time to time be adjusted pursuant to Sections 1.2 and 11.1 hereof, the
"Principal Amount") of its 18% Adjusted Interest PIK Senior Secured Notes due
April 11, 2004 (such date, the "Maturity Date"; such Senior Secured Notes and
any promissory note issued in substitution therefor pursuant to Article 10
hereof or as PIK Interest pursuant to Section 1.3 below, collectively, the
"Senior Secured Notes"). The Principal Amount shall be payable on the Maturity
Date in U.S. dollars in immediately available funds. The Senior Secured Notes
shall be substantially in the form attached hereto as Exhibit A hereto, with
such changes therefrom, if any, as may be approved by the Required Purchasers
and the Company. Certain capitalized terms used in this Agreement are defined in
Schedule II hereto; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified herein, to a Schedule or an Exhibit attached to this
Agreement.
1.2 Interest on the Senior Secured Notes.
(a) The Company shall pay interest as set forth in this Section 1.2 on
the unpaid principal amount of the Senior Secured Notes from their respective
date of issuance until such Senior Secured Notes are paid in full. The Senior
Secured Notes shall accrue interest at the rate of 18% per annum from the
Closing Date through June 30, 2001 (the "Initial Interest Rate"). Beginning on
July 1, 2001 and on the first day of each calendar quarter thereafter (i.e.,
October 1, January 1, April 1 and July 1), the then applicable interest rate
shall increase by an additional 0.75% per annum (each such adjusted interest
rate, the "Adjusted Interest Rate") and the Senior Secured Notes shall
thereafter accrue interest at the applicable Adjusted Interest Rate for so long
as the Senior Secured Notes remain outstanding; provided that the Adjusted
Interest
Rate applicable (excluding any default interest or other amounts payable under
this Section 1 or otherwise hereunder) to the Senior Secured Notes shall not
exceed 25% per annum; provided further that nothing in this Section 1.2(a) shall
preclude the accrual and payment of interest at the Default Rate, in addition to
the then applicable Adjusted Interest Rate pursuant to Section 1.2(c) below.
(b) Interest shall be due in U.S. dollars quarterly in arrears on June
30, September 30, December 31 and March 31 of each year on the first such date
occurring after the date of this Agreement, on the Maturity Date and, if the
Maturity Date shall not be the Termination Date, on the Termination Date (each
such date, an "Interest Due Date"), shall be compounded quarterly and shall be
payable as set forth in this Section 1.2(b). On each Interest Due Date other
than the Maturity Date and, if applicable, the Termination Date payment of the
interest due on such Interest Due Date shall be paid in the following manner:
(i) with the approval of the applicable Purchaser, which approval shall be in
such Purchaser's sole discretion, such accrued interest shall be capitalized on
the applicable Senior Secured Note, or (ii) such accrued interest shall be paid
in the form of a Senior Secured Note (interest paid in such manner, the "PIK
Interest") in the principal amount of such accrued interest and issued on the
applicable Interest Due Date. Interest due on the Maturity Date and, if
applicable, the Termination Date shall be payable in U.S. dollars in immediately
available funds. Interest on the Senior Secured Notes shall be computed on the
basis of a 360-day year for the actual number of days (including the first day
and the last day) occurring in the period for which such interest is payable.
(c) Notwithstanding the foregoing, so long as any Event of Default
shall have occurred and be continuing interest shall accrue on the unpaid
principal amount of the Senior Secured Notes at the Initial Interest Rate or the
Adjusted Interest Rate, as applicable, plus 3.00% per annum (the "Default
Rate"), shall be due in arrears on a quarterly basis on each Interest Due Date
during the continuation of such Event of Default, and shall be payable in
accordance with Section 1.2(b) above.
1.3 Priority.
(a) Senior to the Subordinated Notes. The Obligations of the Company
under the Senior Secured Notes and the other Note Documents constitute, and
shall be deemed to constitute for all purposes thereunder, "Senior Indebtedness"
and "Designated Senior Indebtedness" under the 10.5% Subordinated Note Documents
and the 11% Subordinated Note Documents. The Obligations of the Company under
the Note Documents are, and shall be deemed to be, senior to any and all
Obligations of the Company under the Subordinated Debt Documents and any and all
Obligations of the Company ranking pari passu with, or junior to, such
Obligations.
(b) Subordinated to the Senior Debt Obligations. The Obligations of the
Company under the Senior Secured Notes and the other Note Documents are
subordinated to the Company's Senior Debt Obligations on the terms and
conditions set forth in the Intercreditor Agreement.
1.4 Commitment Fees. The Company shall pay to each Purchaser on the Closing
Date, such Purchaser's pro rata share of 6.00% of the Principal Amount of the
Senior Secured
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Notes (the "Commitment Fee"). The Commitment Fee shall be payable and fully
earned as of the Closing Date.
ARTICLE 2. SALE AND PURCHASE OF SENIOR SECURED NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to each Purchaser, and each Purchaser will purchase from the
Company, at the Closing provided for in Section 3 hereof, Senior Secured Notes
in the principal amount specified opposite such Purchaser's name on Schedule I
hereto at the purchase price of 100% of such principal amount (such issuance,
sale and purchase, the "Note Purchase"; and, together with the other
transactions contemplated hereunder and under the other Note Documents,
including, without limitation, the modification of the Senior Credit Documents
(including Amendment No. 4 to the Senior Credit Agreement) and the Subordinated
Note Documents and the granting of the security interests in the Collateral, in
each case as contemplated hereunder and thereunder, the "Note Purchase
Transactions"). Each Purchaser's obligation hereunder are several and not joint
obligations and no Purchaser shall have any obligations under this Agreement or
any other Note Document, or any liability to any Person, for the performance or
nonperformance by any other Purchaser hereunder or thereunder.
ARTICLE 3. CLOSING.
The Note Purchase shall occur at the offices of Dechert, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., New York time, at a closing (the
"Closing") on April 11, 2001 or on such other Business Day as may be agreed upon
by the Company and the Purchasers (the "Closing Date"). At the Closing, the
Company will deliver to each Purchaser a Senior Secured Note in the principal
amount purchased by such Purchaser (or such greater number of Senior Secured
Notes each in a denomination of at least $200,000 as such Purchaser may request)
dated the Closing Date and registered in such Purchaser's name (or in the name
of such Purchaser's nominee), against delivery to the Company or its order of
immediately available funds in U.S. dollars in the amount of the purchase price
thereof by wire transfer for the account of the Company to such account or
accounts in the United States as the Company shall designate to the Purchasers
at least two Business Days prior to the Closing. If, at the Closing, the Company
shall fail to tender such Senior Secured Notes to any Purchaser as provided in
this Section 3, or any of the conditions specified in Section 4 below shall not
have been fulfilled to the satisfaction of the Required Purchasers, each
Purchaser shall, at such Purchaser's election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights such
Purchaser may have by reason of such failure or such nonfulfillment.
ARTICLE 4. CONDITIONS TO CLOSING.
Each Purchaser's obligations to purchase Senior Secured Notes hereunder
is subject to the performance and full satisfaction, prior to or on the Closing
Date, of the conditions precedent set forth in this Article 4.
4.1 Representations and Warranties; Material Adverse Change. The
representations and warranties of the Company contained in this Agreement and in
each other Note Document shall be true and correct when made and on the Closing
Date, before and immediately after
3
giving pro forma effect to the Note Purchase Transactions as if such
representations had been made on and as of the Closing Date.
4.2 Performance; No Default. The Company shall have performed and complied
with all agreements and conditions in this Agreement and each other Note
Document required to be performed or complied with thereby prior to or at the
Closing and, before and immediately after giving pro forma effect to the Note
Purchase Transactions, and each of them, no Default or Event of Default shall
have occurred and be continuing.
4.3 Senior Secured Notes. The Company shall have delivered the Senior
Secured Notes, in each case, duly executed by the Company, to the Purchasers.
4.4 Documents Required. Each Purchaser shall have received the following
documents, each dated as of the Closing Date and, unless otherwise specified
herein, in the form of the respective Exhibit hereto, if any, or otherwise in
form and substance satisfactory to the Required Purchasers.
(a) Amendment to the Senior Credit Facility. Amendment No. 4 to the
Senior Credit Agreement shall be in full force and effect and the Purchasers
shall have received true and correct copies of such Amendment No. 4, certified
by a Responsible Officer of the Company.
(b) Supplemental Indentures. Each of (i) the Third Supplemental
Indenture to the 10.5% Subordinated Notes Indenture and (ii) the First
Supplemental Indenture to the 11% Subordinated Notes Indenture shall be in full
force and effect. The Company shall have delivered a true and correct copy of
each such supplemental indenture, certified by a Responsible Officer of the
Company.
(c) Governmental Approvals. All governmental and third party approvals
necessary or reasonably advisable in connection with the financing contemplated
hereby and the continuing operations of the Company and its subsidiaries shall
have been obtained and be in full force and effect, and all applicable waiting
periods under applicable Law shall have expired without any action being taken
or threatened by an competent authority which would restrain, prevent or
otherwise impose material adverse conditions on the Note Purchase Transaction.
(d) Financial Statements. The draft, dated March 27, 2001, of the
Company's annual report on SEC Form 10-K for the fiscal year ended December 31,
2000 (the "Draft Form 10-K").
(e) [Intentionally Omitted.]
(f) Security Documents. A guaranty and collateral agreement, in
substantially the form of Exhibit B hereto (together with each other guarantee
and collateral agreement, or other security agreement, pledge agreement,
assignment agreement (or other similar document) delivered pursuant to this
Agreement, in each case as amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof and hereof, the "Guarantee and
Collateral Agreement"; and, together with the Mortgages and the Patent and
Trademark Security Agreement and the other documents, instruments and filings to
be delivered or made thereunder or under this Section 4.4(f), the "Security
Documents"), duly executed by each of
4
the Company and its Domestic Subsidiaries, together with (unless otherwise
delivered to the Lead Purchaser, in form and substance reasonably satisfactory
to the Required Purchasers, prior to the Closing Date):
(i) a patent and trademark security agreement substantially in the
form of Exhibit C hereto (together with each other patent and trademark
security agreement (or similar document) delivered pursuant to this
Agreement, in each case as the same may be amended, supplemented or
otherwise modified from time to time, the "Patent and Trademark Security
Agreement") duly executed and delivered by the Company and each of its
Subsidiaries parties to the Guarantee and Collateral Agreement;
(ii) each of the Mortgages, duly executed and delivered by a duly
authorized officer of the Company and any of its Subsidiaries parties to the
Guarantee and Collateral Agreement;
(iii) proper financing statements (Form UCC-1 or a comparable
form) or amendments to existing financing statements (Form UCC-3 or a
comparable form) or the equivalent thereof under the uniform Commercial Code
(or any similar Requirements of Law) of all jurisdictions that may be
necessary or that the Required Purchasers may reasonably deem desirable in
order to perfect and protect the liens and security interests created or
purported to be created under the Security Agreement, covering the
Collateral described therein, in each case completed in a manner
satisfactory to the Purchasers and duly executed by the applicable grantor
party thereto;
(iv) evidence of the insurance required by the terms of the
Guarantee and Collateral Agreement, Mortgages and the Patent and Trademark
Security Agreement;
(v) copies of the assigned agreements, if any, assigned pursuant
to the Guarantee and Collateral Agreement;
(vi) evidence that all of the other actions (including, without
limitation, the completion of all of the other recordings and filings of or
with respect to the Security Documents) that may be necessary or that the
Required Purchasers may reasonably deem desirable in order to perfect and
protect the liens and security interests created under the Security
Documents have been taken or will be taken in accordance with the terms of
the Note Documents.
(g) Corporate Approvals. Certified copies of (i) the resolutions of the
Board of Directors of the Company approving each Note Document to which it is or
is to be a party, the Note Purchase Transactions and the other transactions
contemplated hereby and thereby and (ii) all documents evidencing other
necessary corporate action with respect to each such Note Document and each such
other document and the Note Purchase Transactions and the other transactions
contemplated hereby and thereby.
(h) Officers' Certificates. A certificate from the Company and each
other Grantor (as defined in the Guarantee and Collateral Agreement) signed on
behalf of such Person by its president or a vice president and the chief
financial officer (the statements made in which certificate shall be true on and
as of the Closing Date), certifying the following: (i) true and
5
complete copies of the charter and by-laws of such Person as in effect on the
date the resolutions specified in clause (g) were adopted and the absence of any
amendments to such charter or by-laws since such dates; (ii) the due
incorporation and good standing of such Person in its state of incorporation and
the absence of any proceeding for the dissolution or liquidation of such Person;
(iii) the accuracy of the representations and warranties made by the Company in
this Agreement and each other Note Document before and immediately after giving
pro forma effect to the Note Purchase Transactions; (iv) the absence of any
event occurring and continuing, or resulting from the Note Purchase
Transactions, that constitutes a Default or an Event of Default; (v) the absence
of any event occurring and continuing, or resulting from Note Purchase
Transactions that constitutes a default or event of default, or with the passage
of time or the giving of notice or both would constitute a default or event of
default, under the Senior Credit Documents or under any other Indebtedness of
such Person; (vi) in the case of the Company, the absence of any event occurring
and continuing, or resulting from the Note Purchase Transactions that
constitutes a default or event of default, or with the giving of notice or
passage of time would constitute a default or event of default, under the
Subordinated Notes; and (vii) the satisfaction of all conditions precedent to be
performed or otherwise satisfied by the Company prior to the Note Purchase on
and as of the Closing Date including, without limitation, a certification that
the conditions precedent set forth in Section 4.2 hereof has been satisfied.
(i) Incumbency Certificates. A certificate of the secretary or an
assistant secretary of the Company and each other Grantor (as defined in the
Guarantee and Collateral Agreement) certifying the names and true signatures of
the officers of the Company or such Grantor, as the case may be, authorized to
sign each Note Document on behalf of such Person to which such Person is or is
to be a party, and the other documents to be delivered hereunder and thereunder.
(j) Solvency Certificate. A certificate from the chief financial
officer of the Company attesting to the Solvency of the Company immediately
after giving pro forma effect to the Note Purchase Transactions.
(k) Lien Searches. The Purchasers shall have received the results of a
recent search by a Person reasonably satisfactory to the Purchasers, of the
Uniform Commercial Code, judgment and tax lien filings which may have been filed
with respect to personal property of the Company and its Subsidiaries in any of
the jurisdictions set forth in Part I of Schedule 5.15 hereto and the results of
such search shall not reveal any liens other than liens permitted by Section 8.3
hereof.
(l) Title Insurance Policy. Each Co-Agent shall have received in
respect of each of the Mortgaged Properties a mortgagee's title policy (or
policies) or marked up unconditional binder for such insurance dated the Closing
Date. Each such policy shall (i) be in an amount reasonably satisfactory to the
Required Purchasers; (ii) insure that the Mortgage insured thereby creates a
valid Lien second in priority only to Liens created under the Senior Credit
Documents on the Mortgaged Property encumbered thereby free and clear of all
defects and encumbrances, except those permitted by Section 8.3 hereof and such
as the Required Purchasers may approve from time to time; (iii) name the
Co-Agents, as agents for the Purchasers as the insureds thereunder; (iv) be in
the form of an ALTA Loan Policy; (v) contain such endorsements and affirmative
coverage as the Required Purchasers may reasonably request, except that (A) in
the case of zoning endorsements, if any, no additional premiums will be
6
required in excess of $2,000 per property and (B) those exceptions taken on
account of the delayed delivery of surveys to the Title Insurance Company, which
surveys shall be delivered pursuant to Section 7.11(b) hereof and which
exceptions shall be removed from the applicable policies pursuant to Section
7.11(c) hereof, (vi) be issued by title companies reasonably satisfactory to the
Required Purchasers (including any such title companies acting as reinsurers, at
the option of the Required Purchasers) and (vii) be issued at ordinary rates
(other than with respect to affirmative insurance). The Co-Agents shall have
received evidence reasonably satisfactory to it that all premiums in respect of
each such policy, and all charges for mortgage recording tax, if any, have been
paid. The Co-Agents shall have also received a copy of all recorded documents
referred to, or listed as exceptions to title in, the title policy or policies
referred to in this subsection and a copy, certified by such parties as the
Required Purchasers may deem reasonably appropriate, of all other documents
affecting the property covered by each Mortgage as shall have been reasonably
requested by the Required Purchasers.
(m) Other Documentation. Such other documents, agreements or
information as the Required Purchasers may reasonably request.
4.5 Opinions of Counsel. The Purchasers shall have received: (a) a favorable
opinion from Dechert, counsel to the Company, dated the Closing Date,
substantially in the form of Exhibit D-1 hereto opining that, among other
things, (i) the Senior Secured Notes are permitted under the Subordinated Note
Indentures and constitute "Senior Indebtedness" and "Designated Senior
Indebtedness" thereunder, and (ii) the Note Purchase Transactions and the Senior
Secured Notes are permitted under the Senior Credit Documents; (b) a favorable
opinion from ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., General Counsel of the Company ("General
Counsel") substantially in the form of Exhibit D-2 hereto; (c) a letter from
each of Dechert, counsel for the Company, and General Counsel addressed to the
Lead Purchaser and each other Purchasers and otherwise in form and substance
reasonably satisfactory to the Required Purchasers, stating that the Purchasers
may rely upon the favorable opinion of such counsel being delivered in
connection with (i) Amendment No. 4 to the Senior Credit Agreement, (ii) the
Third Supplemental Indenture to the 10.5% Subordinated Notes and (iii) the First
Supplemental Indenture to the 11% Subordinated Notes, in each case together with
a copy of such opinion; and (d) favorable legal opinions of special local
counsel in the jurisdictions set forth in Schedule 4.5 hereto with respect to
collateral security matters, each in form and substance reasonably satisfactory
to the Required Purchasers.
4.6 Purchase Permitted by Applicable Law, etc. On the Closing Date, each
Purchaser's purchase of and payment for the Senior Secured Notes to be purchased
thereby at the Closing (a) shall be permitted by the Law of each jurisdiction to
which such Purchaser is subject, without recourse to provisions permitting
limited investments by insurance companies without restriction as to the
character of the particular investment, (b) shall not violate any applicable Law
(including, without limitation, Regulation T, U or X of the Board of Governors
of the Federal Reserve System) and (c) shall not subject such Purchaser to any
tax, penalty or liability under or pursuant to any applicable Law, which Law was
not in effect on the date hereof. If requested by any Purchaser, each Purchaser
shall have received an Officer's Certificate certifying as to such matters of
fact as such requesting Purchaser may reasonably specify to enable such
requesting Purchaser to determine whether such purchase and payment are so
permitted.
7
4.7 No Litigation or Other Proceedings. There shall exist no action, suit,
investigation, litigation or proceeding pending or, to the knowledge of the
Company, threatened before any Governmental Authority (i) challenging the
consummation of the Note Purchase and other Note Purchase Transactions
contemplated hereby or by the Note Documents or (ii) seeking to obtain, or
having resulted in the entry of, any Governmental Order that (A) would restrain,
prohibit or impose materially adverse conditions on any Purchaser's ability to
purchase the Senior Secured Notes to be purchased by such Purchaser on the
Closing Date, (B) could be reasonably expected to have a Material Adverse
Effect, or (C) purports to affect the legality, validity or enforceability of
any material provision of this Agreement or any other Note Document.
4.8 No Material Adverse Change. There shall not have occurred a Material
Adverse Change or any event that is reasonably likely to result in a Material
Adverse Change (in each case, in the sole opinion of the Required Purchasers)
since December 31, 2000 and immediately prior to giving effect to the Note
Purchase Transactions. There shall not have occurred a Material Adverse Change
or any event that is reasonably likely to result in a Material Adverse Change
(in each case in the sole opinion of the Required Purchasers) immediately after
giving pro forma effect to the Note Purchase Transactions.
4.9 Fees and Expenses. Without limiting the generality of Section 12 below,
the Company shall have paid, or caused to have been paid, all accrued fees and
expenses incurred in connection with the Note Purchase and the other Note
Purchase Transactions contemplated by this Agreement and the other Note
Documents as of the Closing, including, without limitation, (i) the Commitment
Fee and any other fees payable to the Purchasers, or any of them, in connection
with the Note Purchase Transactions and (ii) the reasonable fees and expenses of
▇▇▇▇▇▇▇ Procter LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, each counsel to initial
Purchasers.
4.10 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
the Required Purchasers, and the Purchasers shall have received all such
counterpart originals or certified or other copies of such documents as the
Purchasers may reasonably request.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants each of the representations and
warranties set forth in this Article 5 to each Purchaser (a) on and as the date
hereof and (b) on and as of the Closing Date, before and immediately after
giving pro forma effect to the Note Purchase and the other Note Purchase
Transactions contemplated hereby, except where otherwise expressly provided. The
Company represents and warrants each of the representations and warranties set
forth in Sections 5.1, 5.2, and 5.3 to each Purchaser on and as of each Interest
Due Date on which the Company issues additional Senior Secured Notes as PIK
Interest, before and immediately after giving effect to the issuance of such
Senior Secured Notes. Each representation and warranty made in this Article 5
shall be, and shall be deemed to be, qualified by the information and
disclosures set forth and made in the Draft Form 10-K. Further, each
representation and warranty made in this Article 5 with respect to any Foreign
Subsidiary is qualified such that no
8
breach thereof shall occur, or be deemed to have occurred, unless such breach
has or is reasonably likely to have a Material Adverse Effect.
5.1 Corporate Existence; Qualification; Power; Licenses and Permits.
Holdings, the Company and each of its Subsidiaries (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and is authorized to
do business and is in good standing in every jurisdiction in which the failure
to be so qualified could reasonably be expected to have a Material Adverse
Effect, (iii) has all corporate power and authority required to own its
properties and assets and to carry on its business as now conducted and (iv) has
all licenses, authorizations, consents, approvals, franchises, leases, permits,
certificates, qualifications, easements, rights of way and other rights required
to carry on its business as now conducted which the failure to so have could
reasonably be expected to have a Material Adverse Effect. None of Holdings, the
Company and any of their Subsidiaries is in violation of the terms of any such
license, authorization, consent, approval, franchise, lease, permit,
certificate, qualification, easement, right of way or other right in any such
case which would have a Material Adverse Effect.
