Exhibit 4.14
EXECUTION COPY
GMH ACQUISITION CORP.
Senior Subordinated Notes due 2002
GMH HOLDINGS, INC.
Warrants to Purchase Common Stock
______________________________
NOTE AND WARRANT
PURCHASE AGREEMENT
______________________________
Dated as of December 21, 1995
TABLE OF CONTENTS
Page
1. Authorization of Notes and Warrants . . . . . . . . . . . . . . . . 1
2. Sale and Purchase of Notes and Warrants . . . . . . . . . . . . . . 2
2.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Issue Price. . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Closing; Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. Transaction Fee. . . . . . . . . . . . . . . . . . . . . . . 3
3.3. Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . 3
4.1. Representations and Warranties . . . . . . . . . . . . . . . 3
4.2. Performance; No Default. . . . . . . . . . . . . . . . . . . 3
4.3. Compliance Certificate . . . . . . . . . . . . . . . . . . . 3
4.4. Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . 4
4.5. Consummation of Acquisition. . . . . . . . . . . . . . . . . 4
4.6. Consummation of Merger . . . . . . . . . . . . . . . . . . . 4
4.7. Amendment of Certificate of Incorporation. . . . . . . . . . 5
4.8. Certain Agreements . . . . . . . . . . . . . . . . . . . . . 5
4.9. Consents, Agreements . . . . . . . . . . . . . . . . . . . . 5
4.10. Common Stock, Preferred Stock and Junior
Subordinated Loans . . . . . . . . . . . . . . . . . . . . . 5
4.11. Senior Loans . . . . . . . . . . . . . . . . . . . . . . . . 6
4.12. Satisfaction of Obligations. . . . . . . . . . . . . . . . . 6
4.13. Compliance with Securities Laws. . . . . . . . . . . . . . . 6
4.14. No Adverse U.S. Legislation, Action or
Decision, etc. . . . . . . . . . . . . . . . . . . . . . . . 6
4.15. No Actions Pending . . . . . . . . . . . . . . . . . . . . . 7
4.16. Purchase Permitted By Applicable Law, etc. . . . . . . . . . 7
4.17. Proceedings and Documents. . . . . . . . . . . . . . . . . . 7
4.18. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.19. Transaction Expenses . . . . . . . . . . . . . . . . . . . . 7
5. Representations and Warranties, etc.. . . . . . . . . . . . . . . . 7
5.1. Organization, Standing, etc. . . . . . . . . . . . . . . . . 7
5.2. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 9
5.3. Qualification. . . . . . . . . . . . . . . . . . . . . . . . 9
5.4. Business; Financial Statements . . . . . . . . . . . . . . . 9
5.5. Changes, etc.. . . . . . . . . . . . . . . . . . . . . . . . 10
5.6. Compliance with Other Instruments, etc.. . . . . . . . . . . 10
5.7. Governmental Consents, etc.. . . . . . . . . . . . . . . . . 10
5.8. Capital Stock and Related Matters. . . . . . . . . . . . . . 11
5.9. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.10. Tax Returns and Payments . . . . . . . . . . . . . . . . . . 12
5.11. Title to Properties; Liens . . . . . . . . . . . . . . . . . 13
5.12. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.13. Environmental Compliance . . . . . . . . . . . . . . . . . . 14
5.14. Patents, Trademarks, Authorizations, etc.. . . . . . . . . . 15
5.15. Federal Reserve Regulations. . . . . . . . . . . . . . . . . 15
5.16. Status Under Certain Federal Statutes. . . . . . . . . . . . 16
5.17. Foreign Assets Control Regulations, etc. . . . . . . . . . . 16
5.18 Compliance with ERISA. . . . . . . . . . . . . . . . . . ... 16
5.19. Offer of Securities. . . . . . . . . . . . . . . . . . . . . 18
5.20. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . 18
5.21. Solvency of the Company. . . . . . . . . . . . . . . . . . . 18
5.22. Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . 19
5.23. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6. Purchase for Investment; Source of Funds. . . . . . . . . . . . . . 19
7. Furnishing of Information . . . . . . . . . . . . . . . . . . . . . 20
7.1. Accounting; Financial Statements and Other
Information. . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2. Rule 144A. . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. Inspection; Confidentiality . . . . . . . . . . . . . . . . . . . . 25
8.1. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 25
9. Prepayment of Notes . . . . . . . . . . . . . . . . . . . . . . . . 26
9.1. Required Prepayment Without Premium. . . . . . . . . . . . . 26
9.2. Optional Prepayments Without Premium . . . . . . . . . . . . 26
9.3. Optional Prepayments With Premium. . . . . . . . . . . . . . 26
9.4. Contingent Prepayments Upon Change of Control. . . . . . . . 26
9.5 Master Premium Table . . . . . . . . . . . . . . . . . . . . 27
9.6. Notice of Optional Prepayments; Officers'
Certificate. . . . . . . . . . . . . . . . . . . . . . . . . 27
9.7. Allocation of Partial Prepayments. . . . . . . . . . . . . . 28
9.8. Maturity; Surrender, etc.. . . . . . . . . . . . . . . . . . 28
9.9. Acquisition of Notes . . . . . . . . . . . . . . . . . . . . 28
10. Business and Financial Covenants. . . . . . . . . . . . . . . . . . 28
10.1. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2. Liens, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3. Investments, Guaranties, etc.. . . . . . . . . . . . . . . . 31
10.4. Restricted Payments. . . . . . . . . . . . . . . . . . . . . 33
10.5. Consolidation, Merger, Sale of Assets, etc.. . . . . . . . . 33
10.6. Certain Financial Covenants. . . . . . . . . . . . . . . . . 35
10.7. Transactions with Affiliates . . . . . . . . . . . . . . . . 39
10.8. Corporate Existence, etc.; Business. . . . . . . . . . . . . 39
10.9. Subsidiary Stock and Indebtedness. . . . . . . . . . . . . . 40
10.10. Payment of Taxes and Claims. . . . . . . . . . . . . . . . . 41
10.11 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . 41
10.12. Maintenance of Properties; Insurance . . . . . . . . . . . . 42
10.13. Other Loan Agreements. . . . . . . . . . . . . . . . . . . . 43
11. Events of Default; Acceleration . . . . . . . . . . . . . . . . . . 43
12. Remedies on Default, etc. . . . . . . . . . . . . . . . . . . . . . 46
13. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . 47
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15. Registration, Transfer and Substitution of Notes;
Action by Noteholders . . . . . . . . . . . . . . . . . . . . . . . 61
15.1. Note Register; Ownership of Notes. . . . . . . . . . . . . . 61
15.2. Transfer and Exchange of Notes . . . . . . . . . . . . . . . 62
15.3. Replacement of Notes . . . . . . . . . . . . . . . . . . . . 62
15.4. Notes held by Company, etc., Deemed Not
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . 62
16. Payments on Notes . . . . . . . . . . . . . . . . . . . . . . . . . 62
16.1. Place of Payment . . . . . . . . . . . . . . . . . . . . . . 62
16.2. Home Office Payment. . . . . . . . . . . . . . . . . . . . . 63
17. Expenses, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
18. Survival of Representations and Warranties. . . . . . . . . . . . . 64
19. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . 64
20. Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
21. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 65
22. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SCHEDULE A -- Schedule of Purchaser Information
SCHEDULE B -- Schedule of Equity Purchasers
SCHEDULE C -- Schedule of Debt and Liens
SCHEDULE D -- Schedule of Investments
SCHEDULE E -- Disclosure Schedule
EXHIBIT A -- Form of Senior Subordinated Note due 2002
EXHIBIT B -- Form of Warrant
EXHIBIT C-1 -- Form of Opinion of Company Counsel
EXHIBIT C-2 -- Form of Opinion of company's Georgia Counsel
EXHIBIT C-3 -- Form of Opinion of Purchaser's Counsel
EXHIBIT D -- Form of Restated Certificate of Incorporation
of Holding
EXHIBIT E -- Form of Stockholder's Agreement
EXHIBIT F -- Form of Investors' Rights Agreement
EXHIBIT G -- Form of Subordination Agreement
GMH Acquisition Corp.
P.O. Box 1449
Waycross, Georgia 31502
Senior Subordinated Notes due December 21, 2002
Warrants to Purchase Common Stock
December 21, 1995
The Equitable Life Assurance Society of the United States
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
GMF Acquisition Corp., a Delaware corporation (the "Company"), has
entered into a Stock Purchase Agreement, dated as of October 10, 1995 (as
amended, the "Stock Purchase Agreement"), with the Sellers (as defined in
section 14), providing for the purchase of all of the issued and outstanding
capital stock of General Manufactured Housing, Inc., a Georgia corporation
("GMH"). The Company is a wholly-owned subsidiary of GMH Holdings, Inc., a
Delaware corporation ("Holding"). Concurrently with the consummation of the
transactions contemplated by this Agreement, (i) the Company will acquire such
stock of GMH and (ii) GMH Acquisition will be merged into GMH, with GMH as the
surviving entity. For purposes of this Agreement, the term "Company" will refer
to GMH Acquisition Corp. prior to such merger and to GMH, as the surviving
entity with respect to such merger, thereafter.
The transaction described above, together with the related
transactions to be consummated on the Closing Date, are collectively sometimes
referred to herein as the "Acquisition." Certain other capitalized terms used in
this Agreement are defined in section 14; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.
The GMH Companies agree with you as follows:
1. Authorization of Notes and Warrants. In connection with the
Acquisition, (a) the Company will authorize the issue and sale of $17,243,295
aggregate principal amount of its Senior Subordinated Notes due December 21,
2002 (the "Notes," such term to include any such notes issued in substitution
therefor pursuant to section 15), to be substantially in the form of the Note
set out in Exhibit A, with such changes therefrom, if any, as may be approved by
you and the Company; and (b) Holding will authorize the issue and sale of
warrants (the "Warrants," such term to include any warrants issued in
substitution therefor pursuant to section 12.3 of the Warrant) to purchase
350,000 shares of, at the election of the holder, either the Class A Common
Stock or the Class B Common Stock of Holding at an initial exercise price of
$.01 per share, to be substantially in the form of the Warrant set out in
Exhibit B, with such changes therefrom, if any, as may be approved by you and
Holding.
2. Sale and Purchase of Notes and Warrants.
2.1. Purchase Price. Subject to the terms and conditions of this
Agreement, the Company will issue and sell to you and you will purchase from the
Company, at the Closing provided for in section 3, Notes in the aggregate
principal amount specified in section 1, and subject to the terms and conditions
of this Agreement, Holding will issue and sell to you and you will purchase from
Holding, at the Closing provided for in section 3, Warrants for the number of
shares of Common Stock specified in section 1; for a combined purchase price of
$15,000,000.
2.2. Issue Price. The Company, Holding and you agree for U.S. federal
income tax purposes (a) that (x) the present value as of the Closing Date of all
payments under the Notes, using a discount rate based on a yield which the
Company, Holding and you agree is the original yield of comparable debt
instruments not issued as part of an investment unit (which rate is not less
than the applicable federal rate on the date the Notes are issued), is $994.67
per $1,000 principal amount, and that (y) the aggregate "issue price" under
1273(b) of the Code of all of the Notes to be issued hereunder is $14,920,000;
and (b) that the aggregate purchase price under 1273(b) of the Code of all of
the Warrants to be issued hereunder is $80,000. The Company, Holding and you
agree to use the foregoing issue price, purchase price, value and the yield
which results in such issue price for U.S. f ederal income tax purposes with
respect to this transaction.
3. Closing; Fees.
3.1. Closing. The sale of the Notes and Warrants to be purchased by
you shall take place at the offices of ▇▇▇▇▇, Hargrave, Devans & ▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New York City time, at
a closing (the "Closing") on December 21, 1995 or on such other Business Day
thereafter on or prior to December 31, 1995 as may be agreed upon by the Company
and you. At the Closing (a) the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $100,000 as you may request)
dated the date of the closing and registered in your name (or in the name of
your nominee), and (b) Holding will deliver to you the Warrants to be purchased
by you in the form of a single warrant certificate (or such greater number of
warrant certificates as you may request) dated the date of the Closing and
registered in your name (or in the name of your nominee); against delivery by
you to the Company or its order of immediately available funds in the amount of
the purchase price therefor. If at the Closing the Company or Holding shall fail
to tender such Notes or such Warrants to you as provided above in this section
3, or any of the conditions specified in section 4 shall not have been
fulfilled, you shall, at your election, be relieved of all further obligations
under this Agreement, without thereby waiving any other rights you may have by
reason of such failure or such nonfulfillment.
3.2. Transaction Fee. On the date of the Closing, the Company will
pay to Alliance Corporate Finance Group Incorporated, in immediately available
funds, a transaction fee equal to $300,000.
3.3. Legal Fees. On the date of the Closing, the Company will pay the
fees and disbursements of your special counsel incurred in connection with the
transaction contemplated by this Agreement and set forth in a statement
delivered to the Company on or prior to the date of the Closing, and thereafter
the Company will pay, promptly upon receipt of a supplemental statement
therefor, additional fees and disbursements of your special counsel, if any,
incurred in connection with the closing of such transactions.
4. Conditions to Closing. Your obligation to purchase and pay for
the Notes and Warrants to be sold to you at the Closing is subject to the
fulfillment to your satisfaction, prior to or at the Closing, of the following
conditions:
4.1. Representations and Warranties. The representations and
warranties of the GMH Companies contained in this Agreement and those otherwise
made in writing by either of the GMH Companies in connection with the
Acquisition and the transactions contemplated by this Agreement shall be correct
when made and at the time of the Closing, except as affected by the consummation
of the Acquisition and any related transactions entered into in connection
therewith.
4.2. Performance; No Default. Each of the GMH Companies shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing and at the time of the Closing no Event of Default or Potential Event of
Default shall have occurred and be continuing.
4.3. Compliance Certificate. The Company shall have delivered to you
an Officers' Certificate of the Company, dated the date of the Closing,
certifying that the conditions specified in sections 4.1 and 4.2 have been
fulfilled and that, after giving effect to the issuance of all of the Notes and
Warrants, each of the GMH Companies will be in compliance in all material
respects with the most stringent limitations on the incurrence or maintenance of
Debt contained in any instrument or agreement applicable to or binding on either
of them or certifying that a complete and correct copy of a waiver or waivers of
compliance with such limitations is attached to such officers' Certificate.
4.4. Opinions of Counsel. You shall have received (a) from ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the GMH Companies, (b) from ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special Georgia counsel for the GMH Companies and
(c) from Becker, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, your special counsel in connection
with the transactions contemplated by this Agreement, favorable opinions
substantially in the forms set forth in Exhibits C-1, C-2 and C-3, respectively,
and covering such other matters incident to such transaction as you may
reasonably request, each addressed to you, dated the date of the Closing and
otherwise satisfactory in substance and form to you. You shall also have
received copies of the opinions delivered by counsel for the GMH Companies and
counsel for the Sellers in connection with the consummation of the Acquisition,
accompanied by letters, dated the Closing Date and addressed to you, from such
counsel stating that you are entitled to rely on such opinions as if they were
addressed to you.
4.5. Consummation of Acquisition. The transactions
contemplated by the Stock Purchase Agreement shall have been duly consummated.
The Stock Purchase Agreement shall be in full force and effect and no term or
condition thereof shall have been amended, modified or waived except with your
prior written consent. The purchase price under the Stock Purchase Agreement
shall have been paid in full in a combination of cash and Installment Promissory
Notes, and the Company shall have no further obligation with respect to the
purchase price except as set forth in the Stock Purchase Agreement. You and your
special counsel shall have received complete and correct copies of the Stock
Purchase Agreement as executed, with all exhibits and schedules thereto, and of
each document required under the Stock Purchase Agreement to be delivered or
filed in connection with the consummation of the Acquisition. All taxes, fees
and other expenses incurred in connection with the transactions contemplated by
the Stock Purchase Agreement which are required to be paid or provided for as a
condition to the due consummation of such transactions shall have been duly paid
or provided for by the Sellers or the Company. All governmental authorizations,
consents, approvals, exemptions or other actions required in connection with the
Acquisition shall have been duly received.
4.6. Consummation of Merger. The Merger shall have been duly
consummated in accordance with the laws of the States of Delaware and Georgia
and the Plan of Merger and General Manufactured Housing, Inc., a Georgia
corporation, shall be the surviving entity. The Plan of Merger shall be
satisfactory to you in form and substance and shall have been duly filed with
the Secretary of State of the States of Delaware and Georgia. All governmental
authorizations, consents, approvals, exemptions or other actions required in
connection with such Merger shall have been duly obtained or taken.
4.7. Amendment of Certificate of Incorporation. The Certificate of
Incorporation of Holding shall have been amended and restated to include
substantially the provisions set forth in Exhibit D relating to the Class B
Common Stock and, except as so amended, the Certificate of Incorporation shall
not have been amended or modified without your prior written consent.
4.8. Certain Agreements.
(a) Stockholders' Agreement. Holding and the Persons listed on part I
of Schedule B shall have executed and delivered to you the Stockholders'
Agreement substantially in the form of Exhibit E.
(b) Investors' Rights Agreements. The Investors' Rights Agreement
shall have been executed and delivered by the parties thereto, substantially in
the form of Exhibit F.
(c) Subordination Agreement. The Subordination Agreement shall have
been executed and delivered by the parties thereto, substantially in the form of
Exhibit G.
4.9. Consents, Agreements. Each of the Company and Holding shall have
obtained all consents and waivers, under any term of any agreement or instrument
to which it is a party or by which it or any of its properties or assets is
bound, or any term of any applicable law, ordinance, rule or regulation of any
governmental authority (including without limitation the Department of Housing
and Urban Development) or any term of any applicable order, judgment or decree
of any court, arbitrator or governmental authority, necessary or appropriate in
connection with the Acquisition, and such consents and waivers shall be in full
force and effect on the Closing Date. A complete and correct copy of each of
such consents and waivers shall have been delivered to you.
4.10. Common Stock, Preferred Stock and Junior Subordinated Loans.
Holding shall have sold shares of Class A Common Stock to the purchasers of
Class A Common Stock listed in part 1 of Schedule B and shall have received
payment in full therefor in an amount in cash of not less than $1,318,750.
Holding shall have sold shares of the Series A Preferred Stock to the purchasers
of Series A Preferred Stock listed in part 2 of Schedule B and shall have
received payment in full therefor in an aggregate amount in cash of not less
than $7,720,000. Holding
shall have sold shares of the Series B Preferred Stock to the purchasers of
Series B Preferred Stock listed in part 3 of Schedule B and shall have received
payment in full therefor in an aggregate amount in cash of not less than
$2,150,000. The Company shall have issued $5,000,000 aggregate principal amount
of the Junior Subordinated Notes and shall have received payment in full
therefor in an amount in cash equal to the face amount thereof. The RFE
Securities Purchase Agreement shall be satisfactory in form and substance to you
and shall be in full force and effect on the Closing Date and no term or
condition thereof shall have been amended or modified without your consent. A
complete and correct copy of the RFE Securities Purchase Agreement shall have
been delivered to you.
4.11. Senior Loans. Concurrently with the Closing, the Company shall
have borrowed from the Senior Lenders, as a term loan, the principal amount of
$20,000,000 pursuant to the Senior Loan Agreement; and the Company shall have
available to it under the Senior Loan Agreement an additional $6,000,000
principal amount as a revolving credit facility. The Senior Loan Agreement and
the related security agreements shall be satisfactory in form and substance to
you and shall be in full force and effect on the Closing Date and no term or
condition thereof shall have been amended or modified without your consent. A
complete and correct copy of each of the Senior Loan Agreement and such security
agreements shall have been delivered to you, together with evidence satisfactory
to you of such borrowings under the Senior Loan Agreement.
4.12. Satisfaction of Obligations. All of the obligations of the GMH
Companies shown on Schedule C as obligations that are required or intended to be
satisfied on or prior to the Closing Date shall have been satisfied in full and
all Liens securing any of such obligations shall have been released.
4.13. Compliance with Securities Laws. The offering and sale of the
Notes and Warrants to you, and the offering and sale of the Common Stock, the
Preferred Stock and the Junior Subordinated Notes to be issued by Holding at or
prior to the Closing, shall have complied with all applicable requirements of
federal and state securities laws and you shall have received evidence thereof
in form and substance satisfactory to you.
4.14. No Adverse U.S. Legislation, Action or Decision, etc. No
legislation shall have been enacted by either house of Congress or favorably
reported by any committee thereof, no other action shall have been taken by any
United States governmental authority, whether by order, regulation, rule, ruling
or otherwise, and no decision shall have been rendered by any court of competent
jurisdiction in the United States, which would materially and adversely affect
the Notes or the Warrants being purchased by you hereunder.
4.15. No Actions Pending. There shall be no suit, action,
investigation, inquiry or other proceeding by any governmental body or any other
Person or any other legal or administrative proceeding pending or, to the
Company's knowledge, threatened, which questions the validity or legality of the
Acquisition or the other transactions contemplated by this Agreement or which
seeks damages or injunctive or other equitable relief in connection therewith.
4.16. Purchase Permitted By Applicable Law, etc. On the date of the
Closing, your purchase of Notes and Warrants (a) shall be permitted by the laws
and regulations of each jurisdiction to which you are subject and (b) shall not
subject you to any tax, penalty or, in your reasonable judgment, other onerous
condition by reason of any change after the date of this Agreement in any
applicable law or governmental regulation. If requested by you, you shall have
received, at least five Business Days prior to the Closing, an Officers'
Certificate of the Company certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.
4.17. Proceedings and Documents. All corporate and other proceedings
in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
4.18. Fees. The fees required to be paid by sections 3.2 and 3.3
shall have been paid as therein provided.
4.19. Transaction Expenses. The transaction fees and expenses payable
in connection with the Acquisition and the other transactions contemplated by
this Agreement, including without limitation the fees referred to in sections
3.2, 3.3 and 5.22, shall not exceed $4,100,000 in the aggregate, and the Company
shall have delivered to you a letter to that effect.
5. Representations and Warranties, etc. The Company and Holding
hereby jointly and severally represent and warrant that:
5.1. Organization, Standing, etc.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties
(including the properties to be owned and operated by it after consummation of
the Acquisition), to carry on its business as now conducted and as proposed to
be conducted following the Acquisition, to enter into this Agreement and the
Operative Agreements to which it is a party, to issue and sell the Notes, and
the' Junior Subordinated Notes to be issued by it in connection with the
Acquisition, and to carry out the transactions contemplated by this Agreement
and the Operative Agreements to which it is a party.
(b) Holding is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties, to carry
on its business as now conducted and as proposed to be conducted following the
Acquisition, to enter into this Agreement and the Operative Agreements to which
it is a party, to issue and sell the Warrants, and the Common Stock and
Preferred Stock, and to carry out the transactions contemplated by this
Agreement and the Operative Agreements to which it is a party.
(c) The Company was organized on October 5, 1994 and has not engaged
in any business other than the issuance of its capital stock and the negotiation
and consummation of the transactions contemplated by this Agreement, the Stock
Purchase Agreement, the RFE Securities Purchase Agreement and the Senior Loan
Agreement, and has incurred no liabilities except for expenses and liabilities
incident to its organization and to the carrying out of the transactions
contemplated by this Agreement and the Operative Agreements.
(d) Holding was organized cn November 20, 1995 and has not engaged in
any business other than the issuance of its capital stock and the negotiation
and consummation of the transactions contemplated by this Agreement, the Stock
Purchase Agreement, the RFE Securities Purchase Agreement and the Senior Loan
Agreement, and has incurred no liabilities except for expenses and liabilities
incident to its organization and to the carrying out of the transactions
contemplated by this Agreement and the Operative Agreements.
(e) GMH is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and has all requisite corporate
power and authority to own, lease and operate its properties, to carry on its
business as now conducted and as proposed to be conducted following the
Acquisition, to enter into this Agreement and the Operative Agreements to which
it is a party and to carry out the transactions contemplated by this Agreement
and the Operative Agreements to which it is a party.
5.2. Subsidiaries. As of the date of this Agreement none of the GMH
Companies has, and on the Closing Date after
giving effect to the Acquisition and the other transactions contemplated by this
Agreement, none of them will have, any Subsidiaries other than (in the case of
Holding) the Company.
5.3. Qualification. Each of the GMH Companies is, and after giving
effect to the Acquisition will be, duly qualified and in good standing as a
foreign corporation authorized to do business in each jurisdiction (other than
the jurisdiction of its incorporation) in which the nature of its activities or
the character of the properties it owns or leases makes such qualification
necessary and in which the failure so to qualify would have a materially adverse
effect on the GMH Companies.
5.4. Business; Financial Statements. The Company has delivered to you
complete and correct copies of (a) the audited financial statements of GMH as
and for the fiscal years ending December 31, 1992, 1993 and 1994 (including the
balance sheets and the related statements of income and cash flows), with the
report thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants, for 1994,
and of ▇▇▇▇ ▇. ▇▇▇▇▇▇, independent public accountant, for 1993 and 1992; (b) the
audited balance sheet of GMH as and for the ten month period ending October 31,
1995, with the report thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the financial statements
described in the foregoing clause (a) and in this clause (b) being referred to
collectively as the "Audited Financial Statements"); (c) unaudited statements of
income and cash flows for the ten months ended October 31, 1995 (the "Unaudited
Financial Statements" and, together with the Audited Financial Statements, the
"Financial Statements"); and (d) the pro forma balance sheet of the Company as
of November 30, 1995 (the "Pro Forma Balance Sheet"), giving pro forma effect to
the Acquisition, the issuance of the Notes and Warrants hereunder, the borrowing
under the Senior Loan Agreement and the issuance of the Common Stock, the
Preferred Stock and the Junior Subordinated Notes as contemplated hereby, as if
such transactions were consummated on the date of the Pro Forma Balance Sheet.
The Financial Statements have been prepared in accordance with generally
accepted accounting principles, applied on a consistent basis throughout the
periods specified (except such changes as are therein specified and except, in
the case of the Unaudited Financial Statements, for the absence of footnotes and
for year-end audit adjustments), and present fairly the financial position of
GMH as of the respective dates specified and the results of its operations and
changes in financial position for the respective periods specified. The Pro
Forma Balance Sheet gives pro forma effect to the Acquisition and the other
transactions contemplated hereby and by the Senior Loan Agreement and the
issuance of the Common Stock, the Preferred Stock and the Junior Subordinated
Notes in connection with such transactions. The Pro Forma Balance Sheet has been
prepared on the basis stated therein (including the assumptions set forth
therein, which were reasonable assumptions when made and are reasonable
assumptions as of the date hereof).