5.2 Corporate and Governmental Authorization; Contravention. The execution,
delivery and performance by Holdings, the Company and its Subsidiaries of this
Agreement and the other Note Documents to which the Company and its
Subsidiaries, as the case may be, and the consummation by Company and its
Subsidiaries of the Note Purchase and of the other Note Purchase Transactions
contemplated hereby and thereby, (i) are within Holdings, the Company's and each
such Subsidiary's corporate (or equivalent) powers, (ii) have been duly
authorized by all necessary corporate (or equivalent) action, (iii) require no
action by or in respect of, or filing with, any Governmental Authority, (iv) do
not contravene, or constitute a default under, any provision of any Governmental
Order or of the certificate of incorporation or By-Laws (or equivalent
constituting documents) of Holdings, the Company or any of its Subsidiaries, (v)
do not contravene, or constitute a default or an event that with the passage of
time, the giving of notice or both would constitute a default, under, any
Governmental Order, indenture, contract, lease, instrument or other commitment
or agreement to which the Company is a party (including, without limitation, any
Senior Credit Facility Document or any Subordinated Notes Document) or by which
Holdings, the Company, its Subsidiaries or any of their respective assets are
bound and which could reasonably be expected to have a Material Adverse Effect,
and (vi) will not result in the creation or imposition of any material Lien upon
any asset of Holdings, the Company or any of its Subsidiaries under any existing
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which it or any of its assets may be bound or affected (except as contemplated
herein) other than those Liens existing under the Senior Credit Facility
Documents or under the Note Documents.
5.3 Binding Effect. This Agreement is and, when executed and delivered in
accordance with the terms hereof, the other Note Documents will be, the legal,
valid and binding obligations of the Company, Holdings and their respective
Subsidiaries parties thereto, and are or will be, as the case may be,
enforceable against the Company, Holdings and such Subsidiaries in accordance
with their terms.
9
5.4 Financial Information.
(a) The audited consolidated balance sheets of the Company and its
Consolidated Subsidiaries as of December 31, 1998 and December 31, 1999 and the
unaudited consolidated balance sheets of the Company and its Consolidated
Subsidiaries as of December 31, 2000 and the audited, and unaudited, as the case
may be, consolidated statements of earnings, statements of shareholders' equity
and statements of cash flows for the periods ended December 31, 1998, December
31, 1999 and December 31, 2000 have heretofore been furnished to each Purchaser
(collectively, with the financial information delivered from time to time
pursuant to Section 7.1 hereof, the "Financial Statements"). Such Financial
Statements (including the notes thereto) (i) solely with respect to those
audited balance sheets of the Company and its Consolidated Subsidiaries have
been audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, (ii) have been prepared in accordance with
GAAP consistently applied throughout the periods covered thereby and (iii)
present fairly, in all material respects, the consolidated financial condition,
results of operations and cash flows of the Company and its Consolidated
Subsidiaries as of such dates and for such periods. During the period from
December 31, 2000 to and including the Closing Date, except as provided in the
Note Documents, there has been no sale, transfer or other disposition by the
Company and its Consolidated Subsidiaries of any material part of the business
or property of the Company and its Consolidated Subsidiaries, taken as a whole,
and no purchase or other acquisition by any of them of any business or property
(including any Capital Stock of any other Person) material in relation to the
consolidated financial condition of the Company and its Consolidated
Subsidiaries, taken as a whole, in each case, which is not reflected in the
foregoing financial statements or in the notes thereto and has not otherwise
been disclosed in a writing to the Purchasers on or prior to the Closing Date.
(b) [Intentionally Omitted.]
5.5 Litigation and Judgments. Except as set forth on Schedule 5.5, there is
no (i) injunction, stay, decree, judgment, writ or order issued and outstanding
by any court or arbitrator or any governmental body, agency or official against
the Company, Holdings or any of their Subsidiaries or (ii) action, suit,
proceeding, litigation, contested claim, investigation or arbitration pending,
or to the knowledge of the Company threatened, against or affecting the Company,
Holdings or any of their Subsidiaries which, in any case, could have a Material
Adverse Effect on, or which in any manner impairs the validity of, this
Agreement, any of the other Note Documents or any other Credit Document.
5.6 Compliance with ERISA. During the five year period prior to each date as
of which this representation is made, or deemed made, with respect to any Plan
(or, with respect to (vi) or (viii) below, as of the date such representation is
made or deemed made), except as set forth on Schedule 5.6 hereto, none of the
following events or conditions, either individually or in the aggregate, has
resulted or is reasonably likely to result in a Material Adverse Effect: (i) a
Reportable Event; (ii) an "accumulated funding deficiency" (within the meaning
of Section 412 of the Code or Section 302 of ERISA); (iii) any noncompliance
with the applicable provisions of ERISA or the Code; (iv) a termination of a
Single Employer Plan (other than a standard termination pursuant to Section
4041(b) of ERISA); (v) a Lien on the property of the Company or its Subsidiaries
in favor of the PBGC or a Plan; (vi) any Underfunding with respect to any Single
Employer Plan; (vii) a complete or partial withdrawal from any Multiemployer
Plan by the Borrower or any Commonly Controlled Entity; (viii) any liability of
the Company or any
10
Commonly Controlled Entity under ERISA if the Company or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the annual valuation date most closely preceding the date on which this
representation is made or deemed made; or (ix) the Reorganization or Insolvency
of any Multiemployer Plan. There have been no transactions that resulted or
could result in any liability to the Company or any Commonly Controlled Entity
under Section 4069 of ERISA or Section 4212(c) of ERISA.
5.7 Taxes. Except as set forth on Schedule 5.7 hereto, Holdings, the Company
and their respective Subsidiaries have timely filed (inclusive of any permitted
extensions) with the appropriate taxing authorities all United States Federal
income tax returns and except as set forth on Schedule 5.7 hereto, all other
material tax returns (including, without limitation, information returns and
other material information) in respect of Taxes required to be filed through the
date hereof. The information filed is complete and accurate in all material
respects. All material deductions taken by Holdings, the Company and their
respective Subsidiaries as reflected in such income tax returns have been taken
in accordance with applicable laws and regulations.
(a) Except as set forth on Schedule 5.7 hereto, all Taxes, in respect
of periods beginning prior to the date hereof, have been timely paid, except
where the same are being contested in good faith by appropriate proceedings and
appropriate reserves therefor have been established and maintained in accordance
with GAAP for the accrual thereof as reflected on the audited financial
statements for the Company's fiscal year ended December 31, 2000, and, to the
extent such reserves are maintained for periods after December 31, 2000,
consistent with Holdings' or the Company's respective past practice.
(b) Except as set forth in Schedule 5.7 hereto, (i) no material
deficiencies for Taxes have been claimed, proposed or assessed by any taxing or
other Governmental Authority against Holdings, the Company or any of their
respective Subsidiaries other than deficiencies that are being contested in good
faith by appropriate proceedings, and for which appropriate reserves have been
established and maintained as reflected on the unaudited financial statements
for the Company's fiscal year ended December 31, 2000 and in accordance with
GAAP, and, to the extent such reserves are maintained for periods after December
31, 2000, consistent with Holdings' or the Company's respective past practice
and (ii) no material tax liens have been filed against any of the Property of
Holdings, the Company or their respective Subsidiaries other than Liens
permitted under Section 9.4 of this Agreement at are being contested in good
faith by appropriate proceedings, and for which appropriate reserves have been
established and maintained as reflected on the unaudited financial statements
for the Company's fiscal year ended December 31, 2000 in accordance with GAAP
and, to the extent such reserves are maintained for periods after December 31,
2000, consistent with Holdings' or the Company's respective past practice, and
to the extent such Liens have been bonded in a manner reasonably satisfactory to
the Required Purchasers. Except as set forth in Schedule 5.7 hereto, there are
no pending or, to the knowledge of the Company, threatened audits,
investigations or claims for or relating to any material liability in respect of
Taxes, and there are no matters under discussion with any Governmental
Authorities with respect to Taxes that are likely to result in a material
additional liability for Taxes. Except as set forth on Schedule 5.7 hereto, for
all years up to and including the fiscal year ended March 31, 1990, either the
periods during which any assessments may be made by the Internal Revenue Service
have expired without waiver or extension or the
11
federal income tax returns for which the Company and their respective
Subsidiaries have been audited by the Internal Revenue Service and such audits
have been closed.
5.8 Capitalization; Subsidiaries.
(a) There are presently issued by the Company and its Subsidiaries and
outstanding the shares of capital stock indicated on Schedule 5.8 hereto. All of
the issued and outstanding capital stock of each Subsidiary of the Company
listed is owned of record and beneficially by the entity set forth on such
Schedule. The Company and its Subsidiaries have received at least the
consideration for which such stock was authorized to be issued and have
otherwise complied in all material respects with all legal requirements relating
to the authorization and issuance of shares of stock and all such shares are
validly issued, fully paid and non-assessable. The Company and its Subsidiaries
have no other capital stock of any class outstanding other than as set forth on
Schedule 5.8 hereto. Except as set forth on Schedule 5.8 hereto, neither the
Company nor any of its Subsidiaries are subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any of their equity
interests. There are no voting trusts or other agreement or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of its equity interests.
(b) The only direct or indirect Subsidiaries of the Company are those
listed on Schedule 5.8 hereto. Except as set forth on such Schedule, the Company
is the record and beneficial owner of all of the equity interests in each of its
Subsidiaries listed on such Schedule as being owned by such Company (other than
directors' qualifying shares), there are no proxies, irrevocable or otherwise,
with respect to any such equity interests, and no equity interests in any of the
Subsidiaries of the Company are or may become required to be issued by reason of
any options, warrants, scripts, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, equity interests in any such Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any such
Subsidiary is or may become bound to issue additional shares of its capital
stock, or other equity interests, or debt or equity securities convertible or
exchangeable for such equity interests. All of such shares so owned by Company
are owned directly or indirectly by it free and clear of any Liens (other than
Liens permitted under Section 8.3 hereof), and all such shares are validly
issued, fully paid and non-assessable (except for statutory rights of assessment
for wages owed).
(c) Holdings owns of record and beneficially all of the issued and
outstanding capital stock of the Company.
5.9 Not an Investment Company. Neither the Company nor any of its
Subsidiaries is (i) an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, (ii) 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," within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (iii) subject to any other Law that purports to
regulate or restrict its ability to borrow money or to consummate the
transactions contemplated by this Agreement, the other Note Documents or the
other Credit Documents, or to perform its obligations hereunder or thereunder.
12
5.10 No Conflicting Requirements. Neither Holdings, the Company, any of
their Subsidiaries is in default (or, with the passage of time, the giving of
notice or both, will be in default), or as a result of the Note Purchase shall
be in default (or, with the passage of time, the giving of notice or both, will
be in default), under any term or provision of (a) any charter, by-law or
similar document, (b) any mortgage, indenture, agreement, instrument, contract,
lease or other commitment to which any of them is a party or by which any of
them is bound (including, without limitation, any Senior Credit Facility
Document or Subordinated Notes Document) such that such violations or defaults
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect or (c) any Law or Governmental Order. After due inquiry by
appropriate Company personnel, the Company knows of no dispute regarding any
facts or circumstances likely to cause a default under any indenture, contract,
lease, agreement, instrument or other commitment, including, without limitation,
any Senior Credit Document or Subordinated Notes Document, that would
individually, or when aggregated with other such disputes, be reasonably likely
to have a Material Adverse Effect. The offer, issuance, sale and delivery of the
Senior Secured Notes are or will be exempt from the registration requirements
and prospectus requirements of the Securities Act and the qualification,
registration or prospectus provision of applicable U.S. state or "blue sky"
securities laws and other applicable securities laws.
5.11 Indebtedness. On and as of February 28, 2001, neither the Company nor
any Subsidiary has any Indebtedness that is senior, pari passu or subordinated
in right of payment to its Obligations under the Senior Secured Notes or under
this Agreement, except for Indebtedness under the Senior Credit Documents or
otherwise as set forth on Schedule 5.11 hereto, all of which Indebtedness is
permitted pursuant to Section 8.2 of this Agreement. Since February 28, 2001
there has been no material change in the amount of such Indebtedness, nor any
other change with respect to such Indebtedness that would be reasonably likely
to have a Material Adverse Effect.
5.12 Title to Properties and Assets; Intellectual Property.
(a) Except as set forth in Schedule 5.12(a) hereto, the Company and its
Subsidiaries have good record and marketable fee title to all real Property and
all other Property and assets, whether tangible or intangible, owned by it and
reasonably necessary in the conduct of business of the Company and its
Subsidiaries. All of the leases for the operation of its properties and assets,
under which the Company and its Subsidiaries hold any Property or assets, real
or personal, are valid, subsisting and enforceable and afford peaceful and
undisturbed possession of the subject matter of the lease, and no default by the
Company and its Subsidiaries exists under any of the provisions thereof. To the
best of the Company's knowledge after due inquiry by appropriate Company
personnel, all buildings, machinery and equipment of the Company material to its
operations and business are in good repair and working order, except for
ordinary wear and tear. To the best of the Company's knowledge all material
current and proposed uses of such Property or assets of the Company are
permitted as of right and no such regulation or ordinance interferes with such
current or proposed uses. To the best of the Company's knowledge there is no
pending or formally proposed change in any such laws, regulations and ordinances
which would have a Material Adverse Effect. No condemnation, appropriation or
similar proceeding is pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary of the Company.
13
(b) The Company and each of its Subsidiaries owns, or has the legal
right to use, all United States patents, patent applications, trademarks,
trademark applications, tradenames, copyrights, technology, know-how and
processes necessary for each of them to conduct its business as currently
conducted (the "Intellectual Property") except for those the failure to own or
have such legal right to use would not be reasonably expected to have a Material
Adverse Effect. Except as provided on Schedule 5.12(b) hereto, no claim has been
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does the Company know of any such claim, and, to the
knowledge of the Company the use of such Intellectual Property by the Company
and its Subsidiaries does not infringe on the rights of any Person, except for
such claims and infringements which in the aggregate, would not be reasonably
expected to have a Material Adverse Effect.
(c) Holdings, the Company and each of their Subsidiaries maintains
insurance with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which Holdings, the Company or such Subsidiary operates.
5.13 Compliance with Law. Neither the Company nor any of its Subsidiaries
has violated or failed to comply with any Law, applicable to its business or
operations except where, individually or in the aggregate, such violations or
failures could not reasonably be expected to have a Material Adverse Effect. The
conduct of the businesses of the Company and each of its Subsidiaries is in
conformity with all applicable Law and Governmental Orders, except where,
individually or in the aggregate, such non-conformities could not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any notice to the effect that, or otherwise been
advised that, it is not in compliance with, and neither the Company nor any of
its Subsidiaries has any reason to anticipate that any presently existing
circumstances are likely to result in the violation of, any such Law or
Governmental Order, which failure or violation could reasonably be expected to
have a Material Adverse Effect.
5.14 Compliance with Environmental Laws.
(a) Without limiting the foregoing Section 5.13, the Company and each
of its Subsidiaries has complied with and currently is in compliance with all
Environmental Laws, except where such noncompliance, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(b) No solid or hazardous or toxic wastes or hazardous substances (as
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resources Conservation and Recovery Act and the Superfund Amendments
and Reauthorization Act of 1986, as amended, or under any successor or similar
Law), are processed, discharged, stored, treated, disposed of, or managed at any
facility owned, leased or operated by the Company or any Subsidiary thereof or,
at the request or behest of the Company or any Subsidiary thereof, at any
adjoining site, so as to require a license, permit or authorization of any type
from any governmental authority, other than licenses, permits and authorizations
which have been obtained and are in full force and effect or where the failure
to obtain such a license, permit or authorization could not reasonably be
expected to have a Material Adverse Effect. Except as set
14
forth on Schedule 5.14 hereto, no governmental or private actions to enforce
environmental or pollution control laws are pending against the Company or any
Subsidiary thereof, or against or with respect to any facility owned, operated
or leased by the Company or any Subsidiary thereof. Except as disclosed on
Schedule 5.14 hereto, and except where any of the following, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect: (i) neither the Company nor any of its Subsidiaries has received any
complaint, notice of violation, alleged violation, investigation or advisory
action or of potential liability or of potential responsibility regarding
environmental protection matters or permit compliance, and (ii) neither the
Company nor any of its Subsidiaries have any contingent liability of which the
Company has knowledge in connection with any release of any hazardous or toxic
waste, substance or constituent, or other substance into the environment, nor
has the Company or any Subsidiary received any notice, letter or other
indication of potential liability arising from the disposal of any hazardous or
toxic waste, substance or constituent or other substance into the environment.
(c) Except as disclosed on Schedule 5.14 hereto, no action, suit or
proceeding brought by any employee of the Company or any Subsidiary thereof or
any other Person involving (i) a claim for damages in excess of $100,000 or (ii)
claims for damages under $100,000 and which in the aggregate could reasonably be
expected to have a Material Adverse Effect, in each case based on alleged damage
to health caused by any such hazardous or toxic substance or by any waste or
by-product thereof, is pending before any court or arbitrator or any
governmental body, agency or official.
5.15 Security Interests and Liens. Except for the Liens granted by Holdings,
the Company and their Subsidiaries under the Senior Credit Documents, all of
which Liens are set forth on Schedule 5.15 hereto, and under the Note Documents,
and the Liens otherwise permitted under Section 8.13 hereof or disclosed on
Schedule 5.15 hereto, there are no Liens in favor of third parties with respect
to any real or personal Property owned by the Company or any of its Subsidiaries
wherever located. After due inquiry by appropriate Company personnel, to the
best of the Company's knowledge, no lessor or warehouseman of the Company or any
of its Subsidiaries has granted any Lien with respect to the Inventory
maintained by the Company or its Subsidiaries, as the case may be, at the
property of any such lessor or warehousemen.
5.16 Labor Relations. Neither the Company nor any of its Subsidiaries is
engaged in any material unfair labor practices which could reasonably be
expected to result in a material liability to the Company, materially increase
the costs of operations or materially decrease the revenue generated from the
Company's or any of its Subsidiaries' operations, or which could otherwise
reasonably be expected to have a Material Adverse Effect. There is (i) no unfair
labor practice complaint pending against the Company or any of its Subsidiaries
or, to the best knowledge of the Company after due inquiry by appropriate
Company personnel, threatened against the Company or any of its Subsidiaries
before the National Labor Relations Board, and no material grievance or
significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of its
Subsidiaries or, to the best knowledge of the Company after due inquiry by
appropriate Company personnel, threatened against the Company or any of its
Subsidiaries, (ii) no strike, labor dispute, slowdown or stoppage pending
against the Company or any of its Subsidiaries or, to the best knowledge of the
Company after due inquiry by appropriate Company personnel, threatened against
it or any of its Subsidiaries, which, in the case of the items described in the
preceding clauses (i) and (ii)
15
could reasonably be expected to result in a material liability to the Company or
any of its Subsidiaries, materially increase the costs of the Company's
operations or any of its Subsidiaries or materially decrease the revenue
generated from the Company's or any of its Subsidiaries' operations or which
could otherwise reasonably be expected to have a Material Adverse Effect, and
(iii) no union representation question with respect to the employees of the
Company or any of its Subsidiaries and no union organizing activities which
representation question or organizing activity could reasonably be expected to
have a Material Adverse Effect. There are no controversies pending or, to the
best knowledge of the Company after due inquiry by appropriate Company
personnel, threatened between the Company or any of its Subsidiaries and any of
their respective employees, other than (i) employee grievances and other
controversies arising in the ordinary course of business which could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect and (ii)
employee grievances and other controversies arising outside the ordinary course
of business of which the Purchasers have received written notice, and which
grievances and other controversies, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.17 Solvency; Material Adverse Effect.
(a) The Company, together with its Subsidiaries, on a consolidated
basis, is Solvent after giving effect to the Note Purchase Transactions. On and
at all times after the Closing Date the fair saleable value of the assets of the
Company and its Subsidiaries, on a consolidated basis, exceeds all probable
liabilities, including, without limitation, those to be incurred pursuant to
this Agreement and the other Note Documents. On and at all times after the
Closing Date, the Company and its Subsidiaries, on a consolidated basis, (i) do
not have unreasonably small capital in relation to the business in which it is
or proposes to be engaged and (ii) have not incurred, and do not believe that
they will incur after giving effect to the Note Purchase and the other Note
Purchase Transactions, debts beyond their ability to pay such debts as they
become due.
(b) Since December 31, 2000, except as and to the extent disclosed on
Schedule 5.17(b) hereto, there has been no development or event relating to or
affecting Holdings, the Company or any of their respective Subsidiaries that has
had or, immediately after giving pro forma effect to the Note Purchase
Transactions, would be reasonably expected to have a Material Adverse Effect.
5.18 Margin Security. The Company does not own any margin security and none
of the proceeds of the sale of the Senior Secured Notes, have been or shall be
used for the purpose of purchasing or carrying any margin securities or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase any margin securities or for any other purpose not permitted by
Regulation U or X of the Board of Governors of the Federal Reserve System.
5.19 Affiliate Transactions. Except as set forth on Schedule 5.19 hereto,
neither the Company nor any Subsidiary is a party to or bound by any agreement
or arrangement (whether oral or written) to which any Affiliate of the Company
or any Subsidiary is a party.
16
5.20 Accuracy and Completeness of Information.
(a) All factual information heretofore, contemporaneously or hereafter
furnished by or on behalf of Holdings, the Company or any of their respective
Subsidiaries in writing to the Purchasers for purposes of or in connection with
this Agreement or any other Note Document, or any transaction contemplated
hereby or thereby, including, without limitation, the Draft Form 10-K, is or
shall be true and accurate in all material respects on the date on or as of
which such information is dated, delivered or certified and on and as of the
date hereof and shall not be incomplete by omitting to state any material fact
necessary to make such information not misleading at or as of such time. There
is no fact now known to any officer of the Company or any of its Subsidiaries
that has, or is likely to have, a Material Adverse Effect, which fact has not
been set forth herein, in the Financial Statements, or some certificate, opinion
or other written statement made or furnished by the Company to the Purchasers,
including, without limitation, the Draft Form 10-K.
(b) Except as disclosed on Schedule 5.20(b) hereto, each of the
Company's reports, including, without limitation, on SEC Form 10-K, Form 10-Q
and Form 8-K filed with the Commission since December 31, 1999 (collectively,
the "Exchange Act Reports") when filed with the Commission conformed in all
material respects to the requirements of the Exchange Act and none of such
documents contained as of the respective date of such filing an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
5.21 Status of Accounts. The Company confirms to the Purchaser that any or
all taxes or fees relating to its business, its sales, the Accounts or the goods
relating thereto, are its sole responsibility and that all such material taxes
will be paid by the Company when due (unless duly contested and adequately
reserved for) and that none of such taxes or fees (including any immaterial
taxes or fees) is or will become a Lien (other than a Permitted Lien) on or
claim against the Accounts.