5.5. Changes, etc. There has been no materially adverse change in the
assets, liabilities or financial condition of the Company since its
incorporation other than changes contemplated by this Agreement and the
Operative Agreements. Since December 31, 1994, (a) except as set forth in
Schedule E, there has been no change in the assets, liabilities or financial
condition of GMH, other than changes in the ordinary course of business which
have not been, either in any case or in the aggregate, materially adverse to
GMH, and (b) neither the business, operations or affairs nor any of the
properties or assets of GMH have been affected by any occurrence or development
(whether or not insured against) which has been, either in any case or in the
aggregate, materially adverse to GMH.
5.6. Compliance with Other Instruments, etc. None of the GMH
Companies is, and after giving effect to the Acquisition and the financing
thereof none of them will be, in violation of its Certificate of Incorporation
or by-laws. None of the GMH Companies is, and after giving effect to the
Acquisition and the financing thereof none of the GMH Companies will be, in
violation of any term of any agreement or instrument to which it is a party or
by which it or any of its properties or assets is bound, or any term of any
applicable law, ordinance, rule or regulation of any governmental authority or
any term of any applicable order,
judgment or decree of any court, arbitrator or governmental authority, the
consequences of which violation would have a materially adverse effect on the
business, operations, affairs, condition (financial or otherwise), properties or
assets of any of the GMH Companies; the execution, delivery and performance of
this Agreement and the Notes and Warrants and the issuance of the Common Stock,
the Preferred Stock and the Junior Subordinated Notes to be issued as
contemplated hereby, and the execution, delivery and performance of the
Operative Agreements, will not result in any violation of or be in conflict with
or constitute a default under any such term or result in the creation of (or
impose any obligation on any of the GMH Companies to create) any Lien, other
than Liens described in section 10.2 hereof, upon any of the properties or
assets of the GMH Companies pursuant to any such term; and there is no such term
which materially adversely affects, or which in the future and after giving
effect to the Acquisition would materially adversely affect the business,
operations, affairs, condition (financial or otherwise), properties or assets of
the GMH Companies.
5.7. Governmental Consents, etc. No consent, approval or
authorization of, or declaration or filing with, any governmental authority on
the part of the GMH Companies is required for the.valid execution and delivery
of this Agreement, the Stock Purchase Agreement or any of the other Operative
Agreements (other than those which have been duly obtained or made and other
than the filing of Uniform Commercial Code financing statements as required by
the Senior Loan Agreement) or the consummation of the transactions contemplated
hereby or thereby or the valid offer, issue, sale and delivery of the Notes and
Warrants.
5.8. Capital Stock and Related Matters.
(a) As of the Closing Date, the authorized capital stock of Holding
will consist of 4,375,000 shares of Class A Common Stock, 787,500 shares of
Class B Common Stock, 2,150,000 shares of Class C Common Stock, 8,000,000 shares
of Series A Preferred Stock and 2,150,000 shares of Series B Preferred Stock. On
the Closing Date after giving effect to the transactions contemplated by this
Agreement and the Operative Agreements, 1,656,250 shares of the Class A Common
Stock, no shares of Class B Common Stock, no shares of the Class C Common Stock,
8,000,000 shares of Series A Preferred Stock and 2,150,000 shares of the Series
B Preferred Stock will be issued and outstanding. The shares of Class A Common
Stock and Class B Common Stock issuable upon exercise of the Warrants, and the
shares of Class A Common Stock issuable upon conversion of the Class B Common
Stock, have been duly authorized and validly reserved for issuance upon such
exercise or conversion and, when so issued, will be validly issued, fully paid
and non-assessable. As of the Closing Date, Holding will not have outstanding
securities convertible into or exchangeable for any shares of its capital stock,
nor will it have outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, any shares of its capital stock or any securities
convertible into or exchangeable for any shares of its capital stock, other than
(i) as set forth in the Stockholders' Agreement and Investors' Rights Agreement,
(ii) as set forth in the Restated Certificate of Incorporation of Holding as of
the Closing Date, (iii) the Warrants and (iv) the warrants issued to principals
and employees of Larkspur Capital Corporation.
(b) As of the Closing Date, after giving effect to the transactions
contemplated by this Agreement and the Operative Agreements, the authorized
capital stock of the Company will consist of 100,000 shares of common stock, par
value $100 per share, of which 5,250 shares will be issued and outstanding. As
of the Closing Date, the Company will not have outstanding securities
convertible into or exchangeable for any shares of its capital stock, nor will
it have outstanding securities convertible into or exchangeable for any shares
of its capital stork, nor will it have outstanding any rights to subscribe for
or to purchase, or any options for the purchase of, or any agreements providing
for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating
to, any shares of its capital stock or any securities convertible into or
exchangeable for any shares of its capital stock.
(c) As of the Closing Date and after giving effect to the Acquisition
and the other transactions contemplated hereby, except as set forth in the
Investors' Rights Agreement, none of the GMH Companies will be subject to any
obligation (contingent or otherwise) to repurchase or otherwise to acquire or
retire any shares of its capital stock. Except as set forth in the Stockholders'
Agreement, none of the GMH Companies is required to file, nor has it filed,
pursuant to Section 12 or Section 15(d) of the Exchange Act, a registration
statement relating to any class of its debt or equity securities.
5.9. Debt. Schedule C-1 correctly describes all secured and unsecured
Debt of the GMH Companies, including Debt of GMH, outstanding, or for which any
of them has commitments (other than the Notes, the Junior Subordinated Notes and
the loans outstanding under the Senior Loan Agreement), and identifies the
collateral securing any 'of such Debt that is secured. Except as set forth on
Schedule C-2, on the Closing Date and after giving effect to the Acquisition the
GMH Companies will have no Debt outstanding. On the Closing Date after giving
effect to the repayment of the obligations that are shown on Schedule C-1 as
obligations that are required or intended to be satisfied on or prior to the
Closing Date, the GMH Companies will not be in default with respect to any Debt
or any instrument or agreement relating thereto.
5.10. Tax Returns and Payments. Neither the Company nor Holding has
incurred any liability for any taxes, assessments or other governmental charges
with respect to it or to any of its properties, assets, income or franchises,
whether or not now due and payable (other than state franchise taxes and similar
taxes payable solely as a result of the organization or qualification of Holding
and the Company). GMH has filed all tax returns required by law to be filed by
it and has paid all taxes, assessments and other governmental charges levied
upon it and any of its properties, assets, income or franchises which are due
and payable, other than those presently payable without penalty or interest and
those presently being contested in good faith by appropriate proceedings
diligently conducted for which such reserves or other appropriate provision, if
any, as shall be required by generally accepted accounting principles shall have
been made. The Federal income tax liabilities of GMH has been finally determined
by the Internal Revenue Service and satisfied, or the time for audit has
expired, for all fiscal periods through December 31, 1991. The charges, accruals
and reserves on the book s of GMH in respect of income taxes for all fiscal
periods are adequate in all material respects in the opinion of the Company, and
the Company knows of no unpaid assessment for additional Federal, state or
foreign income taxes for any period or any basis for any such assessment.
5.11. Title to Properties; Liens. On the Closing Date and after
giving effect to the Acquisition and the other transactions contemplated by this
Agreement, each of the GMH Companies will have good and sufficient title to all
of its properties and assets, including the properties and assets reflected in
the Pro Forma Balance Sheet referred to in section 5.4 (other than inventory
disposed of in the ordinary course of business after the respective dates
thereof), and none of such properties or assets is subject to any Liens except
such as are permitted by section 10.2. On the Closing Date and after giving
effect to the Acquisition and the other transactions contemplated by this
Agreement, each of the GMH Companies will enjoy peaceful and undisturbed
possession under all leases necessary for the operation of its properties and
assets, and all such leases will be valid and subsisting and will be in full
force and effect. Except to perfect and protect security interests of the
character permitted by section 10.2, no presently effective financing statement
under the Uniform
Commercial Code which names Holding or the Company as debtor is on file in any
jurisdiction, and neither Holding nor the Company has signed any presently
effective financing statement or any presently effective security agreement
authorizing any secured party thereunder to file any such financing statement.
No presently effective financing statement under the Uniform Commercial Code
which names GMH as debtor is on file in any jurisdiction and GMH has not signed
any presently effective financing statement or any presently effective security
agreement authorizing any secured party thereunder to file any such financing
statement, except in each case for such financing statements or security
agreements which will concurrently with the Closing be terminated and as to
which Uniform Commercial Code termination statements have been or will
concurrently with the Closing be filed in such jurisdiction or be delivered to
the Senior Lenders for filing [; and except for financing statements relating to
the Ware County Obligation].
5.12. Litigation. There is no action, proceeding or investigation
pending or, to the knowledge of any of the GMH Companies, threatened (or any
basis therefor known to the Company) which questions the validity or legality of
this Agreement, the Notes or the Warrants, or any action taken or to be taken
pursuant to this Agreement, the Notes, the Warrants, the Stock Purchase
Agreement or any of the other Operative Agreements or which would result, either
in any case or in the aggregate, in any material adverse change in the business,
operations, affairs, condition (financial or otherwise), properties or assets of
any of the GMH Companies, or in any liability on the part of the GMH Companies,
which would be material to the GMH Companies, taken as a whole.
5.13. Environmental Compliance. Except as disclosed in Schedule E:
(a) the Premises are not being and have not been used for the
treatment, generation, transportation, processing, handling or production of any
Hazardous Substance, or for the storage of petroleum or petroleum based products
other than those referenced in the Environmental Reports;
(b) the Premises are not being and have not been used for the
disposal of any Hazardous Substance, or as a landfill, or other waste disposal
site;
(c) the Premises are not being and have not been used for storage,
treatment, generation, transportation, processing, handling, production or
disposal of any Hazardous Waste, or as a Hazardous Waste landfill or other
Hazardous Waste disposal site;
(d) underground storage tanks are not and have not been located on
the Premises;
(e) the soil, subsoil, bedrock, surface water and groundwater of the
Premises are free of any Hazardous Substances;
(f) there has been no Release nor is there the threat of a Release of
any Hazardous Substance on, at or from the Premises which through soil, subsoil,
bedrock, surface water or groundwater migration could come to be located on the
Premises, and none of the GMH Companies has received any form of notice or
inquiry from any federal, state or local governmental agency or authority, any
operator, licensee or occupant of the Premises or any other Person with regard
to a Release or the threat of a Release of any Hazardous Substance on, at or
from the Premises;
(g) all necessary Environmental Permits have been obtained and are in
full force and effect;
(h) no event has occurred with respect to the Premises which, with
the passage of time or the giving of notice, or both, would constitute a
violation of any applicable current Environmental Law or non-compliance with any
Environmental Permit, and at all times the Premises and all present and prior
uses thereof have substantially complied with all Environmental Laws;
(i) there are no agreements, consent orders, decrees, judgments,
license or permit conditions or other orders or directives of any federal, state
or local court, governmental agency or authority relating to the past, present
or future ownership, use, operation, sale, transfer or conveyance of the
Premises which require containment, clean up, investigations, studies, removal
or other remedial action or capital expenditures
with respect to the Premises;
(j) there are no actions, suits, claims or proceedings, pending, or
threatened, which would cause the incurrence of expenses or costs of any kind or
description or which seek money damages, injunctive relief, remedial action or
any other remedy that arise out of, relate to or result from a violation or
alleged violation of any applicable Environmental Law or non-compliance or
alleged non-compliance with any Environmental Permit, the presence of any
Hazardous Substance or a release or the threat of a Release of any Hazardous
Substance on, at or from the Premises or human exposure to any Hazardous
Substance;
(k) GMH is in substantial compliance with all applicable
Environmental Laws;
(l) GMH has not received any notice of, or been subject to, any
administrative or judicial proceeding pursuant to any applicable Environmental
Law, either now or at any time during the past three years; and
(m) there are no present facts or circumstances that form the basis
for the assertion of any claim against GMH relating to environmental matters
including, without limitation, any claim arising from past or present
environmental practices asserted under CERCLA or RCRA or any other federal,
state or local environmental statute.
5.14. Patents, Trademarks, Authorizations, etc. After giving effect
to the Acquisition, each of the GMH Companies will own, possess or be licensed
or otherwise have the full right to use, all patents, trademarks, service marks,
trade names, copyrights, licenses, authorizations, technology, know-how and
processes, and all rights with respect to the foregoing, necessary for the
conduct of its business, without any known conflict with the rights of others.
5.15. Federal Reserve Regulations. The GMH Companies will not,
directly or indirectly, use any of the proceeds of the sale of the Notes
and.Warrants for the purpose, whether immediate, incidental or ultimate, of
buying a "margin stock" or of maintaining, reducing or retiring any indebtedness
originally incurred to purchase a stock that is currently a "margin stock," or
for any other purpose which might constitute this transaction a "purpose
credit," in each case within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 C.F.R. 207, as amended) or
Regulation U of such Board (12 C.F.R. 221, as amended), or otherwise take or
permit to be taken any action which would involve a violation of such Regulation
G or Regulation U or of Regulation T (12 C.F.R. 22.0, as amended) or Regulation
X (12 C.F.R. 224, as amended) or any other regulation of such Board. No Debt of
the GMH Companies, including Debt of GMH being reduced or retired out of the
proceeds of the sale of the Notes and Warrants, was incurred for the purpose of
purchasing or carrying any such "margin stock," and none of the GMH Companies
owns or has any present intention of acquiring any such "margin stock."
5.16. Status Under Certain Federal Statutes. None of the GMH
Companies is, and after giving effect to the Acquisition none of them will be,
(a) an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act bf 1940, as amended;
(b) a "holding company" or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended; (c) a "public utility" as such term is defined in the Federal
Power Act, as amended; or (d) a "rail carrier or a person controlled by or
affiliated with a rail carrier", within the meaning of Title 49, U.S.C., or a
"carrier" to which 49 U.S.C. 11301(b)(1) is applicable.
5.17. Foreign Assets Control Regulations, etc. Neither the issue and
sale of the Notes and Warrants by the GMH Companies nor their use of the
proceeds thereof as contemplated by this Agreement will violate the Foreign
Assets Control
Regulations, the Transaction Control Regulations, the Cuban Assets Control
Regulations, the Foreign Funds Control Regulations, the Iranian Assets Control
Regulations, the Iranian Transactions Regulations, the Iraqi Sanctions
Regulations, the Libyan Sanctions Regulations, or any similar foreign assets
control or export control regulations of the United States Treasury Department
(31 C.F.R., Subtitle B, Chapter V as amended) or the restrictions set forth in
Executive Orders No. 8389, 9193, 12543 (Libya), 12544 (Libya), 12801 (Libya),
12722 (Iraq), 12724 (Iraq), as amended, of the President of the United States of
America or of any rules or regulations issued thereunder.
5.18. Compliance with ERISA.
(a) None of the GMH Companies has breached the fiduciary rules of
ERISA or engaged in any prohibited transaction in connection with which it could
be subjected to (in the case of any such breach) a suit for damages or (in the
case of any such prohibited transaction) either a civil penalty assessed under
section 502(i) of ERISA or a tax imposed by section 4975 of the Code, which
suit, penalty or tax, in any case, would be materially adverse to any of the GMH
Companies.
(b) No Plan which is a defined benefit plan or any trust created
under any such Plan has been terminated since September 2, 1974. None of the GMH
Companies nor any Related Person has within the past six years contributed to a
single employer plan which has at least two contributing sponsors not under
common control or ceased operations at a facility in a manner which could result
in liability of any of the GMH Companies under section 4062(f) of ERISA. No
liability to the PBGC has been or is expected by any of the GMH Companies to be
incurred with respect to any Plan which is or would be materially adverse to any
of the GMH Companies. There has been no reportable event (within the meaning of
section 4043(b) of ERISA) or any other event or condition with respect to any
Plan which presents a risk of termination of any such Plan by the PBGC under
circumstances which in any case could result in liability which would be
materially adverse to any of the GMH Companies.
(c) Full payment has been made of all amounts which any of the GMH
Companies or any Related Person is required under the terms of each Plan to have
paid as contributions to such Plan as of the last day of the most recent fiscal
year of such Plan ended prior to the date hereof.
(d) The present value of all vested accrued benefits under all Plans
that are defined benefit plans, determined as of the end of each of the GMH
Companies' most recently ended fiscal year on the basis of reasonable actuarial
assumptions, does not exceed the current value of the assets of such Plans
allocable to such vested accrued benefits. The terms "present value", "current
value", and "accrued benefit" have the meanings specified in section 3 of ERISA.
(e) None of the GMH Companies is or has ever been obligated to
contribute to any Multiemployer Plan.
(f) The execution and delivery of this Agreement and the issue and
sale of the Notes hereunder will not involve any transaction which is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975 of the Code. The representation by the GMH
Companies in the preceding sentence is made in reliance upon and subject to the
accuracy of your representation in section 6.2 of this Agreement as to the
source of the funds used to pay the purchase price of the Notes purchased by
you. None of the GMH Companies is a party in interest with respect to any
employee benefit plan whose name has been disclosed to the Company pursuant to
section 6.2 and securities of the GMH Companies are not employer securities with
respect to any such plan. As used in this section 5.18(f), the terms "employee
benefit plans" and "party in interest" have the respective meanings specified in
section 3 of ERISA and the term "employer*securities" has the meaning specified
in section 407 (d) (1) of ERISA.
5.19. Offer of Securities. Neither the GMH Companies nor Larkspur
Capital Corporation (the only Persons authorized or
employed by any of the GMH Companies to act as agent, broker, dealer or
otherwise in connection with the offering or sale of the Notes or Warrants or
any similar securities of the GMH Companies) has directly or indirectly offered
the securities to be purchased by you pursuant to this Agreement or any part
thereof or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any Person other than, in the case of the Notes and the Warrants, you and
approximately 32 other institutional investors and, in the case of the Class A
Common Stock, the Preferred Stock and the Junior Subordinated Notes, to the
purchasers listed in Schedule B. Neither the GMH Companies nor anyone acting on
their behalf has taken or will take any action which would subject the issuance
and sale of the Notes or the Warrants to the registration and prospectus
delivery provisions of the Securities Act.
5.20. Use of Proceeds. The GMH Companies will apply the proceeds of
the sale of the Notes and the Warrants solely to the payment of the purchase
price under the Stock Purchase Agreement and for the payment of expenses
incurred in connection with the transactions contemplated hereby.
5.21. Solvency of the Company. As of the Closing Date and after
giving effect to the Acquisition and the other transactions contemplated hereby,
(a) the aggregate value of all of the assets of the GMH Companies, at a fair
valuation (determined in accordance with applicable law), will exceed the total
liabilities of such GMH Company (including contingent, subordinated, unmatured
and unliquidated liabilities); (b) each GMH Company will be able to pay its
debts as they mature; (c) neither of the GMH Companies will have unreasonably
small capital for the business in which it is proposed to be engaged; and (d)
each of the GMH Companies will be able to satisfy in full any final judgment
which either results from an action for money damages pending against it on the
Closing Date or was a judgment in such an action docketed against it on the
Closing Date. For purposes of this section 5.21, the "fair valuation" of any
asset will be that amount which may be realized within a reasonable time, either
through collection or sale of such asset at fair market value, defining the
latter as the amount which could be obtained for the property in question within
such period by a willing seller from a willing buyer, each having reasonable
knowledge of the relevant facts, neither being under any compulsion to act, with
equity to both. None of the GMH Companies has any intent to hinder, delay or
defraud any entity to which it is, or will become, on or after the Closing Date,
indebted or to incur debts that would be beyond its ability to pay as they
mature.
5.22. Certain Fees. Except for the fees referred to in section 3, the
closing fee payable to SIHI in the amount of $500,000, the investment banking
fee payable to Larkspur Capital Corporation in the amount of $1,565,000, and the
broker's fee payable to ▇. ▇▇▇▇▇ ▇▇▇ in the amount of $500,000, no broker's or
finder's fee or commission has been paid or will be payable with respect to the
offer, issue and sale of the Notes or the Warrants or with respect to the
Acquisition, and each of the GMH Companies hereby indemnifies you against, and
will hold you harmless from, any claim, demand or liability asserted against you
for broker's or finder's fees alleged to have been incurred by any of the GMH
Companies or any other Person (other than you or your Affiliates) in connection
with any such offer, issue and sale or the Acquisition or any of the other
transactions contemplated by this Agreement, the Stock Purchase Agreement or any
of the other Operative Agreements.
5.23. Disclosure. Neither this Agreement nor the Private Placement
Memorandum nor any other document, certificate or instrument delivered to you by
any of the GMH Companies or Larkspur Capital Corporation in connection with the
transactions contemplated by this Agreement, when read together, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to any of the GMH Companies (other than matters of a general economic or
political nature which do not affect the GMH Companies uniquely) which
materially adversely affects the business, operations, affairs, condition
(financial or otherwise), properties or assets of the GMH Companies, which has
not been set forth in this Agreement or in the other documents, certificates and
instruments delivered to you by the GMH Companies or Larkspur Capital
Corporation in connection with the transactions contemplated hereby and thereby.
6. Purchase for Investment; Source of Funds.
6.1. You represent and warrant that you are purchasing the Notes and
Warrants for your own account not with a view to the distribution thereof or
with any present intention of distributing or selling any of the Notes or
Warrants, provided that the disposition of your or their property shall at all
times be within your or their control.
6.2. You represent that no part of the funds to be used by you to pay
the purchase price of the Notes and Warrants constitutes assets allocated to any
separate account maintained by you in which any employee benefit plan (or its
related trust) has any interest.
As used in this section 6.2, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in section 3
of ERISA.
7. Furnishing of Information.
7.1. Accounting; Financial Statements and Other Information. Holding
will maintain, and will cause each of its Subsidiaries to maintain, a system of
accounting established and administered in accordance with generally accepted
accounting principles, and will accrue, and will cause each of its Subsidiaries
to accrue, all such liabilities as shall be required by generally accepted
accounting principles. The Company will deliver (in duplicate) to you, so long
as you shall be entitled to purchase Notes and Warrants under this Agreement or
you or your nominee shall be the holder of any Notes or Warrants, and to each
other institutional holder of any Notes or Warrants:
(a) within 45 days after the end of each of the first three
quarterly fiscal periods in each fiscal year of Holding, consolidated
and consolidating balance sheets of Holding and its Subsidiaries as at
the end of such period and the related consolidated (and, as to
statements of income and cash flows, consolidating) statements of
income, stockholders' equity and cash flows of Holding and its
Subsidiaries for such period and (in the case of the second and third
quarterly periods) for the period from the beginning of the current
fiscal year to the end of such quarterly period, setting forth in each
case in comparative form the consolidated and (where applicable)
consolidating figures for the corresponding periods of the previous
fiscal year, all in reasonable detail and certified by a principal
financial officer of Holding as presenting fairly, in accordance with
generally accepted accounting principles (except for the absence of
notes thereto) applied (except as specifically set forth therein) on a
basis consistent with such prior fiscal periods, the information
contained therein, subject to changes resulting from normal year-end
audit adjustments;
(b) within 90 days after the end of each fiscal year of Holding,
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such year and the related consolidated
(and, as to statements of income and cash flows, consolidating)
statements of income, stockholders' equity and cash flows of Holding
and its Subsidiaries for such fiscal year, setting forth in each case
in comparative form the consolidated and (where applicable)
consolidating figures for the previous fiscal year, all in reasonable
detail and (i) in the case of such consolidated financial statements,
accompanied by a report thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other
independent public accountants of recognized national standing
selected by
the Company (and reasonably satisfactory to you, so long as you shall
be entitled to purchase Notes and Warrants under this Agreement or you
or your nominee shall be the holder of any of the Notes or Warrants,
and to the holder or holders of at least 66 2/3% in principal amount
of the Notes then outstanding) (subject to section 15.4), which report
shall state that such consolidated financial statements present fairly
the financial position of Holding and its subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated in conformity with generally accepted accounting
principles applied on a basis consistent with prior years (except as
otherwise specified in such report) and that the audit by such
accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted standards and (ii)
in the case of such consolidating financial statements, certified by a
principal financial officer of Holding as presenting fairly, in
accordance with generally accepted accounting principles applied
(except as specifically set forth therein) on a basis consistent with
such prior fiscal periods, the information contained therein;
(c) together with each delivery of financial statements pursuant
to subdivisions (a) and (b) of this section 7.1, an Officers'
Certificate of Holding (i) stating that the signers have reviewed the
terms of this Agreement and of the Notes and have made, or caused to
be made under their supervision, a review in reasonable detail of the
transactions and condition of Holding and its Subsidiaries during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of the Officers' Certificate, of any
condition or event which constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action Holding or the Company has taken or is taking or proposes to
take with respect thereto, (ii) specifying the amount available at the
end of such accounting period for Restricted Payments in compliance
with section 10.4 and showing in reasonable detail all calculations
required in arriving at such amount, and (iii) demonstrating -n
reasonable detail compliance during and at the end of such accounting
period with the restrictions contained in sections 10.1 through 10.6;
(d) together with each delivery of financial statements pursuant
to subdivision (b) of this section 7.1, a written statement by the
independent public accountants giving the report thereon (i) stating
that their audit examination has included a review of the terms of
this Agreement and of the Notes and that such review is sufficient to
enable them to make the statement referred to in clause (iii) of this
subdivision (d) (it being understood that no special audit procedures,
other than those required by generally accepted auditing standards,
shall be required), (ii) stating whether, in the course of their audit
examination, they obtained knowledge (and whether, as of the date of
such written statement, they have knowledge) of the existence of any
condition or event which constitutes an Event of Default or Potential
Event of Default, and, if so, specifying the nature and period of
existence thereof, and (iii) stating that they have examined the
Officers' Certificate delivered in connection therewith pursuant to
subdivision (c) of this section 7.1 and that the matters set forth in
such Officers' Certificate pursuant to clauses (ii) and (iii) of such
subdivision (c) have been properly stated in accordance with the terms
of this Agreement;
(e) in addition to the financial statements required by
subdivisions (a) and (b) of this section 7.1, within 30 days after the
end of each month, consolidated balance sheets of Holding and its
Subsidiaries as at the end of such month and the related consolidated
statements of income, stockholders' equity and cash flows of Holding
and its Subsidiaries for such month and (in the case of the second
through twelfth month of the fiscal year) for the period from the
beginning of the current fiscal year to the end of such month, setting
forth in each case in comparative form the consolidated figures for
the corresponding periods of the previous fiscal year, all in
reasonable detail and certified by a principal financial officer of
Holding as presenting fairly, in accordance with generally accepted
accounting principles (except as specifically set forth therein) on a
basis consistent with such prior fiscal periods, the information
contained therein, subject to changes resulting from normal year-end
audit adjustments;
(f) at least fifteen days prior to the commencement of each
fiscal year commencing with the 1996 fiscal year, financial forecasts
and budgets for such fiscal year (including consolidated and
consolidating balance sheets, income statements and statements of cash
flows), setting forth the principal assumptions upon which such
forecasts and budgets are based;
(g) promptly upon receipt thereof, copies of all reports
submitted to any of the GMH Companies by independent public
accountants in connection with each annual, interim or special audit
of the books of the Company or any Subsidiary made by such
accountants, including, without limitation, the comment letter
submitted by such accountants to management in connection with their
annual audit;
(h) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or
made available generally by any of the GMH Companies to its security
holders or by any Subsidiary to its security holders other than the
Company or another Subsidiary, of all regular and periodic reports and
all registration statements and prospectuses filed by any of the GMH
Companies or any Subsidiary with any securities exchange or with the
Securities and Exchange Commission or any governmental authority
succeeding to any of its functions, and of all press releases and
other statements made available generally by any of the GMH Companies
or any Subsidiary to the public concerning material developments in
the business of the GMH Companies or their Subsidiaries;
(i) immediately upon any principal officer of any of the GMH
Companies or any other officer of any of the GMH Companies involved in
their financial administration obtaining knowledge of any condition or
event which constitutes an Event of Default or Potential Event of
Default, or that the holder of any Note has given any notice or taken
any other action with respect to a claimed Event of Default or
Potential Event of Default under this Agreement or that any Person has
given any notice to the any GMH Company or any Subsidiary or taken any
other action with respect to a claimed default or event or condition
of the type referred to in section 11(f) or (g), an Officers'
Certificate describing the same and the period of existence thereof
and what action the GMH Companies have taken, are taking and propose
to take with respect thereto;
(j) immediately upon any principal officer of any of the GMH
Companies or any other officer of the GMH Companies involved in their
financial administration obtaining knowledge of the occurrence of any
(i) "reportable event," as such term is defined in
section 4043 of ERISA, or (ii) "prohibited transaction," as such term
is defined in section 4975 of the Code, in connection with any Plan or
any trust created thereunder, a written notice specifying the nature
thereof, what action the GMH Companies have taken, are taking and
propose to take with respect thereto, and, when known, any action
taken or threatened by the Internal Revenue Service or the PBGC with
respect thereto, provided that, with respect to the occurrence of any
"reportable event" as to which the PBGC has waived the 30-day
reporting requirement, such written notice need be given only at the
time notice is given to the PBGC;
(k) within ninety days after the end of each fiscal year of
Holding, an Officers' Certificate of holding setting forth in
reasonable detail the amount of the Company's Repurchase Obligations
as of the end of such fiscal year and the amount of, and the
circumstances relating to, any payments that were required to be made
during such fiscal year in respect of the Repurchase obligations; and
(l) with reasonable promptness, such other financial reports
and information and data with respect to the GMH Companies or any of
their Subsidiaries as from time to time may be reasonably requested by
any holder of Notes.