5.22 Use of Proceeds. The proceeds of the Senior Secured Notes will be used
(a) to pay interest due and payable on the 10.5% Subordinated Notes and the 11%
Subordinated Notes, (b) prepayment of the "Revolving Credit Loans" (as defined
in the Senior Credit Agreement) pursuant to Section 4.4(a) of the Senior Credit
Agreement, and (c) for the general corporate and operating expenses of the
Company.
5.23 No Default. Except to the extent waived pursuant to Amendment No. 4 to
the Senior Credit Agreement, neither the Company, Holdings nor any of their
respective Subsidiaries is in default under or with respect to any of its
Contractual Obligations including under the 10.5% Subordinated Notes and the 11%
Subordinated Notes in any respect which would be reasonably expected to have a
Material Adverse Effect, and no Default or Event of Default has occurred and is
continuing.
5.24 Collateral. Except with respect to (a) Liens on equipment constituting
fixtures, (b) any reserved rights of the United States government as required
under Law, (c) Liens upon Patents, Patent Licenses, Trademarks and Trademark
Licenses (as such terms are defined in the Guarantee and Collateral Agreement)
to the extent that (i) such Liens are not otherwise perfected by the filing of
financing statements under the Uniform Commercial Code or by the filing and
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acceptance thereof in the United States Patent and Trademark Office or (ii) such
Patents, Patent Licenses, Trademarks and Trademark Licenses are not,
individually or in the aggregate, material to the business of the Company and
its Subsidiaries taken as a whole, (d) Liens on uncertificated securities, (e)
Liens on Collateral the perfection of which requires filings in or other actions
under the laws of jurisdictions outside of the United States of America, any
State, territory or dependency thereof or the District of Columbia (except to
the extent that such filings or other actions have been made or taken), (f)
Liens on contracts or Accounts Receivable on which the United States of America
or any department, agency, or instrumentality thereof is the obligor, (g) Liens
on Proceeds of Accounts Receivable and Inventory, and (h) claims of creditors of
Persons receiving goods included as Collateral for "sale or return" within the
meaning of Section 2-326 of the Uniform Commercial Code of the applicable
jurisdiction, upon filing of the financing statements delivered to the Co-Agents
by the Company and its Subsidiaries on the Closing Date in the jurisdictions
listed on Schedule 5.24 hereto (which financing statements are in proper form
for filing in such jurisdictions), the recording of the Mortgages and the
recording of the Patent and Trademark Security Agreement (and the making of
filings after the Closing Date in any other jurisdiction as may be necessary
under any Requirement of Law) and the delivery to, and continuing possession by,
the Administrative Agent, as agent for the Purchasers and the holders of the
Senior Loans, of all Instruments, Chattel Paper and Documents a security
interest in which is perfected by possession, the Liens created pursuant to each
Security Document, when executed and delivered, will constitute valid Liens on
and to the extent provided therein perfected security interests in the
collateral referred to in such Security Documents (but as to the Copyrights and
the Copyright Licenses (as defined in the Guarantee and Collateral Agreement)
and accounts arising therefrom, only to the extent the Uniform Commercial Code
of the relevant jurisdiction, from time to time in effect, is applicable) in
favor of the Co-Agents for the ratable benefit of the Secured Parties (as
defined in the Guarantee and Collateral Document), which Liens will be prior to
all other Liens of all other Persons, except for Liens in favor of the
Administrative Agent and holders of the Senior Loans pursuant to the Senior
Credit Documents, and which Liens are enforceable as such as against all other
Persons (except, with respect to goods only, buyers in the ordinary course of
business to the extent provided in Section 9-307(1) of the Uniform Commercial
Code as from time to time in effect in the applicable jurisdiction and except to
the extent that recording of an assignment or other transfer of title to the
Purchasers in the United States Patent and Trademark Office may be necessary for
such enforceability), except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
5.25 Survival of Representations. On the Closing Date each of the Note
Documents shall have been duly executed and delivered, by the Company, Holdings
and their respective Subsidiaries parties to such Note Documents, and
thereafter, the Note Documents shall be in full force and effect enforceable in
accordance with their respective terms against the Company Holdings and such
Subsidiaries. All representations made by the Company in this Agreement and each
other Note Document shall survive the execution and delivery hereof and thereof.
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ARTICLE 6. REPRESENTATIONS OF THE PURCHASER.
Each Purchaser represents solely with respect to itself that such Purchaser
(a) is purchasing the Senior Secured Notes for such Purchaser's own account or
for one or more separate accounts maintained by such Purchaser or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof in violation of the securities laws of the United States or
any state thereof, provided that the disposition of such Purchaser's property
shall at all times be within such Purchaser's control, and (b) is an "accredited
investor" as defined in Rule 501(a) of the Securities Act and able to evaluate
the merits and risks, including illiquidity, of the investment. Such Purchaser
understands that the Senior Secured Notes are restricted securities and have not
been registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act and applicable state securities
law, or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by Law, and that the Company is not required to register the Senior Secured
Notes.
ARTICLE VII. AFFIRMATIVE COVENANTS
The Company hereby agrees that, from and after the Closing Date and so long
as any Senior Secured Note remains in effect, and thereafter until payment in
cash in full of all Obligations and any other amount then due and owing to any
Purchaser under any Note Document, the Company shall and (except in the case of
delivery of financial information, reports and notices) shall cause each of its
Subsidiaries to:
7.1 Financial Statements. Furnish to each Purchaser:
(a) as soon as available, but in any event not later than the 90th day
following the end of each fiscal year of the Company ending on or after the
Closing Date, a copy of the consolidated balance sheet of the Company and its
Consolidated Subsidiaries as at the end of such year and the related
consolidated statements of operations, changes in common stockholders' equity
and cash flows for such year, setting forth in each case, in comparative form
the figures for and as of the end of the previous year, reported on without a
"going concern" or like qualification or exception, or qualification arising out
of the scope of the audit, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent certified
public accountants of nationally recognized standing not unacceptable to the
Required Purchasers in their reasonable determination;
(b) as soon as available, but in any event not later than the 45th day
following the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited consolidated balance sheet of the Company and
its Consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of operations and cash flows of the Company
and its Consolidated Subsidiaries for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in comparative form the
budgeted figures (as adjusted consistent with past practice) for the relevant
period and the figures for the corresponding period of the previous fiscal year,
certified by a Responsible Officer of the Company as being fairly stated in all
material respects (subject to normal year-end audit and other adjustments); and
19
(c) as soon as available, but in any event not later than the 30th day
following the end of each fiscal month of each fiscal year of the Company (or
the 45th day in the case of any such month ending on the last day of a fiscal
quarter), an unaudited consolidated balance sheet for the Company and its
Consolidated Subsidiaries as at the end of such month, a statement of cash
flows, and a related unaudited consolidated income statement for such month and
for the portion of the fiscal year through the end of such month, setting forth
in comparative form the budgeted figures (as adjusted consistent with past
practice) for the relevant periods and the figures as at the end of the
corresponding fiscal month of the previous fiscal year and, in the case of such
income statement, in comparative form the figures for the corresponding periods
of the previous fiscal year; all such financial statements delivered pursuant to
Section 7.1(a) or (b) hereof above to be (and, in the case of any financial
statements delivered pursuant to Section 7.1(b) hereof shall be certified by a
Responsible Officer of the Company as being) complete and correct in all
material respects in conformity with GAAP and to be (and, in the case of any
financial statements delivered pursuant to Section 7.1(b) hereof above shall be
certified by a Responsible Officer of the Company as being) prepared in
reasonable detail in accordance with GAAP applied consistently throughout the
periods reflected therein and with prior periods that began on or after the
Closing Date (except as approved by such accountants or officer, as the case may
be, and disclosed therein, and except, in the case of any financial statements
delivered pursuant to Section 7.1(b) hereof above, for the absence of certain
notes).
7.2 Certificates; Other Information. Furnish to each Purchaser:
(a) concurrently with the delivery of the financial statements referred
to in Section 7.1(a) hereof above, a certificate of the independent certified
public accountants reporting on such financial statements stating that in making
the audit necessary therefor no knowledge was obtained of any Default or Event
of Default insofar as the same relates to any financial accounting matters
covered by their audit, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements and
reports referred to in Sections 7.1(a) and (b) hereof above, a certificate
signed by a Responsible Officer of the Company (i) stating that, to the best of
such Responsible Officer's knowledge, the Company and its Subsidiaries during
such period has observed or performed all of its covenants and other agreements,
and satisfied every condition, contained in this Agreement, any Senior Secured
Notes or the other Note Documents to which it is a party to be observed,
performed or satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default, except, in each case, as specified
in such certificate, (ii) setting forth the calculations required to determine
(A) compliance with all covenants set forth in Section 8.1 hereof below (in the
case of a certificate furnished with the financial statements referred to in
Sections 7.1(a) and (b) hereof above), and (B) compliance with the covenant set
forth in Section 8.8 (in the case of a certificate furnished with the financial
statements referred to in Section 7.1(a) hereof); and (iii) setting forth the
calculations required to determine Company's Excess Cash Flow for the fiscal
year or period ending on the preceding December 31.
(c) as soon as available, but in any event not later than the 90th day
after the beginning of each fiscal year of the Company, a copy of the
projections by the Company of the operating budget and cash flow budget of the
Company and its Subsidiaries for such fiscal year, such projections to be
accompanied by a certificate of a Responsible Officer of the Company to
20
the effect that such Responsible Officer believes such projections to have been
prepared on the basis of reasonable assumptions;
(d) within five Business Days after the same are sent, copies of all
financial statements and reports which the Company sends to its public security
holders, and within five Business Days after the same are filed, copies of all
financial statements and periodic reports which the Company may file with the
SEC or any successor or analogous Governmental Authority;
(e) promptly, such additional financial and other information as any
Purchaser may from time to time reasonably request, including certificates
setting forth calculations showing that the Company is in compliance with
Sections 8.1, 8.2(c), 8.2(e), 8.2(k), 8.3(k), 8.6(f) , 8.7, 8.8 and 8.11 of this
Agreement; and
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all its material
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings diligently
conducted and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Company or any of its Subsidiaries, as the case may
be.
7.4 Conduct of Business and Maintenance of Existence. Continue to engage in
business of the same general type as conducted by the Company and its
Subsidiaries on the Closing Date, taken as a whole, and preserve, renew and keep
in full force and effect its corporate existence and take all reasonable action
to maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of the business of the Company and its Subsidiaries, taken as a
whole, except as otherwise expressly permitted pursuant to Section 8.5 hereof,
provided that the Company and its Subsidiaries shall not be required to maintain
any such rights, privileges or franchises, if the failure to do so would not
reasonably be expected to have a Material Adverse Effect; and comply with all
Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith, in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in the business of the Company and its Subsidiaries, taken as a whole,
in good working order and condition; maintain with financially sound and
reputable insurance companies insurance on all property material to the business
of the Company and its Subsidiaries, taken as a whole, in at least such amounts
and against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business;
and furnish to the Purchasers, upon the written request of any Purchaser,
information in reasonable detail as to the insurance carried.
7.6 Inspection-of Property; Books and Records; Discussions.
(a) Keep proper books, records and accounts in which full, complete and
correct entries in conformity with GAAP and all material Requirements of Law
shall be made of all dealings and transactions in relation to its business and
activities; and permit representatives of any Purchaser to visit and inspect any
of its properties and examine and, to the extent
21
reasonable, make abstracts from any of its books and records and to discuss the
business, operations, properties and financial and other condition of the
Company and, its Subsidiaries with officers and employees of the Company and its
Subsidiaries and with its independent certified public accountants, in each case
at any reasonable time, upon reasonable notice, and as often as may reasonably
be desired.
(b) At any time at which any Senior Secured Notes are outstanding, upon
the reasonable request of any Purchaser or Purchasers holding Senior Secured
Notes evidencing at least $5,000,000 of Indebtedness, permit such Purchaser or
Purchasers or its or their respective professionals (including consultants,
accountants and appraisers) to conduct evaluations and appraisals of (i) the
Company's Accounts and Inventory, and other related procedures deemed necessary
by such Purchaser or Purchasers and pay the reasonable fees and expenses thereof
in connection therewith; provided, however, that no such Purchaser or Purchasers
shall be entitled to conduct such evaluations and appraisals more frequently
than once per year unless (x) an Event of Default has occurred and is continuing
or (y) such Purchaser or Purchasers reasonably determine in consultation with
the Company that a material event or material change has occurred with respect
to Holdings, the Company and its Subsidiaries, their inventory practices or the
performance of the Collateral and that as a result of such event or change more
frequent evaluations or appraisals are required to effectively monitor the
Accounts and Inventory of the Company, in which case the Company will permit
such Purchaser or Purchasers to conduct such evaluations and appraisals at such
reasonable times and as often as may be reasonably requested.
7.7 Notices. Promptly give notice to each Purchaser of:
(a) as soon as possible after a Responsible Officer of the Company
knows or reasonably should know thereof, the occurrence of any Default or Event
of Default;
(b) as soon as possible after a Responsible Officer of the Company
knows or reasonably should know thereof, any (i) default or event of default
under any Contractual Obligation of the Company or any of its Subsidiaries,
other than as previously disclosed in writing to the Purchasers, or (ii)
litigation, investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, which in
either case, if not cured or if adversely determined, as the case may be, would
reasonably be expected to have a Material Adverse Effect;
(c) as soon as possible after a Responsible Officer of the Company
knows or reasonably should know thereof, the occurrence of any default or event
of default under the Subordinated Note Documents;
(d) as soon as possible after a Responsible Officer of the Company
advisor reasonably should know thereof, the occurrence of any default or event
of default under the Senior Credit Documents.
(e) as soon as possible after a Responsible Officer of the Company
knows or reasonably should know thereof, any litigation or proceeding affecting
the Company or any of its Subsidiaries in which the amount involved (not covered
by insurance) is $1,000,000 or more or in which injunctive or similar relief is
sought that would reasonably be expected to have a Material Adverse Effect;
22
(f) the following events, as soon as possible and in any event within
30 days after a Responsible Officer of the Company or any of its Subsidiaries
knows or reasonably should know thereof: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Single Employer Plan, a
failure to make any required contribution to a Single Employer Plan or
Multiemployer Plan, the creation of any Lien on the property of the Company or
its Subsidiaries in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan; (ii) the
institution of proceedings or the taking of any other formal action by the PBGC
or the Company or any of its Subsidiaries or any Commonly Controlled Entity or
any Multiemployer Plan which could reasonably be expected to result in the
withdrawal from, or the termination, Reorganization or Insolvency of, any Single
Employer Plan or Multiemployer Plan; provided, however, that no such notice will
be required under clause (i) or (ii) above unless the event giving rise to such
notice, when aggregated with all other such events under clause (i) or (ii)
above, could be reasonably expected to result in liability to the Company or its
Subsidiaries in an amount that would exceed $5,000,000; or (iii) the existence
of an Underfunding under a Single Employer Plan that exceeds 10% of the value of
the assets of such Single Employer Plan, in each case, determined as of the most
recent annual valuation date of such Single Employer Plan on the basis of the
actuarial assumptions used to determine the funding requirements of such Single
Employer Plan as of such date;
(g) as soon as possible after a Responsible Officer of the Company
knows or reasonably should know thereof, any material adverse change in the
business, operations, property, condition (financial or otherwise) or prospects
of the Company and its Subsidiaries taken as a whole;
(h) as soon as possible after a Responsible Officer of the Company
knows or reasonably should know thereof, (i) any release or discharge by the
Company or any of its Subsidiaries of any Materials of Environmental Concern
required to be reported under applicable Environmental Laws to any Governmental
Authority, unless the Company reasonably determines that the total Environmental
Costs arising out of such release or discharge are unlikely to exceed $2,000,000
or to have a Material Adverse Effect; (ii) any condition, circumstance,
occurrence or event not previously disclosed in writing to each Purchaser that
could result in liability under applicable Environmental Laws unless the Company
reasonably determines that the total Environmental Costs arising out of such
condition, circumstance, occurrence or event are unlikely to exceed $2,000,000
or to have a Material Adverse Effect, or could result in the imposition of any
lien or other restriction on the title, ownership or transferability of any
facilities and properties owned, leased or operated by the Company or any of its
Subsidiaries; and (iii) any proposed action to be taken by the Company or any of
its Subsidiaries that would reasonably be expected to subject the Company or any
of its Subsidiaries to any material additional or different requirements or
liabilities under Environmental Laws, unless the Company reasonably determines
that the total Environmental Costs arising out of such proposed action are
unlikely to exceed $1,000,000 or to have a Material Adverse Effect; and
(i) as soon as possible after a Responsible Officer of the Company
knows or reasonably should know thereof, the failure to make any rental payment
when due and payable with respect to any property leased by the Company or any
of its Domestic Subsidiaries at which Inventory of the Company or any of its
Domestic Subsidiaries is located.
23
Each notice pursuant to this Section shall be accompanied by a statement of
a Responsible Officer of the Company (and, if applicable, the relevant Commonly
Controlled Entity or Subsidiary) setting forth details of the occurrence
referred to therein and stating what action the Company (or, if applicable, the
relevant Commonly Controlled Entity or Subsidiary) proposes to take with respect
thereto.
7.8 Environmental Laws.
(a) (i) Comply substantially with, and require substantial compliance
by all tenants, subtenants, contractors, and invitees with, all applicable
Environmental Laws;(ii) obtain, comply substantially with and maintain any and
all Environmental Permits necessary for its operations as conducted and as
planned; and (iii) require that all tenants, subtenants, contractors, and
invitees obtain, comply substantially with and maintain any and all
Environmental Permits necessary for their operations as conducted and as
planned, with respect to any property leased or subleased from, or operated by
the Company or its Subsidiaries.
(b) Conduct and complete or cause to be conducted and completed all
investigations, studies, sampling and testing, and all remedial, removal, and
other actions required under applicable Environmental Laws; and promptly comply
with all orders and directives of all Governmental Authorities regarding
Environmental Laws, (i) except where non-compliance with any such order or
directive would not reasonably be expected to have a Material Adverse Effect or
(ii) other than any such order or directive as to which an appeal or other
appropriate contest is or has been timely and properly taken, is being
diligently pursued in good faith, and as to which appropriate reserves have been
established in accordance with GAAP, and, if the effectiveness of such order or
directive has not been stayed, the pendency of such appeal or other appropriate
contest does not give rise to a Material Adverse Effect.
(c) Maintain, update as appropriate, and implement in all material
respects an ongoing program to ensure that all the properties and operations of
the Company and its Subsidiaries are regularly and reasonably reviewed by
competent professionals to identify and promote compliance with and to
reasonably and prudently manage any liabilities or potential liabilities under
any Environmental Law that may affect the Company or any of its Subsidiaries,
including, without limitation, compliance and liabilities relating to:
discharges to air and water, acquisition, transportation, storage and use of
hazardous materials; waste disposal; repair, maintenance and improvement of
properties; employee health and safety; species protection; and recordkeeping
(the "Environmental Program").
7.9 After-Acquired Real Property and Fixtures.
(a) With respect to any owned real property or fixtures, in each case
with a purchase price or a fair market value of at least $500,000, in which the
Company or any of its Subsidiaries acquires ownership rights at any time after
the Closing Date, promptly grant to the Purchasers a Lien of record on all such
owned real property and fixtures, upon terms reasonably satisfactory in form and
substance to the Required Purchasers and in accordance with any applicable
requirements of any Governmental Authority (including, without limitation, any
required appraisals of such property under FIRREA); provided that (i) nothing in
this Section 7.9 hereof shall defer or impair the attachment or perfection of
any security interest in any Collateral covered by any of the Security Documents
which would attach or be perfected pursuant to the
24
terms thereof without action by the Company, any of its Subsidiaries or any
other Person and (ii) no such Lien shall be required to be granted as
contemplated by this Section 7.9 hereof on any owned real property or fixtures
the acquisition of which is financed, or is to be financed within any time
period permitted by Section 8.2(d) or (e) hereof, in whole or in part, through
the incurrence of Indebtedness permitted by Section 8.2(d) hereof or (e), until
such Indebtedness is repaid in full (and not refinanced as permitted by Section
8.2(d) or (e) hereof) or, as the case may be, the Company determines not to
proceed with such financing or refinancing. In connection with any such grant to
the Purchasers, of a Lien of record on any such real property in accordance with
this Section, the Company or such Subsidiary shall deliver or cause to be
delivered to the Co-Agents any surveys, title insurance policies, environmental
reports and other documents in connection with such grant of such Lien obtained
by it in connection with the acquisition of such ownership rights in such real
property or as the Required Purchasers shall reasonably request (in light of the
value of such real property and the cost and availability of such surveys, title
insurance policies, environmental reports and other documents and whether the
delivery of such surveys, title insurance policies, environmental reports and
other documents would be customary in connection with such grant of such Lien in
similar circumstances).
(b) At its own expense, execute, acknowledge and deliver, or cause the
execution, acknowledgement and delivery of, and thereafter register, file or
record in an appropriate governmental office, any document or instrument
reasonably deemed by the Co-Agents, or either of them, to be necessary or
desirable for the creation, perfection and priority and the continuation of the
validity, perfection and priority of the foregoing Liens or any other Liens
created pursuant to the Security Documents.
(c) At its own expense, request, and use reasonable efforts to obtain,
prior to entering into a lease of a facility located in the United States in
which Inventory will be located on or after the Closing Date (other than any
such facility for which there is not a lease of more than one year and which the
Company and its Subsidiaries intends to use as a seasonal storage facility), a
consent in such form as may be reasonably satisfactory to the Required
Purchasers, from each landlord of any such facility, in which such landlord
acknowledges the Purchasers' second priority security interest in the Inventory
pledged by the Company and each of the other grantors to the Purchasers under
the Security Documents.
7.10. Pledged Stock and Pledged Notes. Simultaneously with the earlier to
occur of (a) the payment in full in cash of the Senior Debt Obligations and (b)
the termination of the Intercreditor Agreement absent a successor provision to
Section 2(b) thereof (which successor provision is in form and substance
acceptable to the Required Purchasers), the Company shall instruct the
Administrative Agent to deliver, immediately upon such payment in full of such
Senior Debt Obligations, to the Co-Agents (i) the certificates, notes and other
instruments evidencing the Pledged Stock and Pledged Notes (together with any
stock powers and endorsements executed in blank and delivered to the
Administrative Agent) and (ii) at the request of the Co-Agents, to such
depository account as the Co-Agents shall direct, the cash and other items
credited to the Collateral Proceeds Account (as defined in the Guarantee and
Collateral Agreement). The Company shall, and shall cause each of its
Subsidiaries to, deliver such stock powers, endorsements, instruments and
agreements as the Required Purchasers determine necessary or advisable to
perfect, and to maintain the perfection of, the security interest granted or
purported to be granted by Holdings, the Company and their Subsidiaries parties
to the
25
Guarantee and Collateral Agreement to the Purchasers under the Note Documents in
connection with the events contemplated by the foregoing sentence.
7.11. Conditions Subsequent to Closing.
(a) 2000 Audited Financial Statements. Not later than April 30, 2001,
the Company shall deliver to each Purchaser the audited consolidated balance
sheets of the Company and its Consolidated Subsidiaries as of December 31, 2000
and the audited consolidated statements of earnings, statements of shareholders'
equity and statements of cash flows for the period ended December 31, 2000. Upon
the delivery of such financial statements, the Company shall, and shall be
deemed to, represent and warrant to each Purchaser that such financial
statements (including the notes thereto) (i) have been audited by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, (ii) have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby and (iii) present fairly, in all
material respects, the consolidated financial condition, results of operations
and cash flows of the Company and its Consolidated Subsidiaries as of such dates
and for such periods.
(b) Surveys. Not later than 90 days following the Closing Date the
Company shall deliver to the Co-Agents and the title insurance company issuing
the policies referred to in Section 4.4(l) (the "Title Insurance Company") maps
or plats of an as-built survey of the sites of each of the Mortgaged Properties
certified to the Purchasers and the Title Insurance Company in a manner
reasonably satisfactory to them, dated a date reasonably satisfactory to the
Required Purchasers and the Title Insurance Company by an independent
professional licensed land surveyor reasonably satisfactory to the Required
Purchasers and the Title Insurance Company, which maps or plats and the surveys
on which they are based shall be made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys jointly established and adopted by
the American Land Title Association and the American Congress on Surveying and
Mapping in 1992, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the following: (i)
the locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites necessary to use the sites; (iv) all
roadways, paths, driveways, easements, encroachments and overhanging projections
and similar encumbrances affecting the sites, whether recorded, apparent from a
physical inspection of the sites or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (vi) if the site is described as being on a filed
map, a legend relating the survey to said map.
(c) Removal of Certain Exceptions on Title Policies. Any exception take
by the Title Insurance Company on account of the delayed delivery of surveys to
be delivered pursuant to the foregoing clause (b) shall be (i) removed from the
applicable policy or (ii) affirmatively covered by the Title Insurance Company
within 90 days following the Closing Date.
26
ARTICLE 8. NEGATIVE COVENANTS
The Company hereby agrees that, from and after the Closing Date and so long
as any Senior Secured Note remain outstanding, and thereafter until payment in
full of all Obligations of the Company hereunder and under the other Note
Documents, and any other amount then due and owing to any Purchaser, the Company
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
8.1. Minimum Consolidated EBITDA. Permit the Consolidated EBITDA of the
Company for any fiscal period of the Company set forth below to be less than the
amount set forth opposite such period below:
Date of Determination Fiscal Period Amount
--------------------- ------------- ------
March 31, 2001 January 1, 2001 - $4,000,000
March 31, 2001
June 30, 2001 January 1, 2001 - $12,000,000
June 30, 2001
September 30, 2001 January 1, 2001 - $22,000,000
September 30, 2001
December 31, 2001 January 1, 2001 - $35,200,000
December 31, 2001
March 31, 2002 April 1, 2001 - $36,800,000
March 31, 2002
June 30, 2002 July 1, 2001 - $38,400,000
June 30, 2002
September 30, 2002 October 1, 2001 - $41,600,000;
September 30, 2002
December 31, 2002 January 1, 2002 - $41,600,000
December 31, 2002
March 31, 2003 April 1, 2002 - $41,600,000
March 31, 2003
June 30, 2003 July 1, 2002 - $41,600,000
June 30, 2003
September 30, 2003 October 1, 2002 - $41,600,000
September 30, 2003
December 31, 2003 January 1, 2003 - $41,600,000
December 31, 2003
March 31, 2004 April 1, 2003 - $41,600,000
March 31, 2004
provided, that if the "Minimum Consolidated EBITDA" for any fiscal period set
forth in Section 8.1(a) of the Senior Credit Agreement (as such is in effect on
the Closing Date) shall be reduced, the Minimum Consolidated EBITDA for the
corresponding period herein shall be reduced correspondingly such that the
Minimum Consolidated EBITDA required hereunder for any such fiscal period shall
equal 80% of the "Minimum Consolidated EBITDA" required thereunder for the same
fiscal period.
27
8.2. Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness (including any Indebtedness of any of its Subsidiaries),
except:
(a) Indebtedness of the Company (i) under this Agreement, any Senior
Secured Notes and other Note Documents or (ii) that constitutes Senior Debt
Obligations;
(b) Indebtedness under or evidenced by the Subordinated Note Documents;
provided that such Indebtedness shall not be extended, renewed, replaced,
refinanced or otherwise amended, except as otherwise permitted by Section
8.12(c) hereof; provided further that such Indebtedness shall not exceed
$225,000,000 in the aggregate plus the amount of any paid-in-kind interest on
any Indebtedness Refinanced in accordance with Section 8.12 hereof;
(c) Indebtedness (i) of the Company owed to any of its Subsidiaries and
(ii) of any Subsidiary owed to the Company or any other Subsidiary;
(d) Indebtedness of the Company and any of its Subsidiaries incurred to
finance or refinance the acquisition of fixed or capital assets (whether
pursuant to a loan, a Financing Lease or otherwise) otherwise permitted pursuant
to this Agreement, and any other Financing Leases, in an aggregate principal
amount not exceeding in the aggregate as to the Company and its Subsidiaries
$3,000,000 at any one time outstanding, provided that such Indebtedness is
incurred substantially simultaneously with such acquisition or within six months
after such acquisition or in connection with a refinancing thereof;
(e) to the extent that any Indebtedness may be incurred or arise
thereunder, Indebtedness of the Company and its Subsidiaries under Permitted
Hedging Arrangements;
(f) other Indebtedness outstanding or incurred under facilities in
existence on the Closing Date and listed on Schedule 8.2(f) hereto, and any
refinancings, refundings, renewals or extensions thereof on financial and other
terms, in the reasonable judgment of the Company, no more onerous to the Company
or any of its Subsidiaries in the aggregate than the financial and other terms
of such Indebtedness, provided that the amount of such Indebtedness is not
increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to the premium or other amounts paid, and fees and
expenses incurred, in connection with such refinancing, refunding, renewal or
extension;
(g) Indebtedness of Foreign Subsidiaries for working capital purposes
or pursuant to Section 8.6(b) hereof (including in respect of overdrafts) in an
aggregate principal amount at any one time outstanding not exceeding, as to all
such Foreign Subsidiaries, the Foreign Subsidiary Indebtedness Amount, provided
that such Indebtedness may exceed the Foreign Subsidiary Indebtedness Amount so
long as the "Available Revolving Credit Commitments" under the Senior Credit
Agreement shall have been reduced by the amount by which such Indebtedness
exceeds the Foreign Subsidiary Indebtedness Amount;
(h) to the extent that any Guarantee Obligation permitted under Section
8.4 hereof constitutes Indebtedness, such Indebtedness;
(i) Indebtedness of the Company or any of its Subsidiaries incurred to
finance insurance premiums in the ordinary course of business;
28
(j) Indebtedness arising from the honoring of a check, draft or similar
instrument against insufficient funds; provided that such Indebtedness is
extinguished within two Business Days of its incurrence; and
(k) Indebtedness of the Company and any of its Subsidiaries not
otherwise permitted by the preceding clauses of this Section 8.2 hereof which is
secured solely by a lien on Excluded Foreign Accounts of the Company and its
Subsidiaries and which does not exceed $5,000,000 in aggregate principal amount
at any one time outstanding, provided that the "Available Revolving Credit
Commitments" under the Senior Credit Agreement (as defined therein) shall have
been reduced by the amount of such Indebtedness.
With respect to any Indebtedness denominated in a foreign currency, for purposes
of determining compliance with any Dollar-denominated restriction on the
Incurrence of such Indebtedness under this Section 8.2 hereof, the amount of
such Indebtedness shall be calculated monthly based on the currency exchange
rate in effect at such time.
8.3. Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes, assessments and similar charges not yet delinquent
or the nonpayment of which in the aggregate would not reasonably be expected to
have a Material Adverse Effect, or which are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves with respect
thereto are maintained on the books of the Company or its Subsidiaries, as the
case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in good
faith by appropriate proceedings diligently conducted;
(c) Liens of landlords or of mortgagees of landlords arising by
operation of Law or pursuant to the terms of real property leases, provided that
the rental payments secured thereby are not yet due and payable;
(d) pledges, deposits or other Liens in connection with workers'
compensation, unemployment insurance, other social security benefits or other
insure related obligations (including, without limitation, pledges or deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements);
(e) Liens arising by reason of any judgment, decree or order of any
court or other Governmental Authority, if appropriate legal proceedings which
may have been duly initiated for the review of such judgment, decree or order,
are being diligently prosecuted and shall not have been finally terminated or
the period within which such proceedings may be initiated shall not have
expired;
(f) Liens to secure the performance of bids, trade contracts (other
than for borrowed money), obligations for utilities, leases, statutory
obligations, surety and appeal bonds,
29
performance bonds, judgment and like bonds, replevin and similar bonds and other
obligations of alike nature incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way, restrictions on the
use of property, other similar encumbrances incurred in the ordinary course of
business and minor irregularities of title which do not materially interfere
with the ordinary conduct of the business of the Company and its Subsidiaries
taken as a whole;
(h) Liens securing or consisting of Indebtedness of the Company and its
Subsidiaries permitted by Section 8.2(d) hereof incurred to finance the
acquisition of fixed or capital assets, provided that (i) such Liens shall be
created no later than the later of the date of such acquisition or the date of
the incurrence or assumption of such Indebtedness, and (ii) such Liens do not at
any time encumber any property other than the property financed by such
Indebtedness and, in the case of Indebtedness assumed in connection with any
such acquisition, the property subject thereto immediately prior to such
acquisition
(i) Liens existing on assets or properties at the time of the
acquisition thereof by the Company or any of its Subsidiaries that do not
materially interfere with the use, occupancy, operation and maintenance of
structures existing on the property subject thereto or extend to or cover any
assets or properties of the Company or such Subsidiary other than the assets or
property being acquired;
(j) Liens in existence on the Closing Date and listed in Schedule
8.3(j) hereto and other Liens securing Indebtedness of the Company and its
Subsidiaries permitted by Section 8.2(f) hereof, provided that no such Lien is
spread to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased except as permitted by
Section 8.2(f) hereof;
(k) Liens first arising prior to the Closing Date securing Guarantee
Obligations permitted under Section 8.4(d) hereof not exceeding (as to the
Company and all its Subsidiaries) $1,000,000 in aggregate amount at any time
outstanding;
(l) Liens created pursuant to the Security Documents or otherwise
securing Indebtedness permitted by Section 8.2(a) hereof;
(m) any encumbrance or restriction (including, without limitation, put
and call agreements) with respect to the Capital Stock of any joint venture or
similar arrangement pursuant to the joint venture or similar agreement with
respect to such joint venture or similar arrangement, provided that no such
encumbrance or restriction affects in any way the ability of the Company or any
of its Subsidiaries to comply with Section 8.15(b) hereof;
(n) Liens on property of any Foreign Subsidiary of the Company securing
Indebtedness of such Foreign Subsidiary permitted by Section 8.2(g) hereof or
otherwise permitted under this Agreement;
(o) Liens on Intellectual Property and foreign patents, patent
applications, trademarks, trademark applications, tradenames, copyrights,
technology, know-how and processes to the extent such Liens arise from the
granting of licenses to use such Intellectual
30
Property and foreign patents, patent applications, trademarks, trademark
applications, tradenames, copyrights, technology, know-how and processes to any
Person in the ordinary course of business of the Company or any of its
Subsidiaries; and
(p) Liens on Excluded Foreign Accounts of the Company and its
Subsidiaries securing Indebtedness permitted by Section 8.2(k) hereof.
8.4. Limitation on Guarantee Obligations. Create, incur, assume or suffer to
exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the Closing Date and listed
in Schedule 8.4(a) hereto, and any refinancings, refundings, extensions or
renewals thereof, provided that the amount of such Guarantee Obligation shall
not be increased at the time of such refinancing, refunding, extension or
renewal except to the extent that the amount of Indebtedness in respect of such
Guarantee Obligations is permitted to be increased by Section 8.2(f) hereof;
(b) Guarantee Obligations for performance, appeal, judgment, replevin
and similar bonds and suretyship arrangements, all in the ordinary course of
business;
(c) Reimbursement Obligations in respect of the letters of credit
issued under the Senior Credit Agreement;
(d) Guarantee Obligations in respect of third-party loans and advances
to officers or employees of the Company or any of its Subsidiaries (i) for
travel and entertainment expenses incurred in the ordinary course of business
and (ii) for relocation expenses incurred in the ordinary course of business;
(e) obligations to insurers required in connection with worker's
compensation and other insurance coverage incurred in the ordinary course of
business;
(f) obligations of the Company and its Subsidiaries under Permitted
Hedging Arrangements;
(g) guarantees made in the ordinary course of its business by the
Company or any of its Subsidiaries of obligations of the Company or any of its
Subsidiaries, which obligations are otherwise permitted under this Agreement;
(h) Guarantee Obligations in connection with sales or other
dispositions permitted under Section 8.6 hereof, including indemnification
obligations with respect to leases, and guarantees of collectability in respect
of accounts receivable or notes receivable for up to face value;
(i) Guarantee Obligations incurred pursuant to the Guarantee and
Collateral Agreement or otherwise in respect of Indebtedness permitted by
Section 8.2(a) hereof;
(j) guarantees by Subsidiaries of the Company set forth in the
Subordinated Note Documents, which guarantees are subordinated as provided in
each such document;
31
(k) guarantees of Indebtedness of Foreign Subsidiaries permitted by
Section 8.2(g) hereof;
(l) Guarantee Obligations in respect of letters of credit issued for
the account of Foreign Subsidiaries, and guarantees thereof, provided that the
aggregate amount of such Guarantee Obligations, taken together with the
aggregate amount of other Indebtedness of Foreign Subsidiaries outstanding
pursuant to Section 8.2(g) hereof, shall not exceed the aggregate amount of such
Indebtedness permitted pursuant to such Section; and
(m) Guarantee Obligations made by the Company or any of its
Subsidiaries to enable customers of the Company or any of its Subsidiaries to
obtain financing for the purchase of goods or services of the Company or any of
its Subsidiaries, provided that the aggregate amount of all such Guarantee
Obligations shall not at any one time exceed $1,000,000.
8.5. Limitation on Fundamental Changes. Enter into any merger, consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any Subsidiary of the Company may be merged or consolidated with or
into the Company, or with or into any one or more Wholly Owned Subsidiaries of
the Company, provided that the Company or such Wholly Owned Subsidiary or
Subsidiaries of the Company shall be the continuing or surviving entity;
(b) any Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Company or any Wholly Owned Subsidiary of the Company; or
(c) as expressly permitted by Sections 8.6 and 8.15 hereof.
8.6. Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, Accounts and leasehold interests), whether now owned or hereafter
acquired, or, in the case of any Subsidiary of the Company, issue or sell any
shares of such. Subsidiary's Capital Stock, to any Person other than the Company
or any Wholly Owned Subsidiary of the Company, except:
(a) the sale or other Disposition of any property (including Inventory)
in the ordinary course of business;
(b) the sale or discount without recourse of accounts receivable or
notes receivable arising in the ordinary course of business, or the conversion
or exchange of accounts receivable into or for notes receivable, in connection
with the compromise or collection thereof provided that, in the case of any
Foreign Subsidiary of the Company, any such sale or discount may be with
recourse if such sale or discount is consistent with customary practice in such
Foreign Subsidiary's country of business and the aggregate amount of any such
recourse shall be included in the determination of such Foreign Subsidiary's
Indebtedness for purposes of Section 8.2(g) hereof;
32
(c) as permitted by Section 8.5(b) hereof and pursuant to Sale and
Leaseback Transactions permitted by Section 8.11 hereof;
(d) Dispositions of any assets or property by the Company or any of its
Subsidiaries to the Company or any Wholly Owned Subsidiary of the Company,
(e) the abandonment or other Disposition of patents, trademarks or
other intellectual property that are, in the reasonable judgment of the Company,
no longer economically practicable to maintain or useful in the conduct of the
business of the Company and its Subsidiaries taken as a whole; provided that an
amount equal to 100% of the Net Cash Proceeds of any such abandonment or other
Disposition is applied in accordance with Section 4.4(d) of the Senior Credit
Agreement.
(f) Asset Sales or other Dispositions by the Company or any of its
Subsidiaries so long as (i) the aggregate consideration received by the Company
or such Subsidiary in connection therewith is not less than the fair market
value of the property subject of such Asset Sale or Disposition and (unless
otherwise consented to by the Required Purchasers) at least 75% of such
consideration is cash, provided that with respect to the sale or Disposition by
the Company of Audio Consultants Co. Ltd., the minimum cash consideration shall
be at least 50%, (ii) the Net Cash Proceeds of any such Asset Sale or
Disposition is applied in accordance with Section 4.4(d) of the Senior Credit
Agreement, provided that the Company shall not be obligated to so apply the Net
Cash Proceeds from any Asset Sale or Disposition until each such time that the
cumulative Net Cash Proceeds from such Asset Sales and Dispositions that have
theretofore not been applied in accordance with Section 4.4 of the Senior Credit
Agreement equals or exceeds $100,000 and (iii) unless otherwise consented to by
the Purchasers (which consent shall not be unreasonably withheld), the Net Cash
Proceeds to be received in connection with such Asset Sale or Disposition to be
retained by the Company with the consent of the Administrative Agent or the
holders of the Senior Loans under the Senior Credit Agreement do not exceed
$10,000,000, provided that such Net Cash Proceeds shall not be applied to the
payment of any Indebtedness (whether principal, interest accrued thereon or
costs, expenses or other amounts connected therewith) ranking pari passu with,
or subordinated to, the Company's Obligations under the Senior Secured Notes and
other Note Documents without the prior written consent of the Required
Purchasers; or
(g) the sale of all or any part of the assets or Capital Stock of the
Subsidiary or Subsidiaries comprising the Company's military antennae business,
provided that an amount equal to 100% of the Net Cash Proceeds of any such Asset
Sale is applied to mandatory prepayments of the Senior Loans pursuant to the
Senior Credit Agreement, in accordance with Section 4.4(d) thereof (or any
successor provision).
8.7. Limitation on Restricted Payments. Declare or pay any dividend (other
than dividends payable solely in common stock of the Company or options,
warrants or other rights to purchase common stock of the Company) on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of the Company or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution (other than distributions payable
solely in common stock of the Company or options, warrants or other rights to
purchase common stock of the Company) in respect
33
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Company, except that:
(a) the Company may pay cash dividends in an amount sufficient to allow
Holdings to pay expenses incurred in the ordinary course of business in an
aggregate amount not to exceed $750,000 in any fiscal year,
(b) the Company may pay cash dividends in an amount sufficient to cover
reasonable and necessary expenses (including professional fees and expenses)
incurred by Holdings in connection with indemnification and reimbursement of
directors, officers and employees in respect of liabilities relating to their
serving in any such capacity;
(c) the Company may pay cash dividends in amount sufficient to pay tax
liabilities of Holdings which are paid in cash by Holdings to any taxing
authority.
8.8. Limitation on Capital Expenditures. Make or commit to make any Capital
Expenditures (excluding any expenses incurred in connection with normal
replacement and maintenance programs properly charged to current operations and
excluding any Reinvested Amounts); provided that the Company and its
Subsidiaries may make Capital Expenditures in an amount not to exceed, for any
test period set forth below, the amount set forth opposite such test period
below:
Test Period Amount
----------- ------
January 1, 2001 - December 31, 2001 $8,000,000
January 1, 2002 - December 31, 2002 $8,000,000
January 1, 2003 - December 31, 2003 $8,000,000
January 1, 2004 - December 31, 2004 $8,000,000;
provided that an amount, not to exceed $4,000,000 for any test period, of
Capital Expenditures permitted to be made during any test period and not made
during such test period may be carried over and expended during the next
succeeding test period only.
8.9. Limitation on Investments, Loans and Advances. Make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment, in cash or by transfer of assets or
property, in (each an "Investment"), any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in cash and Cash Equivalents;
(c) Investments existing on the Closing Date and described in Schedule
8.9(c) hereto, setting forth the respective amounts of such Investments as of a
recent date;
(d) Investments in notes receivable and other instruments and
securities obtained in connection with transactions permitted by Section 8.6(c)
hereof;
34
(e) (i) loans and advances to officers, directors or employees of
Holdings, the Company or any of their respective Subsidiaries in the ordinary
course of business for travel and entertainment expenses or relocation expenses
or (ii) relating to indemnification or reimbursement of any officers, directors
or employees in respect of liabilities relating to their serving in any such
capacity or as otherwise specified in Section 8.10 hereof;
(f) Investments by the Company in its Wholly Owned Subsidiaries and by
such Wholly Owned Subsidiaries in the Company and in Wholly Owned Subsidiaries
of the Company;
(g) Investments of the Company and its subsidiaries under Permitted
Hedging Arrangements;
(h) Investments in the nature of pledges or deposits with respect to
leases or utilities provided to third parties in the ordinary course of business
or otherwise described in Section 8.3(c), (d) or (f) hereof;
(i) Investments representing non-cash consideration received by the
Company or any of its Subsidiaries in connection with any Asset Sale, provided
that, unless the Required Purchasers shall otherwise consent, in the case of any
Asset Sale permitted under Section 8.6(g) hereof, such non-cash consideration
constitutes not more than 25% of the aggregate consideration received in
connection with such Asset Sale and any such non-cash consideration received by
the Company or any of its Domestic Subsidiaries is pledged to the Purchasers
pursuant to the Security Documents;
(j) Investments representing evidences of Indebtedness, securities or
other property received from another Person by the Company or any of its
Subsidiaries in connection with any bankruptcy proceeding or other
reorganization of such other Person or as a result of foreclosure, perfection or
enforcement of any Lien or exchange for evidences of Indebtedness, securities or
other property of such other Person held by the Company or any of its
Subsidiaries; provided that any such securities or other property received by
the Company or any of its Domestic Subsidiaries is pledged to the Purchasers
pursuant to the Security Documents; and
(k) Investments by the Company or any of its Subsidiaries in a Person
in connection with a joint venture or similar arrangement in respect of which no
other coinvestor or other Person has a greater legal or beneficial ownership
interest than the Company or such Subsidiary so long as any such Investment
either was first made prior to the Closing Date, or if made thereafter, the cash
Investment does not in the aggregate exceed, unless otherwise agreed by the
Required Purchasers, an amount equal to $500,000 (exclusive of any undistributed
profits of any such joint venture or similar arrangement that may accumulate).