7.2. Rule 144A.
(a) Holding and the Company represent and warrant that neither the
Notes nor the Warrants issued and sold to you hereunder, nor the shares of
Common Stock issuable upon exercise of the Warrants, are of the same class as
securities listed on a national securities exchange or quoted in a U.S.
automated inter-dealer quotation system.
(b) The Company agrees that, until such time as it may be subject
either to Section 13 or to Section 15(d) of the Exchange Act, it will furnish to
any holder of Notes or to a prospective purchaser, on or prior to the date such
Note is to be sold to such prospective purchaser, subject to a written
confidentiality undertaking by such prospective purchaser satisfactory in form
and substance to the Company, the following information (which shall be
reasonably current in relation to the date of-such sale under this paragraph): a
very brief statement of the nature of the business of the Company and the
products and services it offers; and the Company's most recent audited
consolidated balance sheets and profit and loss and retained earnings statement,
and, if available, similar financial statements for the two preceding fiscal
years.
(c) Holding agrees that, until such time as it may be subject either
to Section 13 or to Section 15(d) of the Exchange Act, it will furnish to any
holder of Warrants or to a prospective purchaser, on or prior to the date such
Warrant is to be sold to such prospective purchaser, subject to a written
confidentiality undertaking by such prospective purchaser satisfactory in form
and substance to Holding, the following information (which shall be reasonably
current in relation to the date of such sale under this paragraph): a very brief
statement of the nature of the business of Holding and the products and services
it offers; and Holding's most recent audited consolidated balance sheets and
profit and loss and retained earnings statement, and, if available, similar
financial statements for the two preceding fiscal years.
8. Inspection; Confidentiality.
8.1. Inspection. The GMH Companies will permit any authorized
representatives designated by you, so long as you shall be entitled to purchase
Notes and Warrants under this Agreement or you or your nominee shall be the
holder of any Notes, Warrants or Common Stock or by any other institutional
holder of any Notes, Warrants or Common Stock without expense to the GMH
Companies, to visit and inspect any of the properties of the GMH Companies or
any of their Subsidiaries, including its and
their books of account, and to make copies and take extracts therefrom, and to
discuss its and their affairs, finances and accounts with its and their officers
and independent public accountants, all at such reasonable times and as often as
may be reasonably requested, but in no event more than four times per annum
unless there shall have occurred and be continuing an Event of Default or
Potential Event of Default.
8.2. Confidentiality. You agree that you will not disclose without
the prior consent of the Company (other than to your employees, officers,
directors, advisors, auditors or counsel or to another holder of the Notes or
Warrants) any information with respect to the GMH Companies or any Subsidiary
which is furnished pursuant to section 7 or this section 8, provided that you
may disclose any such information (a) as has become generally available to the
public (except by your or your affiliate's action in violation of this section),
(b) as may be required in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over you or to the National Association of Insurance Commissioners
or similar organizations or their successors, (c) as may be required in response
to any summons or subpoena or in connection with any litigation (and you will
use reasonable efforts, prior to any such disclosure, to give the Company
advance notice thereof and to assist the Company in obtaining a protective order
or otherwise to prevent such disclosure), (d) to the extent that you believe it
appropriate in order to comply with any law, order, regulation or ruling
applicable to you or (e) to the prospective transferee in connection with any
contemplated transfer of any of the Notes by you, subject to the provisions of
an appropriate confidentiality agreement.
9. Prepayment of Notes.
9.1. Required Prepayment Without Premium. On March 31, 2001, the
Company will prepay $2,243,295 principal amount of the Notes less any portion of
the Accreted Discount previously prepaid (or such lesser principal amount as
shall then be outstanding), at the principal amount of the Notes so prepaid,
without premium.
9.2. Optional Prepayments Without Premium. The Company may, at its
option, upon notice as provided in section 9.6, prepay at any time a portion of
the Notes (in integral multiples of $1,000) without premium, provided that the
amount of such prepayment, when added to the sum of all prepayments theretofore
made under this section 9.2, shall not exceed $2,250,000 in the aggregate.
9.3. Optional Prepayments With Premium. The Company may, in addition
to the optional prepayment at any time without premium permitted by section 9.2,
at its option, upon notice as provided in section 9.6, prepay at any time after
December 21, 1997, all, or from time to time after such date any part (in
integral multiples of $1,000) of, the Notes, at the principal amount so prepaid,
plus a premium applicable in accordance with the premium table set forth in
section 9.5, depending upon the 12-month period in which the date fixed for such
prepayment occurs.
9.4. Contingent Prepayments Upon Change of Control. In the event of
the occurrence of a Change of Control, the Company shall give prompt written
notice thereof to each holder of the Notes, by registered mail (and shall
confirm such notice by prompt telephonic advice to an investment officer of each
such holder), which notice shall contain a written, irrevocable offer by the
Company to prepay, on a date specified in such notice (which date shall be not
less than 30 days and not more than 60 days after the date of such notice), the
Notes held by such holder in full (and not in part). Upon the acceptance of such
offer by any holder mailed to the Company at least 10 days prior to the date of
prepayment specified in the Company's offer, such prepayment shall be made at
the principal amount of the Notes held by such holder, plus a premium applicable
in accordance with the premium table set forth in section 9.5, depending upon
the 12-month period in which the date fixed for such prepayment occurs. Any
offer by the Company to prepay the Notes pursuant to
this section 9.4 shall be accompanied by an Officers' Certificate certifying
that the conditions of this section 9.4 have been fulfilled and specifying the
particulars of such fulfillment. If the holder of any Notes shall accept such
offer, the principal amount of such Notes shall become due and payable on the
date specified in such offer. In the event that there shall have been a partial
prepayment of the Notes under this section 9.4, the Company shall promptly give
notice to the holders of the Notes, accompanied by an Officers' Certificate
setting forth the principal amount of each of the Notes that was prepaid and
specifying how each such amount was determined.
9.5. Master Premium Table.
(a) For the purposes of sections 9.3, 9.4 and 11, whenever a premium
is required to be paid upon prepayment, or acceleration as provided in Section
11, of any Note, the applicable premium shall be determined in accordance with
the following table, depending upon the period in which the date fixed for such
prepayment or acceleration occurs:
12-Month Period
Commencing December 21, Premium
1995 Make-Whole Premium
1996 Make-Whole Premium
1997 9.67%
1998 7.25%
1999 4.83%
2000 2.42%
2001 0.00%
(b) For the purposes of any calculation of Make-Whole Premium under
section 9.4 or 11, it will be assumed, as of the date for which the premium is
to be calculated, that (i) the remaining principal amount of the Notes, for
purposes of the calculation of Called Principal and Remaining Scheduled
Payments, will be the Adjusted Principal Amount and (ii) the remaining cash
interest payable on the Notes, for purposes of the calculation of Remaining
Scheduled Payments, will be at the rate of 14.50%. For the purposes of any other
calculation of premium hereunder, it will be assumed that the remaining
principal amount of the Notes, on which the applicable premium percentage is to
be calculated, will be the Adjusted Principal Amount.
9.6. Notice of Optional Prepayments; Officers' Certificate. The
Company will give each holder of any Notes written notice of each optional
prepayment under section 9.2 or 9.3 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment, in each case specifying such
date, the aggregate principal amount of the Notes to be prepaid, the principal
amount of each Note held by such holder to be prepaid, the portion thereof
representing Accreted Discount, the premium, if any, applicable to such
prepayment and the section of this Agreement under which such prepayment is to
be made. Such notice shall be accompanied by an Officers' Certificate certifying
that the conditions of such section have been fulfilled and specifying the
particulars of such fulfillment.
9.7. Allocation of Partial Prepayments. In the case of each partial
prepayment paid or to be prepaid (except a prepayment pursuant to section 9.4 of
the Notes held by some but not all holders), the principal amount of the Notes
to be prepaid shall be allocated (in integral multiples of $1,000) among all of
the Notes at the time outstanding in proportion, as nearly as practicable, to
the respective unpaid principal amounts thereof not theretofore called for
prepayment, with adjustments, to the extent. practicable, to compensate for any
prior prepayments not made exactly in such proportion.
9.8. Maturity; Surrender, etc. In the case of each prepayment, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date, the Accreted Discount thereof as of such
date and the applicable premium, if any. From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable,
together with the interest and premium,
if any, as aforesaid, interest on such principal amount shall cease to accrue.
Any Note paid or prepaid in full shall be surrendered to the Company and
cancelled and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note. In the case of any prepayment of the Notes
in full, the amount to be prepaid shall be the Adjusted Principal Amount,
together with the Accreted Discount, interest accrued and unpaid to the date of
payment and any applicable premium.
9.9. Acquisition of Notes. The Company will not, and will not permit
any Subsidiary or Affiliate to, purchase, redeem or otherwise acquire any.Note
except upon the payment or prepayment thereof in accordance with the terms of
this Agreement and such Note.
10. Business and Financial Covenants. The Company and Holding
jointly and severally covenant that from the date of this Agreement through the
Closing and thereafter so long as any of the Notes are outstanding:
10.1. Debt. The GMH Companies will not, and will not permit any
Subsidiary to, directly or indirectly, create, incur, assume, guarantee, or
otherwise become or remain directly or indirectly liable with respect to, any
Debt, except that:
(a) the Company may become and remain liable with respect to the
Debt evidenced by the Notes;
(b) the Company may become and remain liable with respect to
Debt outstanding pursuant to the Senior Loan Agreement in a principal
amount not to exceed at any time of determination $26,000,000;
(c) the Company may become and remain liable with respect to the
Junior Subordinated Notes in a principal amount not to exceed
$5,000,000 (plus any increase in principal resulting from the addition
to principal of interest payments blocked pursuant to the
Subordination Agreement);
(d) the Company may become and, until not later than January 25,
1996, may remain liable with respect to the Installment Promissory
Notes, if any, issued to the Sellers pursuant to section 3(a) of the
Stock Purchase Agreement;
(e) the Company may remain liable with respect to the Debt
outstanding on the date hereof and referred to on Schedule C (other
than Debt shown on Schedule C as obligations that are required or
intended to be satisfied on or prior to the Closing Date); and
(f) the Company may become and remain liable with respect to
Debt in addition to that otherwise permitted by the foregoing
provisions of this section 10.1 in an aggregate principal amount
outstanding not to exceed at any time of determination $2,600,000.