8.10. Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement and (b) upon
terms no less favorable to the Company or such Subsidiary, as the case may be,
than it would obtain in a comparable arm's length transaction with a Person
which is not an Affiliate; provided that nothing contained in this Section 8.10
hereof shall be deemed to prohibit:
35
(i) the payment of transaction expenses in connection with this
Agreement and the Note Purchase Transactions, including, but not limited to,
the payment by the Company of the Commitment Fee due to TCII or any of its
Affiliates other than Holdings, the Company or any of their Subsidiaries;
(ii) the Company or any of its Subsidiaries from entering into or
performing an agreement with GSCP for the rendering of management consulting
or financial advisory services for compensation not to exceed in the
aggregate $1,720,000 per year plus reasonable out-of-pocket expenses;
provided that at any time during which a Default or an Event of Default has
occurred and is continuing, the Company and its Subsidiaries may not make
any payments to GSCP under any such agreement and such payments may accrue
to GSCP and may be paid in full after such Default or Event or Default has
been cured or waived; provided further that at any time during which the
Company and its Subsidiaries are not permitted to make payments to GSCP
under any such agreements, GSCP may elect to receive Capital Stock of
Holdings in lieu of such payments;
(iii) the Company or any of its Subsidiaries from entering into,
making payments pursuant to and otherwise performing an indemnification and
contribution agreement in favor of any person who is or becomes a director,
officer, agent or employee of the Company or any of its Subsidiaries, in
respect of liabilities (A) arising under the Securities Act, the Exchange
Act and any other applicable securities laws or otherwise, in connection
with any offering of securities by the Company or any of its Subsidiaries,
(B) incurred to third parties for any action or failure to act of the
Company or any of its Subsidiaries, predecessors or successors, (C) arising
out of the fact that any indemnitee was or is a director, officer, agent or
employee of the Company or any of its Subsidiaries, or is or was serving at
the request of any such corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
enterprise or (D) to the fullest extent permitted by Delaware or other
applicable state Law, arising out of any breach or alleged breach by such
indemnitee of his or her fiduciary duty as a director or officer of the
Company or any of its Subsidiaries;
(iv) the Company or any of its Subsidiaries from performing any
agreements or commitments with or to any Affiliate existing on the Closing
Date and described on Schedule 8.10 hereto;
(v) any transaction permitted under Section 8.3(k), 8.4(d),
8.4(i), 8.4(j), 8.4(k), 8.5, 8.7, 8.9(e) or 8.9(k) hereof, or any
transaction with a Wholly Owned Subsidiary of the Company,
(vi) the Company or any of its Subsidiaries from performing its
obligations under the Tax Sharing Agreement to the extent permitted by
Section 8.7(d) hereof (including interest and penalties); or
(vii) the making of loans to the Company by TCII or any Affiliate
thereof other than Holdings, the Company and their Subsidiaries pursuant to
this Agreement.
36
For purposes of this Section 8.10, any transaction with any Affiliate shall be
deemed to have satisfied the standard set forth in clause (b) of the first
sentence hereof if (i) such transaction is approved by a majority of the
Disinterested Directors of the board of directors of the Company or such
Subsidiary, or (ii) in the event that at the time of any such transaction, there
are no Disinterested Directors serving on the board of directors of the Company
or such Subsidiary, such transaction shall be approved by a nationally
recognized expert with expertise in appraising the terms and conditions of the
type of transaction for which approval is required.
8.11. Limitation on Sale and Leaseback Transactions. Enter into any
arrangement with any Person providing for the leasing by the Company or any of
its Subsidiaries of real or personal property which has been or is to be sold or
transferred by the Company or any such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Company or such
Subsidiary (any of such arrangements, a "Sale and Leaseback Transaction"), other
than in connection with any Disposition permitted under Section 8.6 hereof and
except for Sale and Leaseback Transactions entered into by the Company or any
such Subsidiary with respect to real or personal property with an aggregate book
value not to exceed $1,000,000 at any one time.
8.12. Limitation on Optional Payments and Modifications of Debt Instruments
and Other Documents.
(a) Make any repurchase or redemption of any of the Subordinated Notes,
including, without limitation, any payments on account of, or for a sinking or
other analogous fund for, the repurchase, redemption, defeasance or other
acquisition thereof, except mandatory payments of principal, interest, fees and
expenses required by the terms of the Subordinated Note Documents, only to the
extent permitted under the subordination provisions, if any, applicable thereto.
(b) In the event of the occurrence of a Change of Control, repurchase
the Subordinated Notes or any portion thereof, unless the Company shall have (i)
made payment in full of the Senior Secured Notes and all Obligations of the
Company and any other amounts then due and owing to any Purchaser hereunder and
under any other Note Document or (ii) made an offer to pay the Senior Secured
Notes and all Obligations of the Company and any amounts then due and owing to
each Purchaser hereunder and under any other Note Document and shall have made
payment in full thereof to each such Purchaser that has accepted such.
(c) Subject to the maximum amount permitted under Section 8.2(b)
hereof, amend, supplement, waive or otherwise modify, including by an exchange,
any of the provisions of any of the Subordinated Notes Documents, which:
(i) amends or modifies the subordination provisions, if any,
contained therein or relating thereto;
(ii) shortens the fixed maturity or increases the principal amount
of, or increases the rate or shortens the time of payment of interest on, or
increases the amount or shortens the time of payment of any principal or
premium payable whether at maturity, at a date fixed for prepayment or by
acceleration or otherwise of the Indebtedness
37
evidenced by the Subordinated Notes, or increases the amount of, or accelerates
the time of payment of, any fees or other amounts payable in connection
therewith;
(iii) which relates to any material affirmative or negative
covenants or any events of default or remedies thereunder and the effect of
which is to subject the Company or any of its Subsidiaries, to any more
onerous or more restrictive provisions; or
(iv) which otherwise adversely affects the interests of the
Purchasers as senior creditors with respect to the Subordinated Notes or the
interests of the Purchasers, or any of them, hereunder or under any other
Note Document in any material respect.
(d) Amend, supplement, waive or otherwise modify, including by a
refinancing, any of the provisions of the Senior Credit Documents except in a
manner than does not conflict with the Intercreditor Agreement and as is not
reasonably likely to materially adversely affect the rights and remedies of the
Purchasers hereunder. The Company shall use its reasonable best efforts to give
written notice to each Purchaser at least three Business Days, but not more than
ten Business Days, prior to entering into any agreement with respect to any such
proposed amendment, supplement, waiver or other modification.
(e) Create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to, create, incur, assume or suffer to exist, any Indebtedness that
permits, extends, renews, replaces or otherwise refinances (collectively,
"Refinances") Indebtedness that is subordinated in right of payment to the
Senior Secured Notes or any Guarantor's Obligations under the Note Documents
unless such Refinanced Indebtedness shall be subordinated to the Company's
Obligations under or in connection with the Senior Secured Notes (or such
Obligations of the Guarantors, as the case may be) to at least the same extent
as such subordinated Indebtedness that has been Refinanced; provided that
Permitted Refinanced Indebtedness shall not be prohibited hereunder.
(f) Incur, or permit any of its Subsidiaries to incur, any Indebtedness
that by its terms (or by the terms of any agreement governing such Indebtedness)
is subordinated in right of payment to any other Indebtedness of the Company or
any of its Subsidiaries unless such Indebtedness is also by its terms (or by the
terms of any agreement governing such Indebtedness) made expressly subordinate
in right of payment to the Company's Obligations under or in connection with the
Senior Secured Notes or any Guarantor's Obligations under the Note Documents
pursuant to subordination provisions of such Indebtedness (or such agreement)
that are most favorable to the holders of any other Indebtedness of the Company
or such Subsidiary, as the case may be; provided that Permitted Refinanced
Indebtedness shall not be prohibited hereunder.
(g) Directly or indirectly incur, contingently or otherwise, or permit
any Guarantor to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness (other than the Senior Secured Notes and the Guarantor's
Obligations under the Note Documents, as the case may be) that is (i)
subordinate in right of payment to the Senior Debt Obligations and (ii) senior
in right of payment to the Company's Obligations under or in connection with the
Senior Secured Notes and other Note Documents or the Obligations of any
Guarantor hereunder or thereunder, as the case may be; provided that Permitted
Refinanced Indebtedness shall not be
38
prohibited hereunder. For purposes of this Section 8.12, Indebtedness shall be
deemed to be the senior in right of payment to the Senior Secured Notes (and the
Company's Obligations thereunder or with respect thereto) or the Obligations of
any Guarantor hereunder or under any other Note Document, as the case may be, if
it is not expressly subordinated in right of payment to the Senior Debt
Obligations at least to the same extent as the Senior Secured Notes and the
Obligations of any Guarantor hereunder or thereunder, as the case may be, are
subordinated to the Senior Debt Obligations; provided that this Section 8.12(g)
shall not apply to Indebtedness incurred by any Foreign Subsidiary subject to
the Foreign Subsidiary Account.
Notwithstanding anything in this Section 8.12, any Refinancing of the Company's
Obligations under the Subordinated Documents shall be permitted (such Refinanced
Indebtedness, the "Permitted Refinanced Indebtedness") provided that (x) such
Indebtedness shall mature and the principal thereof become due and payable after
the Maturity Date, (y) the annual interest payable thereon in cash shall not
exceed the aggregate annual interest payable in cash on the 11% Subordinated
Notes and the 10.5% Subordinated Notes, and (z) such Indebtedness shall be
subordinate in right of payment to the Senior Secured Notes at least to the same
extent as the Indebtedness being Refinanced.
8.13. Limitations on Changes in Fiscal Year. Permit the fiscal year of the
Company to end on a day other than December 31.
8.14. Limitation on Negative Pledge Clauses. Enter into with any Person any
agreement, other than (a) this Agreement, the other Note Documents and any
related documents, (b) the Senior Credit Documents, and (c) any purchase money
mortgages, acquisition agreements, Financing Leases or operating leases of real
property entered into in the ordinary course of business, which prohibits or
limits the ability of the Company or any of its Subsidiaries to create, incur,
assume or suffer to exist any lien in favor of the Purchasers in respect of
obligations and liabilities under this Agreement, any Senior Secured Notes or
any other Note Documents upon any of its property, assets or revenues, whether
now owned or hereafter acquired except for any such agreement relating to
Indebtedness of a Foreign Subsidiary permitted by Section 8.2(g) hereof or
otherwise permitted under this Agreement.
8.15. Limitation on Lines of Business; Creation of Subsidiaries.
(a) Enter into any business, either directly or through any Subsidiary
or joint venture, except for those businesses of the same general type as those
in which the Company and its Subsidiaries are engaged on the Closing Date or
which are directly related thereto.
(b) Create any new Subsidiaries of the Company other than any new
Subsidiary that (i) in the case of a new Domestic Subsidiary, shall execute and
deliver to the Co-Agents, as applicable, a Guarantee and Collateral Agreement
supplement and appropriate Mortgages and other security documents and take any
necessary steps to perfect the security interests to be created thereby and (ii)
for which the relevant parent corporation, if such parent corporation is the
Company or a Domestic Subsidiary (other than Telex Communications International,
Ltd.), shall execute and deliver to the Co-Agents a stock pledge agreement and
take any necessary steps to perfect the security interest to be created thereby,
which security interest shall not apply to more than 65% of such parent
corporation's ownership interest in any Foreign Subsidiary.
39
(c) To the extent not prohibited by this Agreement, convey, sell or
otherwise transfer shares of Capital Stock of a Foreign Subsidiary to the
Company or any Domestic Subsidiary of the Company unless at the time of such
conveyance, sale or transfer (or promptly thereafter) the Company or such
Domestic Subsidiary shall execute and deliver to the Co-Agents a Guarantee and
Collateral Agreement (or supplement thereto), together with any other Security
Documents that the Required Purchasers may determine necessary and take any
necessary steps to perfect the security interest to be created thereby (which
security interest shall not apply to (i) more than 65% of the Company's or such
Domestic Subsidiary's ownership interest in any Foreign Subsidiary or (ii) any
ownership interest in a non Wholly Owned Foreign Subsidiary to the extent that
the grant of such security interest would violate the terms of any agreements
under which the Investment by the Company or any or its Subsidiaries was made
therein).
8.16. Limitations on Currency and Commodity Hedging Transactions. Enter
into, purchase or otherwise acquire agreements or arrangements relating to
currency, commodity or other hedging except, to the extent and only to the
extent that, such agreements or arrangements are entered into, purchased or
otherwise acquired in the ordinary course of business of the Company or any of
its Subsidiaries with reputable financial institutions and not for purposes of
speculation (any such agreement or arrangement permitted by this Section, a
"Permitted Hedging Arrangement").
8.17. Holding Company Status of Telex Communications International, Ltd. In
the case of Telex Communications International, Ltd., permit Telex
Communications International, Ltd. to engage in any business other than (i) the
owning of the Capital Stock of the Foreign Subsidiaries and (ii) any business or
other activities reasonably related to the foregoing, or to incur any material
liabilities other than any liabilities (x) reasonably related to the foregoing
or (y) arising by operation of Law.
8.18. Payment of Special Bonuses to Management. At any time when a Default
or an Event of Default has occurred and is continuing, make any cash payments to
its management in respect of special bonuses, provided that such payments may
accrue to such persons otherwise entitled to such payments and may be paid in
full after such Default or Event or Default has been cured or waived, and
provided further that at any time when the Company and its Subsidiaries are not
permitted to make such payments to management, any of such persons otherwise
entitled to such payments may elect to receive Capital Stock of Holdings in lieu
of such payments.
ARTICLE 9. EVENTS OF DEFAULT.
9.1. Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default" hereunder:
(a) failure of the Company to pay any principal, interest, fees or
expenses or other Obligations of the Company under or in connection with the
Senior Secured Notes or any other Note Document in accordance with the terms
hereof or thereof when due, whether at stated maturity, by acceleration or
otherwise;
(b) breach by the Company of any representation or warranty, or failure
to comply with any covenant, contained in this Agreement (other than under a
provision covered by subsection (a) above), the other Note Documents or any
other agreement, document, instrument
40
or certificate among the Company and the Purchasers (or any of them) or executed
by the Company in favor of any Purchaser, which breach or failure shall continue
unremedied more than 14 Business Days after receipt of notice of such breach
from any Purchaser or Purchasers holding Senior Secured Notes evidencing at
least $5,000,000 of Indebtedness, (such grace period to apply only to the extent
such breach or failure is curable within such 14-Business Day period);
(c) (i) Holdings, the Company or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future Law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or Holdings, the
Company or any of its Subsidiaries shall make a general assignment for the
benefit of creditors; or (ii) there shall be commenced against Holdings, the
Company or any of their respective Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for 60 days after the entry
thereof; or (iii) there shall be commenced against Holdings, the Company or any
of their respective Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal for 60 days;
(d) an event of default shall occur and be continuing under the Senior
Credit Documents, the Subordinated Note Documents, or any of them;
(e) a Change in Control shall have occurred;
(f) the Company or any of its Subsidiaries shall (i) default in any
payment of principal of or interest on any Indebtedness or in the payment of any
Guarantee Obligation (other than as provided in Section 9.1(a) above) the
aggregate principal amount of the series of Indebtedness under which such
Indebtedness is issued and the aggregate principal amount of the obligation
guaranteed by such Guarantee equals or exceeds $1,000,000; or (ii) default in
the observance or performance of any other agreement or condition relating to
any such Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Guarantee Obligation to become due prior to
its stated maturity or such Guarantee Obligations to become payable;
(g) (i) any material covenant, agreement or obligation of any party
contained in or evidenced by any of the Note Documents, including, without
limitation, that any guarantee made by any Guarantor (as defined therein) under
the Guarantee and Collateral Agreement, shall for any reason cease to be
enforceable in accordance with its terms, or any party (other than
41
Purchasers) to any Note Document shall deny or disaffirm it obligations under
any of the Note Documents (including, without limitation, any such Guarantor
shall so assert with respect to such Guarantor's guarantee under the Guarantee
and Collateral Agreement), or any Note Document shall be cancelled, terminated,
revoked or rescinded without the express prior written consent of Purchasers,
(ii) any of the Note Documents shall cease for any reason to be in full force
and effect (other than in accordance with the terms hereof or thereof) or any
action or proceeding shall have been commenced by any Person (other than other
than the Purchasers) seeking to cancel, revoke, rescind or disaffirm the
obligations of any party to any Note Document, (iii) any court or other
governmental authority shall issue a final judgment, order, decree or ruling for
the payment of money (a "Judgment") and such Judgment is in an amount
(determined after an allowance for the application of any insurance proceeds to
such Judgment) in excess of $250,000 and enforcement proceedings shall have been
commenced upon any such Judgment or any such Judgment shall remain unpaid after
a period of 10 consecutive days during which a stay of such enforcement of any
such Judgment, including, without limitation, by reason of a pending appeal or
otherwise, shall not be in effect;
(h) any Security Document after delivery thereof pursuant to Section
4.4 or 7.9 hereof shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected Lien, (which Liens, or any of
them, become subordinated in right or priority to any Lien granted other than
pursuant to the Senior Credit Documents and/or in accordance with the terms of
the Intercreditor Agreement or any Lien permitted hereunder), on and security
interest in the Collateral purported to be covered thereby; and
(i) the Company or any of its Subsidiaries shall have concealed,
removed or permitted to be concealed or removed any part of its assets or
property with an intent to hinder, delay or defraud its creditors or any of them
or made or suffered a transfer of any of its assets or property or incurred an
obligation which may be fraudulent under any Bankruptcy Law, fraudulent
conveyance or other similar Law;
(j) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of
either of the Company or any Commonly Controlled Entity, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is in the reasonable opinion of the
Administrative Agent likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) either of the Company or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Administrative
Agent is likely to, incur any liability in connection with a withdrawal from, or
the Insolvency or Reorganization of, a Multiemployer Plan, or (vi) any other
event or condition shall occur or exist with respect to a Plan; and in each case
in clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could be reasonably expected to result
in a Material Adverse Effect; or
(k) The Subordinated Notes, for any reason, shall not be or shall cease
to be validly subordinated as provided therein and in the Subordinated Notes
Documents to the
42
Obligations of the Company under this Agreement, any Senior Secured Notes and
the other Note Documents, or the Obligations of any Guarantor (as defined in the
Guarantee and Collateral Agreement) under a guarantee of the Subordinated Notes,
for any reason, shall not be or shall cease to be validly subordinated as
provided therein and in the Subordinated Notes Documents to the obligations of
such Guarantor under the Guarantee and Collateral Agreement.
9.2. Acceleration. The Purchasers, and each of them, upon the occurrence of
an Event of Default that has not been waived by the Required Purchasers, by
delivery of written notice to the Company may, subject in each case to the terms
of the Intercreditor Agreement, take any or all of the following actions without
prejudice to the rights of any Purchaser to enforce its claims against the
Company:
(a) declare all or any part of the Obligations hereunder to be
immediately due and payable (except with respect to any Event of Default set
forth in Section 9.1(c) hereof, in which case all such Obligations shall
automatically become immediately due and payable without the necessity of any
notice or other demand) without presentment, demand, protest or any other action
or obligation of any Purchaser; and
(b) deliver notice to the trustee for each of the 10.5% Subordinated
Notes and the 11% Subordinated Notes for the purpose of blocking payments to
such trustees and the holders of the 10.5% Subordinated Notes and 11%
Subordinated Notes, or any of them.
If at any time after acceleration of the maturity of the Senior Secured Notes
held by any Purchaser, the Company shall pay all arrears of interest, costs and
expenses and all payments on account of principal of such Senior Secured Notes,
which shall have become due otherwise than by acceleration (with interest on
principal and, to the extent permitted by Law, on overdue interest, at the rates
specified in this Agreement) and all Events of Default and Defaults (other than
nonpayment of principal of and accrued interest on such Senior Secured Notes and
other Obligations hereunder due and payable solely by virtue of acceleration)
shall have been remedied or waived, then by written notice to the Company, the
Required Purchasers may elect, in their sole discretion, to rescind and annul
the acceleration and its consequences. Any action pursuant to the foregoing
sentence shall not affect any subsequent Default or Event of Default or impair
any right or remedy consequent thereon. The provisions of the preceding
sentences are intended merely to bind the Required Purchasers to a decision that
may be made at their election. In no event are the provisions of this Section
9.2 intended to benefit the Company or any other Person, nor does this Section
9.2 give the Company or any other Person the right to require the Required
Purchasers to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.
9.3. Remedies on Default.
(a) If an Event of Default occurs and is continuing, the Required
Purchasers may, subject in each case to the terms of the Intercreditor
Agreement, pursue for the ratable benefit of the Purchasers and the other
holders of Senior Secured Notes any available remedy to collect the payment of
principal of, or premium or interest on, the Senior Secured Notes, or to enforce
the performance of any provision of the Senior Secured Notes, the Security
Documents, this Agreement or any other Note Document. A delay or omission by any
Purchaser or the Required Purchasers in exercising any right or remedy with
respect to any Event of Default shall
43
not impair such right or remedy or constitute a waiver of or acquiescence on the
Event of Default. All remedies are cumulative to the extent permitted by Law.
(b) Subject to the terms of the Intercreditor Agreement, the Required
Purchasers may direct the time, method and place of conducting any proceeding
for any remedy available to the Purchasers.
(c) Notwithstanding any other provision of this Agreement, but subject
to the terms of the Intercreditor Agreement, the right of any Purchaser or other
holder of Senior Secured Notes to receive payment of principal of, and interest
on the Senior Secured Notes held by such Purchaser or other holder, or to being
suit for the enforcement of any such payment or to exercise such Purchaser's or
other holder's rights with respect to the Collateral under the Security
Documents or otherwise at law or equity, shall not be impaired or affected
without the consent of such Purchaser.
ARTICLE 10. REGISTRATION; EXCHANGE; SUBSTITUTION OF SENIOR SECURED NOTES.
10.1. Registration of Senior Secured Notes. The Company shall keep at its
principal executive office a register for the registration of the Senior Secured
Notes and transfers thereof. The name and address of each holder of one or more
Senior Secured Notes, each transfer thereof and the name and address of each
transferee of such Senior Secured Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Senior Secured Note shall be registered shall be deemed to be and treated as
the owner and holder thereof for all purposes hereunder and under the other Note
Documents, and the Company shall not be affected by any notice or knowledge to
the contrary. The Company shall give to each holder of a Senior Secured Note,
promptly upon request therefor, a complete and correct copy of the names and
addresses of all registered holders of Senior Secured Notes.