For the purposes of this section 10.1, any Person becoming a Subsidiary after
the date of this Agreement shall be deemed to have incurred all of its then
outstanding Debt at the time it becomes a Subsidiary, and any Person extending,
renewing or refunding any Debt shall be deemed to have incurred such Debt at the
time of such extension, renewal or refunding.
10.2. Liens, etc. The GMH Companies will not, and will not permit
any Subsidiary to, directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of any of the
GMH Companies or any Subsidiary, whether now owned or held or hereafter
acquired, or any income or profits therefrom, except:
(a) Liens for taxes, assessments or other governmental charges
the payment of which is not at the time required by section 10.10;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary
course of business for sums not yet due or the payment of which is not
at the time required by section 10.10;
(c) Liens (other than any Lien imposed by ERISA or the Code in
connection with a Plan) incurred or deposits made in the ordinary
course of business (i) in connection with workers' compensation,
unemployment insurance and other types of social security, or (ii) to
secure (or to obtain letters of credit that secure) the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
performance bonds, purchase, construction or sales contracts and other
similar obligations, in each case not incurred or made in connection
with the borrowing of money, the obtaining of advances or credit or
the payment of the deferred purchase price of property;
(d) any attachment or judgment Lien, unless the judgment it
secures shall not, within 60 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not
have been discharged within 60 days after the expiration of any such
stay;
(e) leases or subleases granted to others, easements, rights-of-
way, restrictions and other similar' charges or encumbrances, in each
case incidental to, and not interfering with, the ordinary conduct of
the business of the Company or any Subsidiary;
(f) Liens existing on the date of this Agreement and described
in Schedule C-1;
(g) Liens incurred to secure the Debt of the Company outstanding
in compliance with sections 10.1(b) and (f);
(h) any Lien created to secure all or any part of the purchase
price, or to secure Debt incurred or assumed to pay all or any part of
the purchase price, of property acquired by the Company after the
Closing Date, provided that (i) any such Lien shall be confined solely
to the item or items of property so acquired and, if required by the
terms of the instrument originally creating such Lien, other property
which is an improvement to or is acquired for specific use in
connection with such acquired property or which is real property being
improved by such acquired property, (ii) the principal amount of the
Debt secured by any such Lien shall at no time exceed an amount equal
to 80% (but 100% in the case of property the acquisition of which is
financed through a Capital Lease Obligation) of the lesser of (A) the
cost to the Company of the property so acquired and (B) the fair
market value of such property (as determined in good faith by the
Board) at the time of such acquisition, (iii) any such Lien shall be
created within three months after, in the case of property, its
acquisition, or, in the case of improvements, their completion; and
(iv) the aggregate principal amount of all Debt secured by Liens
outstanding under this subdivision (h) shall at no time exceed
$75,000; and
(i) Liens incurred to secure the Ware County Obligation.
For the purposes of this section 10.2, any Person becoming a Subsidiary after
the date of this Agreement shall be deemed to have incurred all of its then
outstanding Liens at the time it becomes a Subsidiary, and any Person extending,
renewing or refunding any Debt secured by any Lien shall be deemed to have
incurred such Lien at the time of such extension, renewal or refunding.
10.3. Investments, Guaranties, etc. The GMH Companies will not, and
will not permit any Subsidiary to, directly or indirectly (a) make or own any
Investment in any Person, or (b) create or become or be liable with respect to
any Guaranty, except:
(i) the GMH Companies and their Subsidiaries may make and own
Investments in
(t) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any agency
thereof maturing within one year from the date of acquisition thereof,
(u) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and having as at any date of
determination the highest rating obtainable from either Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.,
(v) commercial paper maturing no more than 270 days from the
date of creation thereof and having as at any date of determination
the highest rating obtainable from either Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.,
(w) certificates of deposit maturing within one year from the
date of acquisition thereof issued by commercial banks incorporated
under the laws of the United States of America or any state thereof or
the District of Columbia, each having as at any date of determination
combined capital and surplus of not less than $500,000,000 ("Permitted
Banks"),
(x) bankers' acceptances eligible for rediscount under
requirements of The Board of Governors of the Federal Reserve System
and accepted by Permitted Banks,
(y) obligations of the type described in clauses (t) through (w)
above purchased from a securities dealer designated as a "primary
dealer" by the Federal Reserve Bank of New York or a Permitted Bank as
counterparty pursuant to a repurchase agreement obligating such
counterparty to repurchase such obligations not later than 14 days
after the purchase thereof and which provides that the obligations
which are the subject thereof are held for the benefit of ' the
Company, Holding or a Subsidiary by a custodian which is a Permitted
Bank and which is not the counterparty to the repurchase agreement in
question, and
(z) the securities of any investment company registered under
the Investment Company Act of 1940 which is a "money market fund"
within the meaning of regulations of the Securities and Exchange
Commission, or an interest in a pooled fund maintained by a Permitted
Bank having comparable investment restrictions;
(ii) the Company may continue to own the Investments it owns on the
date hereof in Persons which are listed in Schedule D;
(iii) the Company and its Wholly-Owned Subsidiaries may make and own
Investments in any Wholly-Owned Subsidiary or any Person which
simultaneously therewith becomes a Wholly-Owned Subsidiary, if (x) such
Subsidiary or such Person is a corporation organized under the laws of the
United States or any state thereof or the District of
Columbia, (y) substantial@ly all of its assets are located and
substantially all of its business is conducted within the United States and
(z) it is engaged primarily in the business of manufactured housing ;
(iv) the GMH Companies may become and remain liable with respect to
reimbursement obligations with respect to letters of credit issued pursuant
to the Senior Loan Agreement; and
(v) the Company may become and remain liable with respect to the
Repurchase Obligations.
10.4. Restricted Payments.
(a) Neither Holding nor the Company will directly or indirectly
declare, order, pay, make or set apart any sum or property for any Restricted
Payment, except that:
(i) Holding and the Company may make Restricted Payments in
accordance with the Subordination Agreement; and
(ii) each of the Company and its Subsidiaries may make payments
to Holding equal to the Company's or such Subsidiary's share of
amounts sufficient in the aggregate to enable Holding to pay the
federal and state income tax liabilities of the affiliated group
filing consolidated returns, provided that neither the Company nor
such Subsidiary shall pay an amount exceeding the tax liabilities it
would incur on a separate basis.
(b) The Company will not declare any dividend (other than a dividend
payable solely in shares of its own stock) on any shares of any class of its
stock which is payable more than 60 days after the date of declaration thereof.
The Company will not permit any Subsidiary, directly or indirectly, to declare,
order, pay or make any Restricted Payment or to set apart any sum or property
for any such purpose.
10.5. Consolidation, Merger, Sale of Assets, etc. The GMH Companies
will not, and will not permit any Subsidiary to, directly or indirectly,
(a) consolidate with or merge into any other Person or permit any
other Person to consolidate with or merge into it, except that:
(i) any Subsidiary of the Company may consolidate with or merge
into the Company or a Wholly-Owned Subsidiary of the Company if the
Company or such Wholly-Owned Subsidiary, as the case may be, shall be
the surviving corporation and if, immediately after giving effect to
such transaction, no condition or event shall exist which constitutes
an Event of Default or Potential Event of Default;
(ii) any corporation (other than a Subsidiary) may consolidate
with or merge into any of the GMH Companies if such GMH Company shall
be the surviving corporation and if, immediately after giving effect
to such transaction, (x) substantially all of the assets of the
Company shall be located and substantially all of its business shall
be conducted within the United States and (y) no condition or event
shall exist which constitutes an Event of Default or Potential Event
of Default; and
(iii) any of the GMH Companies may consolidate with or merge
into any other corporation if (w) the surviving corporation is a
corporation organized and existing under the laws of the United States
of America or a state thereof, with substantially all of its assets
located and substantially all of its business conducted within the
United States, (x) in the case of a consolidation or merger involving
Holding or the
Company, such corporation expressly assumes, by an agreement
satisfactory in substance and form to the holders of more than 50% of
the Notes outstanding (subject to section 15.4) (which agreement may
require the delivery in connection with such assumption of such
opinions of counsel as such ' holders may reasonably require), the
obligations of Holding or the Company, as the case may be, under this
Agreement and under the Notes, (y) immediately after giving effect to
such transaction, such corporation shall not be liable with respect to
any Debt or allow its property to be subject to any Lien which it
could not become liable with respect to or allow its property to
become subject to under this Agreement on the date of such
transaction, and (z) immediately after giving effect to such
transaction no condition or event shall exist which constitutes an
Event of Default or a Potential Event of Default; or
(b) sell, lease, abandon or otherwise dispose of all or substantially
all its assets, except that:
(i) any Subsidiary of the Company may sell, lease or otherwise
dispose of all or substantially all its assets to the Company or a
Wholly-Owned Subsidiary; and
(ii) any of the GMH Companies may sell, lease or otherwise
dispose of all or substantially all its assets to any corporation into
which such Company could be consolidated or merged in compliance with
subdivision (a)(iii) of this section 10.5, provided that (x) each of
the conditions set forth in such subdivision (a)(iii) shall have been
fulfilled, and (y) no such disposition shall relieve the Company or
Holding from its obligations under this Agreement or the Notes; or
(c) sell, lease, abandon or otherwise dispose of any of its assets
(except in the ordinary course of business or in a transaction permitted by
subdivision (b) of this section 10.5), except that the Company or its
Subsidiaries (i) may sell or trade in obsolete or unusable items of equipment
which promptly are replaced with new items of equipment of like function and
comparable value to the obsolete or unusable items of equipment when new and
(ii) may sell assets in addition to those otherwise permitted by this paragraph
(c) in an aggregate amount not to exceed $50,000 per year.
10.6. Certain Financial Covenants. The GMH Companies will
(a) Current Ratio. Maintain at all times a minimum Current Ratio of
not less than the ratio set forth below opposite the applicable period:
Applicable Period Ratio
Closing Date to March 31, 1998 1.00
April 1, 1998 to December 31, 1998 1.25
January 1, 1999 and thereafter 1.50
(b) Adjusted Net Worth. Maintain an Adjusted Net Worth on the last
day of each month during each period listed below of at least the amounts set
forth opposite such period:
Minimum Adjusted
Net Worth
Period (in $ millions)
1/1/96 to 3/31/96 10,200
4/1/96 to 6/30/96 10,900
7/1/96 to 9/30/96 11,500
10/1/96 to 12/31/96 12,300
1/1/97 to 3/31/97 13,000
4/1/97 to 6/30/97 13,700
7/1/97 to 9/30/97 14,500
10/1/97 to 11/30/97 15,200
12/31/97 15,600
1/1/98 to 3/31/98 17,700
4/1/98 to 6/30/98 19,000
7/1/98 to 9/30/98 20,400
10/1/98 to 12/31/98 22,000
1/1/99 to 3/31/99 23,800
4/1/99 to 6/30/99 26,300
7/1/99 to 9/30/99 28,100
10/1/99 to 12/31/99 30,000
1/1/2000 to 3/31/2000 31,900
4/1/2000 to 6/30/2000 34,100
7/1/2000 to 9/30/2000 36,300
10/1/2000 and thereafter 38,500
(c) Net Cash Ratio. Not permit the ratio (as measured on the last
day of any month beginning with the month ending on January 31, 1996) of Net
Cash Generated to Total Fixed Charges for the twelve months ending on the last
day of such month during each period listed below (or in the case of months
ending on or before December 31, 1996, for the period from the Closing Date to
the last day of such month treated as a single accounting period) to be less
than the ratio listed below opposite such period:
Minimum
Period Ratio
1/1/96 to 1/31/96 0.50
2/1/96 to 3/31/96 0.80
4/1/96 to 6/30/96 0.80
7/1/96 to 9/30/96 0.80
10/1/96 to 12/31/96 0.80
1/1/97 to 3/31/97 0.80
4/1/97 to 6/30/97 0.80
7/1/97 to 9/30/97 0.80
10/1/97 to 12/31/97 0.85
1/1/98 to 3/31/98 0.90
4/1/98 to 6/30/98 0.90
7/1/98 to 9/30/98 0.90
10/1/98 to 12/31/98 0.90
1/1/99 to 3/31/99 0.90
4/1/99 to 6/30/99 1.05
7/1/99 to 9/30/99 1.05
10/1/99 to 12/31/99 1.05
1/1/2000 to 3/31/2000 1.15
4/1/2000 to 6/30/2000 1.20
7/1/2000 to 9/30/2000 1.40
10/1/2000 and thereafter 1.60
(d) Total Liabilities Ratio. Not permit the ratio of (a) Total
Liabilities to (b) Adjusted Net Worth to exceed on the last day of any month
during any period set forth below, the ratio set forth opposite such period
below:
Maximum
Period Ratio
1/1/96 to 3/31/96 5.00
4/1/96 to 6/30/96 5.00
7/1/96 to 9/30/96 4.50
10/1/96 to 12/31/96 4.00
1/1/97 to 3/31/97 3.75
4/1/97 to 6/30/97 3.50
7/1/97 to 9/30/97 3.25
10/1/97 to 12/31/97 2.75
1/1/98 to 3/31/98 2.50
4/1/98 to 6/30/98 2.25
7/1/98 to 9/30/98 2.00
10/1/98 to 12/31/98 2.00
1/1/99 to 3/31/99 1.75
4/1/99 to 6/30/99 1.75
7/1/99 to 9/30/99 1.75
10/1/99 to 12/31/99 1.75
1/1/2000 to 3/31/2000 1.50
4/1/2000 to 6/30/2000 1.50
7/1/2000 to 9/30/2000 1.50
10/1/2000 and thereafter 1.50
(e) Annual Interest Coverage Ratio. Not permit the Interest Coverage
Ratio Number 1 measured on January 31, 1996 and
on the last day of any month thereafter for any twelve consecutive months ending
on such last day (or in the case of any month ending on or before December 31,
1996, for the period from the Closing Date to the last day of such month treated
as a single accounting period) to be less than the ratio listed below for the
period during which such month occurs:
Period Ratio
Closing Date to 3/31/96 1.40
4/1/96 to 6/30/96 1.70
7/1/96 to 9/30/96 1.80
10/1/96 to 12/31/96 1.90
1/1/97 to 3/31/97 2.00
4/1/97 to 6/30/97 2.10
7/1/97 to 9/30/97 2.15
10/1/97 to 12/31/97 2.15
1/1/98 to 3/31/98 2.75
4/1/98 to 6/30/98 3.00
7/1/98 to 9/30/98 3.25
10/1/98 to 12/31/98 3.75
1/1/99 to 3/31/99 4.00
4/1/99 to 6/30/99 4.00
7/1/99 to 9/30/99 4.50
10/1/99 to 12/31/99 4.50
1/1/2000 to 3/31/2000 5.00
4/1/2000 to 6/30/2000 5.00
7/1/2000 to 9/30/2000 5.00
10/1/2000 and thereafter 5.00
(f) Quarterly Interest Coverage Ratio. Not permit the Interest
Coverage Ratio Number 2 for any period comprised of three consecutive calendar
months (or in the case of the period ending on or before March 31, 1996, for the
period from the Closing Date to the last day of such month treated as a single
accounting period) and ending during any period specified below to be less than
the ratio listed below for such period:
Minimum
Period Ratio
1/1/96 to 3/31/96 1.50
4/1/96 to 6/30/96 1.75
7/1/96 to 9/30/96 1.75
10/1/96 to 12/31/96 2.10
1/1/97 to 3/31/97 2.10
4/1/97 to 6/30/97 2.10
7/1/97 to 9/30/97 2.20
10/1/97 to 12/31/97 2.20
1/1/98 to 3/31/98 3.00
4/1/98 to 6/30/98 3.25
7/1/98 to 9/30/98 3.25
10/1/98 to 12/31/98 3.25
1/1/99 to 3/31/99 4.00
4/1/99 to 6/30/99 4.00
7/1/99 to 9/30/99 4.00
10/1/99 to 12/31/99 4.00
1/1/2000 to 3/31/2000 4.00
4/1/2000 to 6/30/2000 4.00
7/1/2000 to 9/30/2000 4.00
10/1/2000 and thereafter 4.00
(g) Gross Capital Expenditures. Not directly or indirectly (by way
of the acquisition of the securities of a Person or otherwise), make Gross
Capital Expenditures, except that the Company may, so long as no Event of
Default or Potential Event of Default shall exist or would result therefrom,
make Gross Capital Expenditures in the ordinary course of business in an
aggregate amount not to exceed (a) $500,000 for any Fiscal Year of the Company
other than the Fiscal Year ending December 31, 1995 and (b) $83,000 for the
Fiscal Year ending December 31, 1995; provided, that in the event the Company
does not make Gross Capital Expenditures during any Fiscal Year, except for the
Fiscal Year ending December 31, 1995, up to the amounts specified above, then
the Gross Capital Expenditures permitted to be made in the succeeding Fiscal
Year shall be increased by a positive amount, up to a maximum of $100,000, equal
to (y) the applicable limit specified above minus (z) the
actual amount of Gross Capital Expenditures expended during such prior Fiscal
Year.
10.7. Transactions with Affiliates. The GMH Companies will not, and
will not permit any Subsidiary to, directly or indirectly, engage in any
transaction material to any of the GMH Companies or any of their Subsidiaries
(including, without limitation, the purchase, sale or exchange of assets or the
rendering of any service) with any Affiliate of any of the GMH Companies, except
in the ordinary course of and pursuant to the reasonable requirements of such
GMH Company's or such Subsidiary's business and upon fair and reasonable terms
that are no less favorable to such GMH Company or such Subsidiary, as the case
may be, than those which would be obtained, in the good faith judgment of the
Company, in an arm's length transaction at the time from Persons which are not
such an Affiliate, provided that (a) the foregoing restrictions shall not apply
to any transaction between a GMH Company and a Wholly-Owned Subsidiary or
between one Wholly-Owned Subsidiary and another Wholly-Owned Subsidiary; (b) the
Company may pay an annual base management fee to SIHI for management services
rendered to the Company, up to a maximum annual amount of $250,000 plus,
commencing in the 1997 fiscal year, an additional amount pursuant to the
cost-of-living adjustment provisions of the Management Agreement between the
Company and SIHI not to exceed 3% per year, plus reasonable out-of-pocket
expenses of SIHI not to exceed $50,000 per year; and, to the extent permitted by
the Subordination Agreement, an incentive management fee in a maximum annual
amount of $250,000; (c) the Company may make payments in respect of the
Installment Promissory Notes so long as such Notes are permitted to be
outstanding under the terms of section 10.1; (d) the Company may reimburse
Bulldog and SIHI-GMH LLC for expenses reasonably incurred by them not to exceed
$5,000 per annum in the aggregate; and (e) the Company may carry out the terms
of the Operative Agreements.
10.8. Corporate Existence, etc.; Business. Each of the GMH Companies
will at all times preserve and keep in full force and effect its corporate
existence, and rights and franchises deemed material to its business, and those
of each of its Subsidiaries, except as otherwise specifically permitted by
section 10.5 and except that the corporate existence of any Subsidiary may be
terminated if, in the good faith judgment of the Board of the Company, such
termination is in the best interest of the GMH Companies and is not
disadvantageous to the holders of the Notes. The GMH Companies will not, and
will not permit any Subsidiary to, engage in any business other than the
business of manufactured housing.
10.9. Subsidiary Stock and Indebtedness. Except as permitted by
section 10.5, the GMH Companies will not:
(a) directly or indirectly sell, assign, pledge (except as permitted
by section 10.2) or otherwise dispose of any Debt of or any shares of stock of
(or warrants, rights or options to acquire stock of) any Subsidiary except to a
Wholly-Owned Subsidiary or as directors' qualifying shares if required by
applicable law;
(b) permit any Subsidiary directly or indirectly to sell, assign,
pledge (except as permitted by section 10.2) or otherwise dispose of any Debt of
any GMH Company or any other Subsidiary, or any shares of stock of (or warrants,
rights or options to acquire stock of) any other Subsidiary, except to Holding
or a Wholly-Owned Subsidiary or as directors' qualifying shares if required by
applicable law;
(c) permit any Subsidiary to have outstanding any shares of preferred
stock other than shares of preferred stock which are owned by Holding or a
Wholly-Owned Subsidiary; or
(d) permit any Subsidiary directly or indirectly to issue or sell
(including, without limitation, in connection with a merger or consolidation of
a Subsidiary otherwise permitted by section 10.5(a)) any shares of its stock (or
warrants, rights or options to acquire its stock) except to Holding or a Wholly-
Owned Subsidiary or as directors' qualifying shares if required by applicable
law;
provided that, subject to compliance with section 10.5(c), all Debt and shares
of stock of any Subsidiary owned by Holding and its other Subsidiaries may be
simultaneously sold as an entirety for a cash consideration at least equal to
the fair value thereof (as determined in good faith by the Board of Holding) at
the time of such sale if such Subsidiary does not at the time own (i) any Debt
of any of the GMH Companies or (ii) any Debt or stock of any other Subsidiary
which is not also being simultaneously sold as an entirety in compliance with
this proviso or section 10.5(b)(ii) and if immediately after giving effect to
such transaction no condition or event shall exist which constitutes an Event of
Default or Potential Event of Default, and provided further that shares of stock
of Subsidiaries owned by any of the GMH Companies and their Subsidiaries may be
disposed of in connection with a sale or other disposition by such GMH Company
or Subsidiary of all or substantially all of its assets in compliance with
section 10.5(b)(ii).
10.10. Payment of Taxes and Claims. Each of the GMH Companies will,
and will cause each Subsidiary to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or in
respect of any of its franchises, business, income or profits before any penalty
or interest accrues thereon, and all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums which have become
due and payable and which by law have or would become a Lien upon any of its
properties or assets, provided that no such charge or claim need be paid if
being contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and if such reserves or other appropriate provision, if
any, as shall be required by generally accepted accounting principles shall have
been made therefor.
10.11. Compliance with ERISA. The GMH Companies will not, and will
not permit any Subsidiary to,
(a) engage in any transaction in connection with which any of the GMH
Companies or any Subsidiary could be subject to either a civil penalty assessed
pursuant to section 502(i) of ERISA or a tax imposed by section 4975 of the
Code, terminate or withdraw from any Plan which is a defined benefit plan (other
than a Multiemployer Plan) in a manner, or take any other action with respect to
any such Plan which is a defined benefit plan (including, without limitation, a
substantial cessation of operations within the meaning of section 4062(f) of
ERISA), which could result in any liability of any of the GMH Companies or any
Subsidiary to the PBGC, to a trust established pursuant to section
4041(c)(3)(B)(ii) or (iii) or 4042(i) of ERISA, or to a trustee appointed under
section 4042(b) or (c) of ERISA, incur any liability to the PBGC on account of a
termination of a Plan under section 4064 of ERISA, fail to make full payment
when due of all amounts which, under the provisions of any Plan, any of the GMH
Companies or any Subsidiary is required to pay as contributions thereto, or
permit to exist any accumulated funding deficiency, whether or not waived, with
respect to any Plan (other than a Multiemployer Plan), if, in any such case,
such penalty or tax or such liability, or the failure to make such payment, or
the existence of such deficiency, as the case may be, could have a material
adverse effect on any of the GMH Companies or any of their Subsidiaries;
(b) permit the present value of all vested accrued benefits under all
Plans maintained at such time by the GMH Companies and their Subsidiaries (other
than Multiemployer Plans) guaranteed under Title IV of ERISA to exceed the
current value of the assets of such Plans allocable to such vested accrued
benefits by more than $1,000,000;
(c) permit the aggregate complete or partial withdrawal liability
under Title IV of ERISA with respect to Multiemployer Plans incurred by the GMH
Companies and their Subsidiaries to exceed $1,000,000; or
(d) permit the sum of (i) the amount by which the current value of
all vested accrued benefits referred to in subdivision (b) of this section 10.11
exceeds the current value of the assets referred to in such subdivision (b) and
(ii) the
amount of the aggregate incurred withdrawal liability referred to in subdivision
(c) of this section 10.11 to exceed $1,000,000.
For the purposes of subdivisions (c) and (d) of this section 10.10, the amount
of the withdrawal liability of the GMH Companies and their Subsidiaries at any
date shall be the aggregate present value of the amount claimed to have been
incurred less any portion thereof as to which the Company reasonably believes,
after appropriate consideration of possible adjustments arising under sections
4219 and 4221 of ERISA, the GMH Companies and their Subsidiaries will have no
liability, and that the Company shall obtain prompt written advice from
independent actuarial consultants supporting such determination. The Company
agrees (i) once in each calendar year to request and obtain a current statement
of withdrawal liability from each Multiemployer Plan and (ii) to transmit a copy
of such statement to you, so long as you or your nominee shall be the holder of
any Notes or Warrants, and to each other institutional holder of any Notes or
Warrants, within 15 days after the Company receives the same. As used in this
section 10.11, the term "accumulated funding deficiency" has the meaning
specified in section 302 of ERISA and section 412 of the Code, and the terms
"present value," "current value" and "accrued benefit" have the meanings
specified in section 3 of ERISA.
10.12. Maintenance of Properties; Insurance. The GMH Companies will
maintain or cause to be maintained in good repair, working order and condition,
normal wear and tear excepted, all properties used or useful in the business of
the GMH Companies and their Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof. The
GMH Companies will maintain or cause to be maintained, with financially sound
and reputable insurers, insurance with respect to their properties and business
and the properties and business of their Subsidiaries against loss or damage of
the kinds customarily insured against by corporations of established reputation
engaged in the same or similar business and similarly situated, of such types
and in such amounts as are customarily carried under similar circumstances by
such other corporations. Such insurance may be subject to co-insurance,
deductibility or similar clauses which, in effect, result in self-insurance of
certain losses, provided that such self-insurance is in accord with the approved
practices of corporations similarly situated and adequate insurance reserves are
maintained in connection with such self-insurance.
10.13. Other Loan Agreements.
(a) Holding and the Company will not enter into any amendment or
modification of the Senior Loan Agreement which increases the principal amount
of the loans thereunder by more than $2,600,000, increases the interest rate or
rates or the fees and charges applicable to such loans, shortens the final
maturity or the maturity of any prepayment of such loans, or amends or modifies
the covenants or events of default such that, after giving effect to such
amendment or modification, the covenants and events of default in the Senior
Loan Agreement, taken as a whole, would be materially more restrictive to
Holding and the Company, taken as a whole.