10.2. Transfer and Exchange of Senior Secured Notes.
(a) Upon surrender of any Senior Secured Note at the principal
executive office of the Company for registration of transfer or exchange (and,
in the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Senior Secured Note, or its attorney duly authorized in writing,
and accompanied by the address for notices of each transferee of such Senior
Secured Note or part thereof), the Company shall execute and deliver, at the
Company's expense (except as provided below), one or more new Senior Secured
Notes (as requested by the holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered Senior
Secured Note. Each such new Senior Secured Note shall be payable to such Person
or Persons as such holder may request and shall be substantially in the form of
Exhibit A hereto. Each such new Senior Secured Note shall be dated and bear
interest from the date to which interest shall have been paid on the surrendered
Senior Secured Note or dated the date of the surrendered Senior Secured Note if
no interest shall have been paid thereon. The Company shall pay any stamp tax or
governmental charge imposed in respect of any transfer of Senior Secured Notes.
Senior Secured Notes shall not be transferred by any holder of Senior Secured
Notes to any Person that is a direct competitor of the Company without the
Company's
44
prior written consent and shall be transferred solely in denominations equal to
or greater than the lesser of $200,000 or the entire principal amount of the
Senior Secured Note to be transferred, which Senior Secured Note shall be
transferable solely in whole and not in part.
(b) Each transferee, by its acceptance of a Senior Secured Note
registered in its name (or the name of its nominee), shall be deemed (i) to be a
"Purchaser" for all purposes hereunder, including, without limitation, to have
made the representations set forth in Article 6 hereof and (ii) to confirm to
and agree with the transferor of such Senior Secured Note and the other parties
hereto as follows: (A) other than as provided in any written instrument of
transfer executed by such transferor and such transferee, such transferor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Note Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, this Agreement or any
other Note Document or any other instrument or document furnished pursuant
hereto or thereto; (B) such transferor makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Company
or the performance or observance by the Company of any of its obligations under
any Note Document or any other instrument or document furnished pursuant
thereto; (C) such transferee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 5.4 hereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to purchase the Senior
Secured Note; and (D) such transferee will, independently and without reliance
upon the transferor or any other holder of Senior Secured Notes, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; and (D) such transferee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a holder of a Senior Secured
Note.
(c) Notwithstanding anything to the contrary in this Section 10.2, for
so long as the Senior Secured Notes shall be or be deemed to be restricted
securities under any applicable Law, no Senior Secured Notes shall be
transferable unless registered under the Securities Act and applicable state
securities laws or exempt from such registration. The Company shall be entitled
to an opinion of counsel in form and substance reasonably acceptable to the
Company with respect to any such exemption.
10.3. Replacement of Senior Secured Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Senior Secured Note, and
(a) in the case of loss, theft or destruction, of an indemnity
reasonably satisfactory to the Company, or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company, at its own expense, shall execute and deliver, in lieu thereof, a
new Senior Secured Note, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated
Senior Secured Note or dated the date of such lost, stolen, destroyed or
mutilated Senior Secured Note if no interest shall have been paid thereon.
45
ARTICLE 11. PREPAYMENT; PAYMENT OF SENIOR SECURED NOTES.
11.1. Voluntary Prepayments. The Company may, upon not less than seven, and
not more than 14, Business Days' notice to the Purchasers, prepay the unpaid
principal amount of the Senior Secured Notes, in whole or in part, in cash in
U.S. dollars together with accrued interest thereon and costs incurred in
connection therewith to the date of such prepayment; provided that each partial
prepayment shall be in an aggregate principal amount of not less than the lesser
of $5,000,000 and the total outstanding principal amount of the Notes. Each
prepayment hereunder shall be made by wire transfer in immediately available
funds to the account or accounts specified in writing therefor by the Purchasers
or other holders holding the Senior Secured Notes, respectively.
11.2. Allocation of Partial Prepayments. Each partial prepayment of the
Senior Secured Notes pursuant to Section 11.1 hereof shall be allocated (in
integral multiples of $1,000) to all Senior Secured Notes then outstanding in
proportion, as nearly as practicable, to the respective unpaid principal amounts
thereof not theretofore called for prepayment, with adjustments to the extent
applicable to compensate for any prior prepayments not made exactly in such
proportion.
11.3. Payment. The Company will repay the Principal Amount and any other
outstanding principal amount of the Senior Secured Notes, together with accrued
and unpaid interest thereon and costs, expenses and other amounts due with
respect thereto, in full in U.S. dollars in immediately available funds on the
Maturity Date.
11.4. Maturity; Surrender, etc. In the case of each prepayment of Senior
Secured Notes pursuant to Section 11.1 hereof, the principal amount of each
Senior Secured Note to be so prepaid or repurchased shall mature and become due
and payable on the date fixed for such prepayment or repurchase, together with
the interest accrued thereon and all costs, expenses and other amounts incurred
in connection therewith to such date. From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable,
together with such interest and costs, no investor costs shall accrue on such
principal amount. Any Senior Secured Note paid or prepaid in full shall be
surrendered to the Company and canceled and shall not be reissued, and no Senior
Secured Note shall be issued in lieu of any prepaid or repurchased principal
amount of any Senior Secured Note.
11.5. Purchase of Senior Secured Notes. The Company will not purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Senior Secured Notes except in accordance with the terms of this
Agreement, the Senior Secured Notes and the other Note Documents. The Company
will promptly cancel all Senior Secured Notes acquired by it pursuant to any
payment, prepayment or purchase of Senior Secured Notes pursuant to any
provision of this Agreement and no Senior Secured Notes may be issued in
substitution of or exchange for any such Senior Secured Notes. So long as any
Purchaser or any Purchaser's nominee shall be the holder of any Senior Secured
Note, the Company will pay all sums becoming due on such Senior Secured Note(s)
for principal and interest by the method provided for in this Agreement and at
the address specified for such purpose below such Purchaser's name in Schedule I
hereto, or at such other address as such Purchaser shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Senior Secured Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or
46
prepayment in full of any Senior Secured Note, Purchaser shall surrender such
Senior Secured Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office. Prior to any
permitted sale, transfer or other disposition of any Senior Secured Note held by
any Purchaser or any Purchaser's nominee, such Purchaser will, at Purchaser's
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Senior
Secured Note to the Company in exchange for a new Senior Secured Note or Senior
Secured Notes pursuant to Section 10.2 above. The Company will afford the
benefits of this Section 11 to any holder of Senior Secured Notes that is the
direct or indirect transferee of any Senior Secured Note purchased by Purchaser
under this Agreement and that has made the same agreement relating to such
Senior Secured Note as such Purchaser has made in this Section 11.
ARTICLE 12. EXPENSES AND INDEMNIFICATION.
12.1. Transaction Expenses. Whether or not the Note Purchase and the other
Note Purchase Transactions are consummated, the Company will pay all reasonable
costs and expenses of ▇▇▇▇▇▇▇ Procter LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, each
counsel to the initial Purchasers in connection with the preparation, execution
and delivery of the Note Documents and all costs and expenses (including
reasonable attorney's fees of a special counsel and, if reasonably required,
local or other counsel) incurred by the Purchasers or any holders of Senior
Secured Notes in connection with the administration of the Note Documents,
including (a) the costs and expenses of any amendments, waivers or consents
under or in respect of this Agreement, the Senior Secured Notes (whether or not
such amendment, waiver or consent becomes effective), or any other Note
Document, (b) the costs and expenses incurred in defending (or determining
whether or how to enforce or defend) any rights under this Agreement, the Senior
Secured Notes or any of the other Note Documents or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement, the Senior Secured Notes or any of the other
Note Documents, or by reason of being a holder of any Senior Secured Note, and
(c) subject to the terms of the Intercreditor Agreement, the reasonable costs
and expenses, including financial advisors' fees, incurred in connection with
the insolvency or bankruptcy of the Company or in connection with any work-out,
renegotiation or restructuring of the transactions contemplated hereby, by the
Senior Secured Notes and by the other Note Documents. The Company will pay and
will save each Purchaser and each other holder of a Senior Secured Note harmless
from all claims in respect of any fees, costs or expenses if any, of brokers and
finders (other than those retained by such Purchaser) or such holder.
12.2. Indemnification.
(a) In the event that the Purchasers, or any of them, or any holder of
any Senior Secured Note becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter contemplated by this
Agreement or any other Note Document, the Company will reimburse each such
Purchaser and holder for legal and other expenses (including, without
limitation, the cost of any investigation and preparation) as they are incurred
by each such Purchaser and holder whether or not such investigation, litigation,
or proceeding is brought by the Company, its directors, shareholders or
creditors or an Indemnified Party, or an Indemnified Party is otherwise a party
thereto. The Company also agrees to indemnify and hold
47
harmless Purchaser and each other Purchaser and each holder of a Senior Secured
Note and their respective affiliates and their respective directors, officers,
members, employees, partners, affiliates and agents of such parties (the
"Indemnified Parties") from and against any and all losses, claims, damages,
liabilities, obligations, deficiencies, actions, suits, proceedings, demands,
assessments, penalties, costs and expenses (each, a "Loss") joint or several,
related to or arising out of any matters contemplated by this Agreement, unless
and only to the extent that a court of competent jurisdiction shall finally
determine that such Loss resulted primarily from such Purchaser's or such
holder's, as the case may be, gross negligence or willful misconduct and, in the
event such Purchaser or such holder is found in any action, proceeding or
investigation to have acted with gross negligence or willful misconduct, or to
have breached such Purchaser's or such holder's obligations under Section 19.5
hereof, such Purchaser or holder shall repay to the Company any portion of the
amounts paid by the Company pursuant to this paragraph that is attributable to
such action that is the subject of such finding. The Indemnified Parties will
promptly notify the Company upon receipt of written notice of any claim or
threat to institute a claim; provided that any failure by the Indemnified
Parties to give such notice shall not relieve the Company from the obligation to
indemnify the Indemnified Parties.
(b) If any action, claim, investigation or other proceeding is
instituted or threatened against any Indemnified Parties in respect of which
indemnity may be sought hereunder, the Company shall be entitled to assume the
defense thereof with counsel selected by the Company (which counsel shall be
reasonably satisfactory to such Indemnified Parties) and after notice from the
Company to such Indemnified Parties of its election so to assume the defense
thereof, the Company will not be liable to such Indemnified Parties hereunder
for any legal or other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof other than reasonable costs of
investigation; provided that (i) if counsel for such Indemnified Parties
determines in good faith that there is a conflict that requires separate
representation for the Company and such Indemnified Parties, or (ii) the Company
fails to assume or proceed in a timely and reasonable manner with the defense of
such action or fails to employ counsel reasonably satisfactory to such
Indemnified Parties in any such action, then in either such event, such
Indemnified Parties shall be entitled to select one primary counsel and, if
necessary, one local counsel in each relevant jurisdiction, of their own choice
to represent such Indemnified Parties, and the Company shall not, or no longer,
be entitled to assume the defense thereof on behalf of such Indemnified Parties
and such Indemnified Parties shall be entitled to indemnification for the
reasonable expenses (including, without limitation, reasonable fees and expenses
of such counsel) to the extent provided in the preceding paragraph. Such counsel
shall, to the fullest extent consistent with its professional responsibilities,
cooperate with the Company and any counsel designated by the Company. Nothing
contained herein shall preclude any Purchaser or holder, as the case may be, at
its own expense, from retaining additional counsel to represent such Indemnified
Parties in any action with respect to which indemnity may be sought from the
Company hereunder. The Company shall not be liable under this Agreement for any
settlement made by any Indemnified Parties without the Company's prior written
consent, which consent shall not be unreasonably withheld, unless such
Indemnified Parties have made a reimbursement request pursuant to the provision
of this Article 12 and the Company has failed to satisfy in full such request or
made a good faith objection to such request within 30 days of delivery of such
request. The Company agrees to indemnify and hold harmless any Indemnified
Parties from and against any Loss arising from or under reason of any settlement
with the consent of the Company. The Company shall not settle any such claim or
action without the
48
prior written consent of the applicable Indemnified Parties unless such
settlement provides for a full release of claims against the Indemnified
Parties.
(c) If the indemnification provided for herein is unavailable to an
Indemnified Party in respect of any losses, claims, damages, liabilities or
judgments referred to therein, then the Company, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities and
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and Purchaser on the other from
this Agreement or (ii) if the allocation provided by clause (i) above is not
permitted by applicable Law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and Purchaser on the other in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.
12.3. Survival. The obligations of the Company under this Section 12 will
survive the payment or transfer of any Senior Secured Note, the enforcement,
amendment or waiver of any provision of this Agreement, the Senior Secured Notes
or any other Note Document, and the termination of this Agreement. This
indemnity is in addition to any other remedies that the Co-Agents and the
Purchasers, or any of them, may have at law or equity.
ARTICLE 13. ENTIRE AGREEMENT.
All statements contained in any certificate or other instrument delivered by
or on behalf of the Company pursuant to this Agreement or any other Note
Document shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, this Agreement, the Senior
Secured Notes and the other Note Documents embody the entire agreement and
understanding among the Purchasers and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
ARTICLE 14. AMENDMENT AND WAIVER.
14.1. Requirements. This Agreement, the Senior Secured Notes and the other
Note Documents may be amended, and the observance of any term hereof, of the
Senior Secured Notes or of the other Note Documents may be waived (either
retroactively or prospectively), with, and only with, the written consent of the
Company and the Required Purchasers, except that (a) no amendment or waiver of
any of the provisions of Section 1, 2, 3, 4, or 17 hereof, or any defined term
as it is used therein, will be effective as to any Purchaser unless consented to
in writing by such Purchaser, and (b) no such amendment or waiver may, without
the written consent of the holder of each Senior Secured Note at the time
outstanding affected thereby (i) change the amount or time of any prepayment,
repurchase or payment of principal of, or reduce the rate, or change the time
fixed for any payment or change the method of computation of interest on, the
Senior Secured Notes, or make any other change that affects the priority or
ranking of the Senior Secured Notes (other than the release of, or other matters
affecting, any Collateral), (ii) modify in any way the definition of "Required
Purchasers", or (iii) amend Article 9 or this Article 14.
49
14.2. Solicitation of Holders of Senior Secured Notes.
(a) Solicitation. The Company will provide each holder of the Senior
Secured Notes (irrespective of the amount of Senior Secured Notes then owned or
otherwise then held by such holder) with sufficient information, sufficiently
far in advance of the date a decision is required, to enable such holder to make
an informed and considered decision with respect to any proposed amendment,
waiver or consent in respect of any of the provisions hereof or of any other
Note Documents. The Company will deliver executed or true and correct copies of
each amendment, waiver or consent effected pursuant to the provisions of this
Article 14 to each holder of outstanding Senior Secured Notes promptly following
the date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Senior Secured Notes.
(b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Senior
Secured Notes as consideration for or as an inducement to the entering into by
any holder of Senior Secured Notes, or any waiver or amendment of any of the
terms and provisions hereof or of any other Note Document, unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder of Senior Secured Notes then outstanding even
if such holder did not consent to such waiver or amendment.
14.3. Binding Effect, etc. Any amendment or waiver consented to as provided
in this Article 14 applies equally to all holders of Senior Secured Notes and is
binding upon them, and each of them, and upon each future holder of any Senior
Secured Note and upon the Company without regard to whether such Senior Secured
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived, or impair any right, power or
remedy consequent thereon. No course of dealing nor any delay on the part of any
holder of any Senior Secured Note in exercising any right, power or remedy
hereunder or under any other Note Document shall operate as a waiver of any
right, power or remedy of any such holder of a Senior Secured Note, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided under this Agreement and the other Note Documents
are cumulative and not exclusive of any rights, power or remedies provided by
applicable Law.
14.4. Senior Secured Notes Held by Company, Etc. Solely for the purpose of
determining whether Required Purchasers have approved or consented to any
amendment, waiver or consent to be given under this Agreement or any other Note
Document, or have directed the taking of any action provided herein or in any
other Note Document to be taken upon the direction thereof, Senior Secured Notes
directly or indirectly owned by the Holdings, the Company or any of their
respective Subsidiaries shall be deemed not to be outstanding.
ARTICLE 15. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by facsimile if the sender on the same day sends a confirming copy
of such notice by a
50
recognized overnight delivery service (charges prepaid), or (b) by registered or
certified mail with return receipt requested (postage prepaid), or (c) by a
recognized overnight delivery service (with charges prepaid). Any such notice
must be sent:
(i) if to a Purchaser or such Purchaser's nominee, to such
Purchaser or its nominee at the address specified for such communications in
Schedule I hereto, or at such other address as such Purchaser or its nominee
shall have specified to the Company in writing,
(ii) if to any other holder of any Senior Secured Note, to such
holder at such address as such other holder shall have specified to the
Company in writing, or
(iii) if to the Company, to Telex Communications, Inc., ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention Chief
Financial Officer, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇, or at such other address as
the Company shall have specified to the holder of each Senior Secured Note
in writing.
All notices and other communications provided for under this Section 15 will be
deemed given and effective only when actually received.
ARTICLE 16. REPRODUCTION OF DOCUMENTS.
This Agreement, each of the other Note Documents and all documents relating
thereto, including, without limitation, (a) amendments, waivers and consents of
this Agreement or any other Note Document that may hereafter be executed, (b)
documents received by or on behalf of the Purchasers at the Closing (except the
Senior Secured Notes themselves) and (c) financial statements, certificates and
other information previously or hereafter furnished to the Purchasers, or any of
them, may be reproduced by the Purchaser by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and
Purchaser may destroy any original document so reproduced. The Company agrees
and stipulates that, to the extent permitted by applicable Law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by a Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 16 shall not prohibit the Company or any other holder of Senior Secured
Notes from contesting any such reproduction to the same extent that it could
contest the original, or from introducing evidence to demonstrate the inaccuracy
of any such reproduction.
ARTICLE 17. CONFIDENTIAL INFORMATION.
For the purposes of this Section 17, "Confidential Information" means
materials, documents and other information delivered to the Purchasers by or on
behalf of the Company in connection with the Note Purchase Transactions, whether
before or after the Closing, that is proprietary in nature and that is clearly
marked or labeled, or otherwise adequately identified when received by the
Purchasers as being confidential information of the Company, provided that such
term does not include information that (a) was publicly known or otherwise known
to
51
any Purchaser prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by any Purchaser or any Person acting
on any Purchaser's behalf in violation of this Section 17, (c) otherwise becomes
known to any Purchaser other than through disclosure by the Company, or (d)
constitutes financial statements delivered to Purchaser under Section 5.4 that
are otherwise publicly available. Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser; provided that any Purchaser may
deliver or disclose Confidential Information to (i) such Purchaser's directors,
officers, members, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by such Purchaser's Senior Secured Notes), (ii) such Purchaser's
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 17, (iii) any other holder of any Senior Secured Note,
(iv) any transferee (that is a permitted transferee under this Agreement) to
which such Purchaser sells or offers to sell such Senior Secured Note or any
part thereof or any participation therein (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 17), (v) any Person from which such Purchaser offers
to purchase any security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 17), (vi) any federal or state regulatory authority
having jurisdiction over such Purchaser, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about such
Purchaser's investment portfolio or any other regulatory authority, or (viii)
any other Person to which such delivery or disclosure may be necessary or
appropriate (A) to effect compliance with any Law applicable to such Purchaser,
(B) in response to any subpoena or other legal process, (C) in connection with
any litigation to which such Purchaser is a party or (D) if an Event of Default
shall have occurred and be continuing, to the extent such Purchaser may
reasonably determine such delivery and disclosure to be necessary or appropriate
in the enforcement or for the protection of the rights and remedies under such
Purchaser's Senior Secured Notes, this Agreement and the other Note Documents.
Each holder of a Senior Secured Note, by its acceptance of a Senior Secured
Note, will be deemed to have agreed to be bound by and to be entitled to the
benefits of this Section 17 as though it were an original party to this
Agreement. On the reasonable request of the Company in connection with the
delivery to any holder of a Senior Secured Note of information required to be
delivered to such holder under this Agreement or requested by such holder (other
than a holder that is a party to this Agreement or its nominee), such holder
will enter into an agreement with the Company embodying the provisions of this
Section 17.
ARTICLE 18. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates that constitutes an "accredited investor" as the
purchaser of all or a part of the Senior Secured Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. Upon receipt of such notice, the term
"Purchaser" as is used in this Agreement shall mean and be a
52
reference to such Affiliate in addition to (in the case of Section 17 hereof)
and in lieu of (other than under such Section 17), such Purchaser.
ARTICLE 19. THE CO-AGENTS
19.1. Authorization and Action. Each Purchaser hereby appoints and
authorizes the applicable Co-Agent to take such action as Co-Agent on such
Purchaser's behalf and to exercise such powers and discretion under this
Agreement and the other Note Documents as are delegated to the Co-Agents by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Note Documents (including, without limitation, enforcement or collection of
the Company's Obligations hereunder and under the Note Documents), the Co-Agents
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required
Purchasers, and such instructions shall be binding upon all Purchasers and all
other holders of Senior Secured Notes; provided, however, that the Co-Agents, or
either of them shall not be required to take any action that exposes the
Co-Agents, or either of them, to personal liability or that is contrary to this
Agreement or applicable Law. Each Co-Agent agrees to give to the applicable
Purchasers prompt notice of each notice given to it by the Company pursuant to
the terms of this Agreement or any other Note Document. For the avoidance of
doubt, no Co-Agent may act unless authorized to so act (i) expressly hereunder
or under any other Note Document or (ii) by the Required Purchasers.
19.2. Co-Agents' Reliance. Neither Co-Agent nor any of their directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with the Note Documents, except
for its or their own gross negligence or willful misconduct. Without limitation
on the generality of the foregoing, the Co-Agents, and each of them: (a) may
treat the Purchaser that purchased the Senior Secured Note from the Company as
the holder of the Indebtedness evidenced thereby until such Co-Agent receives
written notice of a transfer duly made pursuant to Section 10.2 hereof; (b) may
consult with legal counsel (including counsel for the Company or any Affiliate
thereof party to any Note Document), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Purchaser
and shall not be responsible to any Purchaser for any statements, warranties or
representations (whether written or oral) made in, or in connection with, the
Note Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Note Document on the part of the Company, Holdings or any of their respective
Subsidiaries or to inspect the property (including the books and records) of the
Company, Holdings or any of their respective Subsidiaries; (e) shall not be
responsible to any Purchaser for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Note Document or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of any Note Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
53
19.3. TCII or GoldenTree and Affiliates. With respect to any Senior Secured
Notes issued to it, TCII or GoldenTree, shall have the same rights and powers
under the Note Documents as any other Purchaser and may exercise the same as
though it were not a Co-Agent; and the term "Purchaser" or "Purchasers" shall,
unless otherwise expressly indicated, include TCII and GoldenTree, each in its
individual capacity. TCII and its Affiliates (other than Holdings, the Company
or any of their respective Subsidiaries) and GoldenTree and its Affiliates may
accept investment banking engagements from and generally engage in any kind of
business with, Holdings, the Company, any of their Subsidiaries and any Person
who may do business with or own securities of any of Holdings, the Company or
any such Subsidiary, all as if TCII and GoldenTree were not the Co-Agents and
without any duty to account therefore to the Purchasers.
19.4. Purchaser Credit Decision. Each Purchaser acknowledges that it has,
independently and without reliance upon either Co-Agent or any other Purchaser
and, based on the financial statements referred to in Section 5.4 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Purchaser also
acknowledges that it will, independently and without reliance upon either
Co-Agent or any other Purchaser and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.
19.5. Indemnification. Each Purchaser severally agrees to indemnify the
Co-Agents (to the extent not promptly reimbursed by the Company) from and
against such Purchaser's ratable share (determined as provided below) of any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
(including without limitation reasonable fees and expenses or counsel) that may
be imposed on, incurred by, or asserted against the Lead Purchaser in any way
relating to or arising out of the Note Documents or any action taken or omitted
by the Co-Agents' under the Note Documents (collectively, the "Indemnified
Costs"); provided, however, that no Purchaser shall be liable for any portion of
such Indemnified Costs resulting from the Co-Agents' (or either of their) gross
negligence or willful misconduct, provided that any gross negligence or willful
misconduct of one Co-Agent shall not be imputed to the other Co-Agent. Without
limitation of the foregoing, each Purchaser agrees to reimburse the Co-Agents
promptly upon demand for its ratable share of any costs and expenses (including,
without limitation, fees and expenses of counsel) payable by the Company under
Section 12.1, to the extent that the Co-Agents are not promptly reimbursed for
such costs and expenses by the Company. For purposes of this Section 19.5, the
Purchasers' respective ratable shares of any amount shall be determined, at any
time, according to the Principal Amount outstanding at such time and owing to
the respective Purchasers. In the case of any investigation, litigation or
proceeding giving rise to any Indemnified Costs, this Section 19.5 applies
whether any such investigation, litigation, or proceeding is brought by the
Co-Agent or either of them, any other Purchaser or a third party. The failure of
any Purchaser to reimburse the Co-Agents promptly upon demand for its ratable
share of any amount required to be paid by the Purchasers to any Co-Agents as
provided herein shall not relieve any other Purchaser of its obligation
hereunder to reimburse the Co-Agents for its ratable share of such amount, but
no Purchaser shall be responsible for the failure of any other Purchaser to
reimburse the Co-Agents for such other Purchaser's ratable share of such amount.
Without prejudice to the survival of any other agreement of any Purchaser
hereunder, the agreement
54
and obligations of each Purchaser contained in this Section 19.5 shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the other Note Documents.
19.6. Successor Co-Agent. Any Co-Agent may resign at any time by giving
written notice thereof to the Purchasers and the Company and may be removed at
any time with or without cause by two-thirds of the applicable Purchasers. Upon
any such resignation or removal, two-thirds of the applicable Purchasers shall
have the right to appoint a successor to such Co-Agent, provided that, so long
as the consent of the Company is not unreasonably withheld, the Company shall
have the right to consent to any such successor Co-Agent (other than a successor
Co-Agent that is a Purchaser at such time holding, individually or with its
Affiliates, at least 45% of the Principal Amount then outstanding). If no
successor Co-Agent shall have been so appointed by such applicable Purchasers,
and shall have accepted such appointment, within 30 days after such retiring
Co-Agent's giving of notice of resignation or such applicable Purchasers'
removal of the retiring Co-Agent, then the retiring Co-Agent may, on behalf of
such applicable Purchasers, without the approval of the Company, appoint a
successor Co-Agent. Upon the acceptance of any appointment as Co-Agent hereunder
by a successor Co-Agent and upon the execution and filing or recording of such
financing statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the two-thirds of the
applicable Purchasers may request, in order to continue the perfection of the
Liens granted or purported to be granted by the Security Documents, such
successor Co-Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of such retiring Co-Agent, and the
retiring Co-Agent shall be discharged from its duties and obligations under the
Note Documents. After any retiring Co-Agent's resignation or removal hereunder
as Co-Agent, the provisions of this Article 19 inure to its benefit as to any
actions taken or omitted to be taken by it while it was Co-Agent under this
Agreement.
ARTICLE 20. MISCELLANEOUS.
20.1. Successors and Assigns. All covenants and other agreements contained
in this Agreement or any other Note Document by or on behalf of any of the
parties hereto bind and inure to the benefit of their respective successors and
assigns (including, without limitation, any subsequent holder of a Senior
Secured Note) whether so expressed or not, except that the Company shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Purchasers and the Co-Agents.
20.2. Payments Due on Non-Business Days. Anything in this Agreement, the
Senior Secured Notes or any other Note Document to the contrary notwithstanding,
any payment of principal of, or interest on, any Senior Secured Note that is due
on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
20.3. Satisfaction Requirement. Except as otherwise provided herein or in
any other Note Document, if any agreement, certificate or other writing, or any
action taken or to be taken, is by the terms of this Agreement or any other Note
Document required to be satisfactory to the Purchasers or to the Required
Purchasers, the determination of such satisfaction shall be made by
55
the Purchasers or the Required Purchasers, as the case may be, in the sole and
exclusive judgment of the Person or Persons making such determination.
20.4. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by Law) not invalidate or
render unenforceable such provision in any other jurisdiction.
20.5. Construction. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
20.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
Each counterpart may consist of a number of copies hereof, each signed by less
than all, but together signed by all, of the parties hereto.
20.7. Governing Law. This Agreement and each Senior Secured Note shall be
governed by, and construed in accordance with, the laws of the State of New York
without giving effect to conflicts of laws principles thereof.
20.8. Consent to Jurisdiction.
(a) The Company hereby irrevocably submits to the jurisdiction of any
New York or Federal court sitting in New York City, New York, in any action or
proceeding arising out of or relating to this Agreement or any other Note
Document, and the Company hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such New York court
or such Federal court. The Company hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Company hereby irrevocably
consents to the service of copies of any summons and complaint and any other
process which may be served in any such action or proceeding by certified mail,
return receipt requested, or by delivering a copy of such process to the
Company, at its address specified in Section 15 or by any other method permitted
by Law. The Company agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or by any other manner provided by Law.
(b) Nothing in this Section 20.8 shall affect the right of any holder
of Senior Secured Notes to serve legal process in any other manner permitted by
Law or affect the right of any such holder to bring any action or proceeding
against the Company or its property in the courts of other jurisdictions.
20.9. Intercreditor Agreement. Notwithstanding anything to the contrary
contained herein, so long as the Senior Debt Obligations are outstanding, the
Co-Agents' or any
56
Purchaser's right to consent (or withhold consent) to an Asset Sale or
Disposition and other actions not expressly permitted by the terms hereof, and
the exercise of rights and remedies by the Co-Agents or any of the Purchasers of
the Senior Secured Notes upon the occurrence and continuance of an Event of
Default, is subject to the terms and conditions of the Intercreditor Agreement;
provided that nothing in this Section shall, or shall be deemed to, relieve the
Company of its Obligations or obligations hereunder, including, without
limitation, pursuant to Articles 1 and 11 hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
57
20.10. Waiver of Jury Trial. EACH OF THE COMPANY AND THE HOLDERS OF SENIOR
SECURED NOTES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE NOTE DOCUMENTS, ANY DOCUMENT
DELIVERED UNDER THE NOTE DOCUMENTS OR THE ACTIONS OF ANY HOLDER OF SENIOR
SECURED NOTES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.
If you, as Purchasers and Co-Agents, as the case may be, are in agreement
with the foregoing, please sign this Agreement and return it to the Company,
whereupon the foregoing shall become a binding agreement between each of you, as
Purchasers, and the Company.
Very truly yours,
TELEX COMMUNICATIONS, INC.
By:
------------------------------------
Name:
Title:
THE FOREGOING IS HEREBY AGREED
TO AS OF THE DATE HEREOF:
THE CO-AGENTS:
TCI INVESTMENTS LLC
By:______________________________________
Name:
Title:
OTHER PURCHASERS:
DEUTSCHE BANK SHARPS ▇▇▇▇▇▇ INC.
By: GoldenTree Asset Management, LP,
as Agent
By:______________________________________
Name:
Title:
58
HIGHBRIDGE CAPITAL MANAGEMENT, LLC
By: GoldenTree Asset Management, LP,
as Agent
By:_______________________________________
Name:
Title:
GOLDENTREE HIGH YIELD MASTER FUND, LTD
By:________________________________________
Name:
Title:
GOLDENTREE HIGH YIELD OPPORTUNITIES I, L.P.
By:_______________________________________
Name:
Title:
59
SCHEDULE I
----------
PURCHASERS
----------
$9,800,000 TCI INVESTMENTS LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
$550,000 DEUTSCHE BANK SHARPS ▇▇▇▇▇▇ INC.
c/o GoldenTree Asset Management, LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
$2,100,000 HIGHBRIDGE CAPITAL MANAGEMENT, LLC
c/o GoldenTree Asset Management, LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
$3,625,000 GOLDENTREE HIGH YIELD MASTER FUND, LTD
c/o GoldenTree Asset Management, LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
$3,925,000 GOLDENTREE HIGH YIELD OPPORTUNITIES I, L.P.
c/o GoldenTree Asset Management, LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE II
-----------
DEFINED TERMS
-------------
As used in the Agreement, the following terms have the respective meanings
set forth below or set forth in the Section hereof following such term:
"10.5% Subordinated Note Documents" means the collective reference to the
10.5% Subordinated Notes, the 10.5% Subordinated Note Indenture and each of the
other instruments and documents executed and delivered pursuant to any of the
foregoing, as the same may be amended, supplemented, waived or otherwise
modified from time to time in accordance with Section 8.12 hereof to the extent
applicable.
"10.5 % Subordinated Note Indenture" means the Indenture, dated as of May 2,
1997, between GST Acquisition Corp. and Manufacturers and Traders Trust Company,
as trustee, as amended by the First Supplemental Indenture dated as of May 6,
1997, the Second Supplemental Indenture dated as of February 2, 1998 and the
Third Supplemental Indenture dated as of April __, 2001, and as the same may be
further amended, supplemented or otherwise modified from time to time in
accordance with its terms and the terms of the Senior Credit Agreement and this
Agreement.
"10.5% Subordinated Notes" means the notes issued under the 10.5%
Subordinated Indenture.
"11% Subordinated Note Indenture" means the Indenture, dated as of March 24,
1997, between EVI and The Bank of New York, as trustee, as amended by the First
Supplemental Indenture dated as of April __, 2001, and as the same may be
further amended, supplemented or otherwise modified from time to time in
accordance with its terms and the terms of the Senior Credit Agreement and this
Agreement.
"11% Subordinated Notes" means the notes issued under the 11% Subordinated
Indenture.
"11% Subordinated Note Documents" means, collectively, the 11% Subordinated
Notes, the 11% Subordinated Note Indenture and each of the other instruments and
documents executed and delivered pursuant to any of the foregoing, as amended,
supplemented, waived or otherwise modified from time to time in accordance with
Section 8.12 hereof to the extent applicable.
"Account" has the meaning ascribed thereto in the Uniform Commercial Code as
in effect in New York from time to time.
"Adjusted Interest Rate" has the meaning specified in Section 1.2.
"Administrative Agent" means, collectively, The Chase Manhattan Bank, in its
capacity as the Administrative Agent under the Senior Credit Agreement and its
successors and assigns thereunder.
"Affiliate" means (i) a Controlling Person or any Person which is controlled
by or is under common control with a Controlling Person and (ii) any other
Person who is a director, officer or member of management of the Company, any of
its Subsidiaries or any Controlling Person. For purposes of the Agreement,
control of a Person means the power, direct or indirect, (a) to vote 10% or more
of the outstanding stock or other ownership interests having ordinary voting
power for the election of directors of such Person or (b) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Agreement" means this Note Purchase Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Amendment No. 4 to the Senior Credit Agreement" means the Waiver, Amendment
No. 4 to the Agreement and Consent dated as of April ___, 2001 to the Senior
Credit Agreement among the Administrative Agent, the Company, the Guarantors and
the other parties thereto.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, through a Sale and Leaseback
Transaction) (a "Disposition") by the Company or any of its Subsidiaries, in one
or a series of related transactions, of any real or personal, tangible or
intangible, property (including, without limitation, Capital Stock) of the
Company or such Subsidiary to any Person (other than to Holdings or any of its
domestic Wholly Owned Subsidiaries); provided, that a Disposition to a joint
venture or similar arrangement otherwise permitted under clause (k) of Section
8.9 hereof shall not constitute an Asset Sale.
"Bankruptcy Law" means Title 11 of the United States Code, as the same may
be amended from time to time.
"Benefit Plan" means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) in respect of which the Company or any
ERISA Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA.
"Business Day" means any day other than a Saturday, Sunday or any other day
on which commercial banks are required by Law or authorized to close in New
York, New York.
"Capital Expenditures" means with respect to any Person for any period, the
sum of the aggregate of all expenditures by such Person and its Consolidated
Subsidiaries during such period which, in accordance with GAAP, are or should be
included in "capital expenditures".
"Capital Stock" means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
"Cash Equivalents" means (a) securities issued or fully guaranteed or
insured by the United States Government or any agency or instrumentality
thereof, (b) time deposits, certificates of deposit or bankers' acceptances of
any commercial bank having capital and surplus in excess of $500,000,000 and the
commercial paper of the holding company of which is rated at least A-2 or the
equivalent thereof by Standard & Poor's Ratings Group (a division of
2
McGraw Hill Inc.) or any successor rating agency ("S&P") or at least P-2 or the
equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc. or any successor rating
agency ("Moody's") (or if at such time neither is issuing ratings, then a
comparable rating of such other nationally recognized rating agency as shall be
approved by the Required Purchasers, which approval shall not be unreasonably
withheld), (c) commercial paper rated at least A-2 or the equivalent thereof by
S&P or at least P-2 or the equivalent thereof by Moody's (or if at such time
neither is issuing ratings, then a comparable rating of such other nationally
recognized rating agency as shall be approved by the Required Purchasers, which
approval shall not be unreasonably withheld) and (d) investments in money market
funds complying with the risk limiting conditions of Rule 2a-7 or any successor
rule of the Securities and Exchange Commission under the Investment Company Act
of 1940, as amended.
"Change of Control" means the occurrence of any of the following events: (i)
the GSCP Group shall in the aggregate beneficially, directly or indirectly, own
shares of Capital Stock having less than 51% of the total voting power of all of
the outstanding Capital Stock of Holdings, (ii) one or more members of the GSCP
Group shall not have the power (whether or not exercised), by virtue of owning
shares of the Capital Stock of Holdings or by contract or otherwise, to elect or
cause the election of a majority of the board of directors of Holdings, (iii)
Holdings shall cease to own 100% of the Capital Stock of the Company or (iv) a
"Change of Control" as defined in the 10.5% Subordinated Note Indenture shall
have occurred at a time when any principal amount of Indebtedness is outstanding
under the Subordinated Indentures.
"Closing" has the meaning specified in Section 3 hereof.
"Closing Date" has the meaning specified in Section 3 hereof.
"Co-Agents" means, collectively, TCII and GoldenTree and each of their
successors pursuant to Section 19.6 hereof. The tem "applicable Purchasers"
means, with respect to TCII, TCII and each of its successors, assigns and
transferees hereunder; conversely, the term "Applicable Co-Agent" means and
refers to TCII, in its capacity as a Co-Agent, and its successors pursuant to
Section 19.6 hereof, with respect to such Purchasers. The term "applicable
Purchasers" means, with respect to GoldenTree, GoldenTree, Deutsche Bank Sharps
▇▇▇▇▇▇ Inc., Highbridge Capital Management, LLC, and GoldenTree High Yield
Master Fund, Ltd and each of their respective successors, assigns and
transferees hereunder; conversely, the term "applicable Co-Agent, shall mean and
be a reference to GoldenTree, in its capacity as a Co-Agent, and its successors
pursuant to Section 19.6 hereof, with respect to such Purchasers.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time,
and any successor statute.
"Collateral" means all assets of Holdings, the Company and each of its
Subsidiaries from time to time party to any Security Documents, now owned or
hereafter acquired, upon which a Lien is created or purported to be created by
any Security Document.
"Commitment Fees" has the meaning ascribed thereto in Section 1.4 hereof.
"Commonly Controlled Entity" means an entity, whether or not incorporated,
which is under common control with Holdings within the meaning of Section 4001
hereof of ERISA or is
3
part of a group which includes the Company and which is treated as a single
employer under Section 414(b) or (c) hereof of the Code or, solely for purposes
of Section 302 hereof of ERISA and Section 412 hereof of the Code, is treated as
a single employer under Sections 414(m) and (o) hereof of the Code.
"Company" has the meaning specified in the preamble hereof.
"Confidential Information" has the meaning specified in Section 17 hereof.
"Consolidated EBITDA" means for any period, Consolidated Net Income for such
period adjusted to exclude the following items (without duplication) of income
or expense to the extent that such items are included in the calculation of
Consolidated Net Income: (a) Consolidated Interest Expense, (b) any non-cash
expenses and charges, (c) total income tax expense, (d) depreciation expense,
(e) the expense associated with amortization of intangible and other assets
(including amortization or other expense recognition of any costs associated
with asset write-ups in accordance with APB Nos. 16 and 17), (f) non-cash
provisions for reserves for discontinued operations, (g) any gain or loss
associated with the sale or write-down of assets not in the ordinary course of
business, (h) any income or loss accounted for by the equity method of
accounting (except in the case of income to the extent of the amount of cash
dividends or cash distributions paid to the Company or any of its Subsidiaries
by the entity accounted for by the equity method of accounting), (i) accruals
for any fees earned by GSCP in respect of management consulting or financial
advisory services as contemplated by Section 8.10(ii) hereof but not paid in
cash as provided in Section 3.2 of Amendment No. 4 to the Senior Credit
Agreement, (j) for any period that is part of fiscal year 2001, all nonrecurring
restructuring or other charges and transaction fees relating to the Telex/EVI
Mergers (as such term is defined in the Senior Credit Agreement), including any
such nonrecurring charges which may reasonably be classified as restructuring
charges but are not classified as restructuring charges under GAAP; provided
that the aggregate amount of all such charges and fees paid in cash shall not
exceed $3,100,000 in the aggregate for fiscal year 2001; (k) non-cash charges,
of up to $161,000 in each fiscal year, relating to that certain operating lease
of the Company for its corporate headquarters in Burnsville, Minnesota; (l)
expenses incurred by the Company in connection with the negotiation and
consummation of Amendment No. 4 to the Senior Credit Agreement, the Note
Purchase Transaction and the amendment and modification of Subordinated Notes
Documents to permit the issuance of the Note Purchase Transaction; provided that
the aggregate amount of all such expenses shall not exceed $1,500,000, unless
otherwise agreed by the Required Purchasers; and (m) except for purposes of
calculating "Excess Cash Flow," cash payments not to exceed an aggregate amount
of $100,000 to be paid prior to the end of fiscal year 2001 made to the
Company's management employees in respect of bonuses (to the extent not
prohibited pursuant to Section 8.18 hereof) in accordance with the terms of such
employees' employment agreements.
"Consolidated Interest Expense" means, for any period, the sum of (a)
interest expense (accrued and paid or payable in cash for such period, and in
any event excluding any amortization or write-off of financing costs) on
Indebtedness of the Company and its Consolidated Subsidiaries for such period
minus (b) interest income (accrued and received or receivable in cash for such
period) of the Company and its Consolidated Subsidiaries for such period, in
each case determined on a consolidated basis in accordance with GAAP.
4
"Consolidated Net Income" means, for any period, net income of the Company
and its Consolidated Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.
"Consolidated Subsidiary" of any Person means at any date any Subsidiary or
other entity the accounts of which in accordance with GAAP would be consolidated
with those of such Person in its consolidated financial statements as of such
date.
"Consolidated Tangible Assets" means, as of the any date of determination,
the total assets, less goodwill, deferred financing costs and other intangibles
(other than patents, trademarks, copyrights, licenses and other intellectual
property) less accumulated amortization, shown on the balance sheet of the
Company and its Restricted Subsidiaries as of the most recent date for which
such a balance sheet is available, determined on a consolidated basis in
accordance with GAAP.
"Contractual Obligation" means, with respect to any Person, any term or
provision of any securities issued by such Person, or any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other agreement to
which such Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Continuing Directors" means the directors of the Company on the date hereof
and each other director, if such director's nomination for election to the Board
of Directors of the Company is recommended by a majority of the Continuing
Directors at the time of such nomination or election.
"Controlling Person" means any Person that is in control of the Company or
any of its Subsidiaries (such control being the power to direct or cause the
direction of the management and policies of the Company or any such Subsidiary,
whether through the ownership of voting stock, by contract or otherwise).
"Credit Document" means the Note Documents, the Senior Credit Facility
Documents and the Subordinated Note Documents.
"Default" means an event, condition or default that with the giving of
notice, the passage of time or both would be an Event of Default.
"Default Rate" has the meaning specified in Section 1.2 hereof.
"Disinterested Director" means, with respect to any Person and transaction,
a member of the board of directors of such Person who does not have any material
direct or indirect financial interest in or with respect to such transaction.
"Disposition" has the meaning ascribed thereto in the definition of the term
"Asset Sale" above.
"Domestic Subsidiary" means any Subsidiary of the Company which is not a
Foreign Subsidiary.
5
"Draft Form 10-K" has the meaning set forth in Section 4.4(d) hereof.
"Employee Benefit Plan" means an "employee benefit plan" as defined in
Section 3(3) of ERISA, maintained or contributed by the Company or with respect
to which the Company may incur liability.
"Environmental Costs" means any and all costs or expenses (including,
without limitation, attorney's and consultant's fees, investigation and
laboratory fees, response costs, court costs and litigation expenses, fines,
penalties, damages, settlement payments, judgments and awards), of whatever kind
or nature, known or unknown, contingent or otherwise, arising out of, or in any
way relating to, any violation of, noncompliance with or liability under any
Environmental Laws or any orders, requirements, demands, or investigations of
any person related to any Environmental Laws. Environmental Costs include any
and all of the foregoing, without regard to whether they arise out of or are
related to any past, pending or threatened proceeding of any kind.
"Environmental Law" means any Law and such requirements of any Governmental
Authority properly promulgated and having the force and effect of law or other
Requirements of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment, as have been, or now or at any relevant time hereafter are, in
effect, pertaining to health, industrial hygiene, or the environmental
conditions on, under or about any real property owned, operated or leased by the
Company or any Subsidiary thereof.
"Environmental Permits" means any and all permits, licenses, registrations,
notifications, exemptions and any other authorization required under any
Environmental Law.
"Environmental Program" has the meaning ascribed thereto in Section 7.8(c)
hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute thereto and all final or
temporary regulations promulgated thereunder, and all published, generally
applicable rulings entitled to precedential effect.
"ERISA Affiliate" means any (i) corporation which is or was at any time
during the immediately preceding six years a member of the same controlled group
of corporations (within the meaning of Section 414(b) of the Code) as the
Company; (ii) partnership or other trade or business (whether or not
incorporated) at any time during the immediately preceding six years under
common control (within the meaning of Section 414(c) of the Code) with the
Company; and (iii) member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as the Company, any corporation described
in clause (i) above, or any partnership or trade or business described in clause
(ii) above.
"Event of Default" or "Events of Default" shall have the meaning provided
for in Section 10 of this Agreement.
"EVI" means EV International, Inc., a Delaware corporation.
6
"Excess Cash Flow" means for any period, Consolidated EBITDA, minus (i) any
Capital Expenditures made in cash during such period, minus (ii) any principal
payments (other than mandatory prepayment of principal during such period
pursuant to Section 4.4(c) or (d) of the Senior Credit Agreement unless and to
the extent that the event giving rise to such mandatory prepayment causes an
increase in Consolidated EBITDA) on the Senior Loans made during such period,
minus (iii) any principal payments resulting in a permanent reduction of any
other Indebtedness of the Company or any of its Consolidated Subsidiaries made
during such period, minus (iv) Consolidated Interest Expense for such period,
minus (v) any taxes paid or payable in cash for such period, minus (vi) the Net
Cash Proceeds from any Asset Sale to the extent that such Net Cash Proceeds (A)
(without duplication of clause (i) or (vii) of this definition) consist of any
Reinvested Amount and (B) are included in the calculation of Consolidated
EBITDA, minus (vii) (without duplication of clause (i) of this definition) any
Investment made in accordance with Section 8.9(e) or (g) hereof, minus (viii)
the proceeds of any Sale and Leaseback Transactions entered into by the Company
or any of its Subsidiaries during such period, plus (ix) the excess, if any, of
Working Investment at the beginning of such period over Working Investment at
the end of such period (or minus the excess, if any, of Working Investment at
the end of such period over Working Investment at the beginning such period).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Foreign Account" means an Account the sale giving rise to which is
to an Obligor in any jurisdiction outside the United States or Canada.
"Financial Statements" means the consolidated and consolidating balance
sheets, consolidated and consolidating statements of operations, consolidated
statements of changes in cash flows and consolidated statements of changes in
stockholders' equity of the Company and its Consolidated Subsidiaries for the
period specified prepared in accordance with GAAP and consistent with prior
practices.
"Financing Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"FIRREA" means the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended from time to time.
"Foreign Subsidiary" means any Subsidiary of the Company which is organized
and existing under the laws of any jurisdiction outside of the United States of
America, Telex International Ltd.
"Foreign Subsidiary Indebtedness Amount" means, as of any date of
determination, the greater of (x) $10,000,000 and (y) an amount equal to 10% of
Consolidated Tangible Assets as of such date.
"GAAP" means, with respect to the covenants contained in Sections 8.1, 8.2
and 8.8 hereof and all defined terms relating thereto and the defined term
"Excess Cash Flow", generally accepted accounting principles in the United
States of America in effect on the Closing Date and,
7
for all other purposes under this Agreement, generally accepted accounting
principles in the United States of America in effect from time to time.
"General Counsel" has the meaning set forth in Section 4.5 hereof.
"Governmental Authority" means any government or political subdivision or
any agency, authority, board, bureau, central bank, commission, department or
instrumentality of the United States of America, any local or state jurisdiction
therein, the European Union, or local or state jurisdiction therein, therefore,
or any other non-United States local, state or supranational jurisdiction, any
court, tribunal, grand jury or arbitrator or any of the foregoing jurisdictions,
in any case whether foreign or domestic, or any entity of any of the foregoing
jurisdictions exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, arbitration award or other award or determination entered by or
with any Governmental Authority.
"Greenwich II" means Greenwich II LLC, a Delaware limited liability company.
"GSCP" means Greenwich Street Capital Partners, Inc., a Delaware
corporation.
"GSCP Group" means Greenwich Street Capital Partners, L.P., Greenwich Street
Capital Offshore Fund, Ltd., The Travelers Insurance Company, The Travelers Life
and Annuity Company, TRV Employees Fund, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ Holdings Inc. and
their respective Affiliates; any other investment fund or vehicle managed or
sponsored by Greenwich Street Capital Partners, Inc., The Travelers Insurance
Company, The Travelers Life and Annuity Company, ▇▇▇▇▇ ▇▇▇▇▇▇ Holdings Inc. or
any of their respective Affiliates; and any limited or general partners of, or
other investors in, any member of the GSCP Group.
"Guarantee and Collateral Agreement" has the meaning specified in Section
4.4(f).
"Guarantee Obligation" means, as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any such obligation of
the guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary
8
course of business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Company in good faith.
"Guarantor" has the meaning ascribed thereto in the Guarantee and Collateral
Agreement.
"Holdings" means Telex Communications Group, Inc., a Delaware corporation
that holds 100% of the Capital Stock of the Company.
"Indebtedness" means, of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or created
for the account of such Person, (e) for purposes of Section 8.2 hereof and
Section 9(e) hereof only, all obligations of such Person in respect of interest
rate protection agreements, interest rate futures, interest rate options,
interest rate caps and any other interest rate hedge arrangements, (f) for
purposes of Section 8.2 hereof only, all preferred stock issued by such person
and (g) all indebtedness or obligations of the types referred to in the
preceding clauses (a) through (f) secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become liable
for the payment thereof provided, that Indebtedness shall not include accruals
for any fees earned by GSCP in respect of management consulting or financial
advisory services as contemplated by Section 8.10(ii) hereof but not paid in
cash as provided in Section 3.2 of Amendment No. 4 to the Senior Credit
Agreement.
"Indemnified Costs" has the meaning set forth in Section 19.5 hereof.
"Indemnified Parties" has the meaning specified in Section 12.2 hereof.
"Interest Due Date" has the meaning specified in Section 1.2(b) hereof.
"Initial Interest Rate" has the meaning specified in Section 1.2 hereof.
"Insolvency" means, with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 hereof of ERISA.
"Insurance Proceeds" means the proceeds of any insurance or any judgments or
settlements made in lieu thereof resulting from a casualty with respect to any
Property.
"Intellectual Property" has the meaning ascribed thereto in Section 5.12
hereof.
9
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
April __, 2001 among The Chase Manhattan Bank, as Administrative Agent on behalf
of the Lenders under the Senior Credit Agreement, the Purchasers and the
Company, substantially in the form of Exhibit E hereto.
"Internal Revenue Service" means the Internal Revenue Service and any
successor agency.
"Inventory" has the meaning ascribed thereto in the Uniform Commercial Code
as in effect in New York from time to time, and including, without limitation,
raw materials and all sub-assemblies held for sale.
"Investments" has the meaning ascribed thereto in Section 8.9 hereof.
"Judgment" has the meaning specified in Section 9.1(g) hereof.
"Law" means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order or other rule of law.
"Lien" means any mortgage, pledge, hypothecation, assignment, security
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Financing Lease having substantially the same economic effect as any of the
foregoing).
"Loss" has the meaning set forth in Section 12.2(a) hereof.
"Material Adverse Change" means a material adverse change in the business,
operations, results of operations, assets, liabilities, condition (financial or
otherwise) or prospects of the Company and its Consolidated Subsidiaries taken
as a whole.
"Material Adverse Effect" means a material adverse effect on (i) the
business, operations, results of operations, assets, liabilities, condition
(financial or otherwise) or prospects of the Company and its Consolidated
Subsidiaries taken as a whole, (ii) the Company's ability to perform its
obligations under the Note Documents, (iii) the Company's ability to perform its
obligations under any Senior Credit Document, or (iv) the rights and remedies of
the Purchasers under the Note Documents.
"Materials of Environmental Concern" means any gasoline or petroleum
(including, without limitation, crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances or materials or wastes defined or
regulated as such in or under or which may give rise to liability under any
applicable Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date" has the meaning specified in Section 1.1.
"Mortgaged Properties" means, collectively, the real properties owned in fee
by the Company or any of its Subsidiaries parties to the Guarantee and
Collateral Agreement, including,
10
without limitation, all buildings, improvements, structures and fixtures now or
subsequently located thereon and owned by the Company or any such Subsidiary.
"Mortgages" means (i) each of the mortgages executed and delivered by the
Company or any of its Subsidiaries encumbering any Mortgaged Properties, in form
and substance reasonably acceptable to the Required Purchasers on the Closing
Date, and (ii) each of the mortgages and deeds of trust, if any, executed and
delivered by Holdings, the Company or any of its Subsidiaries to the Co-Agents
pursuant to Section 7.9 hereof; in each case, as amended, supplemented or
otherwise modified from time to time.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) hereof of ERISA.
"Net Cash Proceeds" means, with respect to any Asset Sale (including,
without limitation, any Sale and Leaseback Transaction permitted under Section
8.11 hereof) hereof, any sale or issuance of equity securities of the Company or
any of its Subsidiaries, the issuance of any debt securities or any borrowings
by the Company or any of its Subsidiaries (other than issuances and borrowings
permitted pursuant to Section 8.2 hereof, except as otherwise specified), an
amount equal to the gross proceeds in cash and Cash Equivalents (including cash
payments received by way of deferred payment of principal pursuant to note,
installment receivable, purchase price adjustment or otherwise, but only when
such cash payments are received) of such Asset Sale, sale, issuance or
borrowing, net of (i) reasonable attorneys' fees, accountants' fees, brokerage,
consultant and other customary fees, underwriting commissions and other
reasonable fees and expenses actually incurred in connection with such Asset
Sale, sale, issuance or borrowing, (ii) taxes paid or reasonably estimated to be
payable as a result thereof, (iii) appropriate amounts provided or to be
provided by the Company or any of its Subsidiaries as a reserve, in accordance
with GAAP, with respect to any liabilities associated with such Asset Sale and
retained by the Company or any such Subsidiary after such Asset Sale and other
appropriate amounts to be used by the Company or any of its Subsidiaries to
discharge or pay on a current basis any other liabilities associated with such
Asset Sale and (iv) in the case of a sale or Sale and Leaseback Transaction of
or involving an asset subject to a Lien securing any Indebtedness, payments made
and installment payments required to be made to repay such Indebtedness,
including, without limitation, payments in respect of principal, interest and
prepayment premiums and penalties.
"Note Documents" means this Agreement, the Senior Secured Notes, the
Intercreditor Agreement, the Security Documents and all other documents,
agreements, instruments, opinions and certificates executed in connection
therewith, as the same may be modified, amended, extended, restated or
supplemented from time to time.
"Note Purchase" has the meaning specified in Article 2 hereof.
"Note Purchase Transactions" has the meaning specified in Article 2 hereof.
"Obligation" means, with respect to any Person, any obligation of such
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated,
11
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 9.1(c).
Without limiting the generality of the foregoing, the Obligations of the Company
under the Note Documents include the obligations to pay principal, interest,
charges, expenses, fees, attorneys' fees and disbursements, indemnities and
other amounts payable by the Company under any Note Document.
"Obligor" means, with respect to an Account, the purchaser of the goods or
services giving rise to such Account or any other Person obligated to make
payment in respect of such purchase of such goods or services.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor thereto).
"Patent and Trademark Security Agreement" has the meaning set forth in
Section 4.4(f) hereof.
"Permitted Hedging Arrangement" has the meaning specified in Section 8.16
hereof.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (including any division, agency or
department thereof), and, as applicable, the successors, heirs and assigns of
each.
"PIK Interest" has the meaning specified in Section 1.2(b) hereof.
"Plan" means, at any particular time, any employee benefit plan that is
covered by ERISA and in respect of which the Company or a Commonly Controlled
Entity is an "employer" as defined in Section 3(5) hereof of ERISA.
"Principal Amount" has the meaning specified in Section 1.1 hereof.
"Property" means any assets or property of any kind or nature whatsoever,
real, personal or mixed (including fixtures), whether tangible or intangible.
"Purchasers" has the meaning set forth in the first paragraph of this
Agreement.
"Refinance" has the meaning ascribed thereto in Section 8.12 hereof.
"Reinvested Amount" means, with respect to any Asset Sale permitted by
Section 8.6(g) or (h) hereof, that portion of the Net Cash Proceeds thereof as
shall, according to a certificate of a Responsible Officer of the Company
delivered to the Purchasers within 30 days of such Asset Sale, be reinvested in
the business of the Company and its Subsidiaries in a manner consistent with the
requirements of Section 8.15(a) hereof and the other provisions hereof within
one year of the receipt of such Net Cash Proceeds or, if such reinvestment is in
a project authorized by the board of directors of the Company that will take
longer than one year to complete, the period of time necessary to complete such
project; provided that (i) if any such certificate of a Responsible Officer is
not delivered to the Purchasers on the date of such Asset Sale, any Net Cash
Proceeds
12
of such Asset Sale shall be immediately (x) deposited in a cash collateral
account established at the offices of the Administrative Agent, or if the Senior
Debt Obligations have been paid in full, at a depositary bank directed by the
Co-Agents, to be held as collateral in favor of the Administrative Agent for the
benefit of the holders of the Senior Loans and the Secured Parties (or the
Co-Agents in favor of the Secured Parties, as the case may be) on terms
reasonably satisfactory to the Administrative Agent, or Co-Agents, as the case
may be, and shall remain on deposit in such cash collateral account until such
certificate of a Responsible Officer is delivered to the Purchasers or used to
make a prepayment under Section 4.4(a) of the Senior Credit Agreement or of the
Company's Obligations under the Senior Secured Notes, hereunder or under the
other Note Documents.
"Reorganization" means, with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
hereof of ERISA.
"Reportable Event" means any of the events set forth in Section 4043(c)
hereof of ERISA, other than those events as to which the thirty day notice
period is waived under Sections .13, .14, .16, .18, .19 or .20 hereof of PBGC
Reg. Section 2615 hereof or any successor regulation thereto.
"Required Purchasers" means, at any date of determination, the registered
holders of at least a two-thirds in interest of the aggregate principal amount
then outstanding of the Senior Secured Notes excluding therefrom any Senior
Secured Notes then owned or held by the Company, Holdings and any of their
Subsidiaries; provided that solely for the purposes of amending, waiving,
supplementing or otherwise modifying (a) Section 8.1 hereof or (b) waiving a
Default or Event of Default under Section 9.1(b) hereof with respect to such
Section 8.1, the term "Required Purchasers" shall mean the registered holders of
at least 40% in interest of the aggregate principal amount then outstanding,
excluding therefrom any Senior Secured Notes held by the Company, Holdings and
any of their Subsidiaries; provided further, that for the purposes of directing
the Co-Agents to act or refrain from acting hereunder, under the Security
Documents or under any other Note Document, including, without limitation for
the purposes of, and as contemplated under, Section 19.1 hereof, the term
"Required Purchasers" shall mean and be a reference to Purchasers holding at
least a majority of the aggregate principal amount of the Senior Secured Notes
then outstanding, excluding therefrom any Senior Secured Notes held by Holdings,
the Company or any of their Subsidiaries.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any Law, statute, ordinance, or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its material property or to which such Person or any
of its material property is subject, including, without limitation, laws,
ordinances and regulations pertaining to zoning, occupancy and subdivision of
real properties; provided that the foregoing shall not apply to any non-binding
recommendation of any Governmental Authority.
"Responsible Officer" means, as to any Person, any of the following officers
of such Person: (i) the chief executive officer or the president of such Person
and, with respect to financial matters, the chief financial officer, the senior
vice president - finance, the treasurer or
13
the controller of such Person, (ii) any vice president of such Person or, with
respect to financial matters, any assistant treasurer or assistant controller of
such Person, who has been designated in writing to the Purchasers as a
Responsible Officer by such chief executive officer or president of such Person
or, with respect to financial matters, such chief financial officer of such
Person, (iii) with respect to Section 7.7 hereof and without limiting the
foregoing, the general counsel of such Person and (iv) with respect to ERISA
matters, the senior vice president - human resources (or substantial equivalent)
of such Person.
"Sale and Leaseback Transaction" has the meaning ascribed thereto in Section
8.11 hereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Documents" means, collectively, the Mortgages, the Guarantee and
Collateral Agreement, the Patent and Trademark Security Agreement, and all other
similar security documents hereafter delivered to the Co-Agents granting, or
purporting to grant, a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Company hereunder, under any Senior Secured
Notes and/or under any of the other Note Documents or to secure any guarantee of
any such obligations and liabilities, including, without limitation, any
security documents executed and delivered or caused to be delivered to the
Purchasers pursuant to Section 8.15(b) or 8.15(c) hereof.
"Senior Credit Documents" means the Credit Agreement dated as of May 6,
1997, among Telex Communications Inc. (successor by assumption to GST
Acquisition Corp.), the several banks and financial institutions parties
thereto, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as Documentation Agent, and The
Chase Manhattan Bank, as Administrative Agent, as amended by the Telex
Assumption Agreement dated as of May 6, 1997, Amendment No. 1 dated as of
January 30, 1998, Amendment No. 2 dated as of December 23, 1998, Amendment No. 3
dated as of October 29, 1999 and Amendment No. 4 dated as of April __, 2001 (as
so amended and as further amended, restated, supplemented or otherwise modified
from time to time in accordance with its terms, the "Senior Credit Agreement")
and the Loan Documents as therein defined.
"Senior Debt Obligations" means, as of any date of determination, the
Company's Obligations under the Senior Credit Documents; provided that the
Senior Debt Obligations shall not exceed $120,000,000 on the date hereof, and,
on any date thereafter, $120,000,000 less (a) the amount of each prepayment of
"Term Loans" (as defined in the Senior Credit Agreement) and each permanent
reduction of the aggregate "Revolving Credit Commitment" (as defined in the
Senior Credit Agreement), from time to time by or on behalf of the Company
pursuant to Section 4.4 of the Senior Credit Agreement (or any successor
provision thereof), and (b) (without duplication) any "Net Cash Proceeds" (as
defined in the Senior Credit Agreement) of any Disposition or Asset Sale
retained by the Company; provided further that in connection with any financing
or use of cash collateral or other Collateral (as such term is defined hereunder
and under the Senior Credit Documents) with respect to the commencement of a
case under Bankruptcy Law (a "DIP Financing"), the principal amount of the
Senior Debt Obligations outstanding on the date on which such case is commenced
shall be increased by the lesser of (x)
14
the amount of such DIP Financing and (y) $25,000,000, which newly adjusted
amount shall remain subject to reductions as set forth in clause (b) of the
first proviso clause of this definition.
"Senior Loans" means the "Loans" under the Senior Credit Agreement (as the
term "Loan" is defined thereunder).
"Senior Secured Notes" has the meaning specified in Section 1 hereof.
"Single Employer Plan" means any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvent" and "Solvency" mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair saleable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur debts and liabilities beyond such Person's ability to pay as such
debts and liabilities mature and (d) such Person is not engaged in a business or
a transaction, and is not about to engage in a business or a transaction, for
which such Person's property would constitute an unreasonably small capital.
"Subordinated Note Documents" means, collectively, the 10.5% Subordinated
Note Documents and the 11% Subordinated Note Documents.
"Subsidiary" means, with respect to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other persons performing similar functions are at
the time, directly or indirectly through one or more intermediaries, or both,
owned or controlled, by such Person. Unless otherwise expressly indicated to the
contrary herein, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
"Termination Date" means the later to occur of the Maturity Date and the
first Business Day on which the Company is permitted under the terms of the
Intercreditor Agreement to pay in full in cash the Company's Obligations under
the Senior Secured Notes and the other Note Documents.
"Termination Event" means (i) a Reportable Event with respect to any Benefit
Plan or Multiemployer Plan which is likely to constitute grounds for termination
of such Benefit Plan or Multiemployer Plan; (ii) the withdrawal (within the
meaning of Section 4063 of ERISA) of the Company or any ERISA Affiliate from a
Benefit Plan during a plan year in which such entity was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; (iii) the providing of
notice of intent to terminate a Benefit Plan in a distress termination described
in Section 4041 (c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan or Multiemployer Plan; (v) any event or condition (a)
described in Section 4042(a) of ERISA and which could reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
15
or (b) described in Section 4041A(a) of ERISA and that could reasonably be
expected to result in termination of a Multiemployer Plan pursuant to Section
4041 A of ERISA; or (vi) the partial or complete withdrawal within the meaning
of Sections 4203 and 4205 of ERISA, of any Company or any ERISA Affiliate from a
Multiemployer Plan.
"Title Insurance Company" has the meaning specified in Section 7.11(b)
hereof.
"Underfunding" means the excess of the present value of all accrued benefits
under a Plan (based on those assumptions used to fund such Plan), determined as
of the most recent annual valuation date, over the value of the assets of such
Plan allocable to such accrued benefits.
"U.S. dollars, "$" or "Dollars" means United States dollars and any lawful
currency of the United States of America successor thereto.
"Wholly Owned Subsidiary" means as to any Person, any Subsidiary of such
Person of which such Person owns, directly or indirectly through one or more
Wholly Owned Subsidiaries, all of the Capital Stock of such Subsidiary other
than directors qualifying shares or shares held by nominees.
"Working Investment" means, at any date of determination thereof, (a) the
sum (determined without duplication for the Company and its Subsidiaries) of (i)
the unpaid face amount of all accounts receivable of the Company and its
Subsidiaries as at such date of determination, plus (ii) the aggregate amount of
prepaid expenses and other current assets (other than cash) of the Company and
its Subsidiaries as at such date of determination, minus (b) the sum (determined
without duplication for the Company and its Subsidiaries) of (i) the unpaid
amount of all accounts payable of the Company and its Subsidiaries as at such
date of determination, plus (ii) the aggregate amount of all accrued expenses of
the Company and its Subsidiaries as at such date of determination (but excluding
from accounts payable and accrued expenses, the current portion of long-term
debt and all accrued interest and taxes).
16