(b) Holding will not enter into any amendment or modification of the
RFE Securities Purchase Agreement, any of the Junior Securities, or the Restated
Certificate of Incorporation of Holding relating to any of the Preferred Stock
if such amendment or modification is adverse to the interests of the holders of
the Notes.
(c) The Company will promptly deliver to each holder of the Notes a
copy of each amendment to the Senior Loan Agreement or the RFE Securities
Purchase Agreement, each amendment of any of the Junior Securities and each
agreement or instrument evidencing any other Debt of the GMH Companies entered
into after the date of the Closing.
11. Events of Default; Acceleration. If any of the following
conditions or events ("Events of Default") shall occur and be continuing:
(a) if the Company shall default in the payment of any principal of
or premium, if any, on any Note when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) if the Company shall default in the payment of any interest on
any Note for more than 10 days after the same becomes due and payable; or
(c) if the Company shall default in the performance of or compliance
with any term contained in section 7.1(i) or 10.1 through 10.6, inclusive; or
(d) if the Company shall default in the performance of or compliance
with any term contained in this Agreement other than those referred to above in
this section 11 and such default shall not have been remedied within 30 days
after such failure shall first have become known to any officer of the Company
or written notice thereof shall have been received by the Company from any
holder of any Note; or
(e) if any representation or warranty made in writing by or on behalf
of Holding or the Company in this Agreement or in any instrument furnished in
compliance with this Agreement shall prove to have been false or incorrect in
any material respect on the date as of which made; or
(f) if any GMH Company or any Subsidiary shall default (as principal
or guarantor or other surety) in the payment of any principal of or premium or
interest on any Debt (other than the Notes and other than Senior Debt) which is
outstanding in a principal amount of at least $1,000,000, or if any event shall
occur or condition shall exist in respect of any such Debt or under any evidence
of any such Debt or of any mortgage, indenture or other agreement relating
thereto, the effect of which default, event or condition is to cause or to
permit the holders of such Debt to cause the acceleration of the payment of such
Debt, or to require or to permit the holders of such Debt to require any GMH
Company or Subsidiary to repurchase such Debt, before its stated maturity or
before its regularly scheduled dates of payment; or
(g) if any GMH Company or any Subsidiary shall default (as principal
or guarantor or other surety) in the payment of any principal of or premium or
interest on any Senior Debt which is outstanding in a principal amount of at
least $1,000,000, or if any event shall occur or condition shall exist in
respect of any such Senior Debt or under any evidence of any such Senior Debt or
of any mortgage, indenture or other agreement relating thereto, the effect of
which default, event or condition is to cause the acceleration of the payment of
such Senior Debt, or to require any GMH Company or Subsidiary to repurchase such
Senior Debt, before its stated maturity or before its regularly scheduled dates
of payment; or
(h) if any GMH Company or any Material Subsidiary shall (i) be
generally not paying its debts as they become due, (ii) file, or consent by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, (iii) make an assignment for the benefit of its creditors, (iv)
consent to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, (v) be adjudicated insolvent or (vi) take corporate action for
the purpose of any of the foregoing; or
(i) if a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by any GMH Company or any
Material Subsidiary, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part of its
property, or if an order for relief shall be entered in any case or proceeding
for liquidation or reorganization or otherwise to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of any GMH Company or any Material Subsidiary, or if
any petition for any such relief shall be filed against any GMH
Company or a Material Subsidiary and such petition shall not be dismissed within
30 days; or
(j) if a final judgment or judgments shall be rendered against the
GMH Companies and Subsidiaries for the payment of money in excess of $500,000 in
excess of insurance coverage in the aggregate and any one of such judgments
shall not be discharged or execution thereon stayed pending appeal, within 60
days after entry thereof, or, in the event of such a stay, such judgment shall
not be discharged within 60 days after such stay expires; then, (x) upon the
occurrence of any Event of Default described in subdivision (h) or (i) of this
section 11 with respect to the Company (other than such an Event of Default
described in clause (i) of subdivision (h) or described in clause (vi) of
subdivision (h) by virtue of the reference in such clause (vi) to such clause
(i)), the Adjusted Principal Amount and Accreted Discount of and accrued
interest on the Notes shall automatically become due and payable or (y) upon the
occurrence of any other Event of Default, (i) in the case of any Event of
Default described in subdivision (a) or (b) of this section 11, an Original
Holder or any holder or holders of 25% or more in principal amount of the Notes
at the time outstanding (subject to section 15.4) or (ii) in the case of any
Event of Default described in any other subdivision of this section 11, any
holder or holders of more than 50% in principal amount of the Notes at the time
outstanding (subject to section 15-4) may at any time (unless all defaults shall
theretofore have been remedied) at its or their option, by written notice or
notices to the Company, declare all the Notes to be due and payable, whereupon
the Adjusted Principal Amount of all the Notes shall forthwith mature and become
due and payable, together with interest accrued thereon and the Accreted
Discount thereof, and, to the extent permitted by applicable law, a premium
determined in accordance with the premium table set forth in section 9.5, all
without presentment, demand, protest or notice, which are hereby waived,
provided, that during the existence of an Event of Default described in
subdivision (a) or (b) of this section 11 then, irrespective of whether any
Original Holder or the holder or holders of 25% or more in principal amount of
Notes then outstanding shall have declared all the Notes to be due and payable
pursuant to this section 11, any holder of the Notes (other than the Company or
any of its Subsidiaries or Affiliates) may, at its option, by notice in writing
to the Company, declare the Notes then held by such holder to be due and
payable, whereupon the Adjusted Principal Amount of all the Notes then held by
such holder shall forthwith mature and become due and payable together with
interest accrued thereon and the Accreted Discount thereof, and, to the extent
permitted by law, a premium determined in accordance with the premium table set
forth in section 9.5, without presentment, demand, protest or notice, which are
hereby waived.
At any time after the principal of, and interest accrued on, any or
all of the Notes are declared due and payable, the holders of not less than 75%
in aggregate principal amount of the Notes then outstanding (subject to section
15.4), by written notice to the Company may rescind and annul any such
declaration and its consequences if (x) the Company has paid all overdue
interest on the Notes, the principal of and premium, if any, on any Notes which
have become due otherwise than by reason of such declaration, and interest on
such overdue principal and premium and (to the extent permitted by applicable
law) any overdue interest in respect of the Notes at the rate equal to 2.0% plus
the otherwise applicable rate, (y) all Events of Default, other than non-payment
of amounts which have become due solely by reason of such declaration, and all
conditions and events which constitute Events of Default or Potential Events of
Default have been cured or waived pursuant to section 19, and (z) no judgment or
decree has been entered for the payment of any monies due pursuant to the Notes
or this Agreement; but no such rescission and annulment shall extend to or
affect any subsequent Event of Default or Potential Event of Default or impair
any right consequent thereon.
12. Remedies on Default, etc. In case any one or more Events of
Default or Potential Events of Default shall occur and be continuing, the holder
of any Note at the time outstanding may proceed to protect and enforce the
rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in such Note, or for
an injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any power granted hereby or thereby or by law or
otherwise. In case of a default in the payment of any principal of or premium,
if any, or interest on any Note, the Company will pay to the holder thereof such
further amount as shall be sufficient to cover the cost and expenses of
collection, including, without limitation, reasonable attorneys' fees, expenses
and disbursements. No course of dealing and no delay on the part of any holder
of any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise.
13. [Intentionally Omitted].
14. Definitions. As used herein the following terms have the
following respective meanings:
Accreted Discount: with respect to the Notes, as of any date of
determination, the portion of the $2,243,295 original issue discount applicable
thereto which, as of such date, has accreted in accordance with customary
financial practice; and, with respect to any particular Note or part thereof,
the portion of such accreted discount attributable to such Note or part thereof.
Acquisition: the meaning specified in the introductory paragraphs of
this Agreement.
Adjusted Net Worth: at any date, (a) $10,000,000, plus (b) Net Income
plus (c) depreciation and amortization expenses, to the extent that the same are
deducted in determining Net Income, for the period beginning on the Closing Date
to and including the date of calculation (treating such period as one accounting
period), less (d) unless subtracted in determining Net Income and without double
counting, all amounts paid by Holding or the Company to purchase, redeem or
otherwise acquire any Equity Interests.
Adjusted Operating Profit: for any period, Net Income for such period
plus (a) any amount which, in conformity with generally accepted accounting
principles, would be set forth opposite the caption "income tax expense"
(including deferred income taxes) (or any like caption) on an income statement
of Holding and its consolidated Subsidiaries for such period, less (b) any
amount which, in conformity with generally accepted accounting principles, would
be set forth opposite the caption "extraordinary pre-tax gain" (or any like
caption) on such an income statement, plus (c) Interest Expense for such period,
plus (d) any amount which, in conformity with generally accepted accounting
principles, would be set forth opposite the caption "depreciation and
amortization expenses" (or any like caption) (including, without limitation,
amortization of Intangible Assets) on such an income statement for such period,
to the extent the same are deducted from the net revenues of Holding, in
conformity with generally accepted accounting principles, in determining Net
Income for such period, plus (e) any amount permitted to be and actually paid in
respect of Management Fees pursuant to section 10.7.
Adjusted Principal Amount: with respect to the Notes, as of any date
of determination, $15,000,000 less the amount of any principal of the Notes
theretofore prepaid (other than the prepayment of principal made pursuant to
section 9.1); and, with respect to any particular Note, the portion of such
principal amount attributable to such Note.
Affiliate: any Person directly or indirectly controlling or
controlled by or under common control with any of the GMH Companies or any
Subsidiary, including (without limitation) any Person beneficially owning or
holding 5% or more of any class of voting securities of any of the GMH Companies
or any Subsidiary or any other corporation of which any of the GMH Companies or
any Subsidiary owns or holds 5% or more of any class of voting securities,
provided that, for purposes of this' definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or by contract or otherwise, and provided further that neither you nor any other
Person which is an institution shall be deemed to be an Affiliate of any of the
GMH Companies or any of their Subsidiaries solely by reason of ownership of the
Notes or Warrants or other securities issued in exchange for the Notes or
Warrants or by reason of having the benefits of any agreements or covenants of
Holding and the Company contained in this Agreement.
Asset Sale: any sale, assignment, conveyance,, transfer or other
disposition of any assets of the GMH Companies permitted by section 10.5(c).
Asset Sale Proceeds: the aggregate cash proceeds payable to the
Company in connection with any Asset Sale, after deduction of all reasonable,
customary and documented costs and expenses of such Asset Sale.
Board: with respect to any GMH Company, the Board of Directors of
such GMH Company or a committee of three or more directors lawfully exercising
the relevant powers of such Board.
Bulldog: Bulldog Holdings LLC, a New York limited liability company.
Business Day: any day except a Saturday, a Sunday or other day on
which commercial banks in New York City or Georgia are required or authorized by
law to be closed.
Capital Lease: as applied to any Person, any lease of any property
(whether real, personal or mixed) by such Person as lessee which would, in
accordance with generally accepted accounting principles, be required to be
classified and accounted for as a capital lease on a balance sheet of such
Person.
Capital Lease Obligation: with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder which would, in accordance
with generally accepted accounting principles, appear on a balance sheet of such
lessee in respect of such Capital Lease.
Cash Equivalents: Investments of the GMH Companies permitted by
section 10.3(i).
Cash Instruments: all cash, checks, drafts and other similar writings
for the payment of money, including without limitation all insurance and
condemnation proceeds, Asset Sale Proceeds and Equity Sale Proceeds.
CERCLA: the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.).
Change of Control: (a) the sale, lease, abandonment or other
disposition by any GMH Company of all or substantially all of its assets; (b) at
any time prior to the occurrence of an IPO, Bulldog and the RFE Group, together
ceasing to be the beneficial owner or owners, directly or indirectly, of at
least 70% (or 51% if as a result of acquisition of Voting Stock by third parties
and not as a result of sales by Bulldog or the RFE Group) of the Voting Stock of
Holding on a fully-diluted basis; or (c) at any time from and after the
occurrence of an,IPO, any Person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) (other than SIHI or the RFE Group, or any such
"group" which consists entirely of SIHI and the RFE Group) (i) being or becoming
the beneficial owner, directly or indirectly, of more than 30% of the Voting
Stock of Holding or (ii) causing its nominees, or possessing the right to name
its nominees, to hold half or more of the seats on the Board of Holding.
Class A Common Stock: the Class A Common Stock, par value $.001 per
share, of Holding.
Class B Common Stock: the Class B Common Stock, par value $.001 per
share, of Holding.
Class C Common Stock: the Class C Common Stock, par value $.001 per
share, of Holding.
Code: the Internal Revenue Code of 1986, as amended from time to
time.
Common Stock: the Class A Common Stock, the Class B Common Stock and
the Class C Common Stock.
Company: prior to the Merger, GMH Acquisition Corp., a Delaware
corporation, and thereafter, General Manufactured Housing, Inc., a Georgia
corporation.
Current Assets: at any date, the amount which, in conformity with
generally accepted accounting principles, would be set forth opposite the
caption "total current assets" (or any like caption) on a balance sheet of
Holding and its consolidated Subsidiaries at such date, less, without
duplication, cash, Cash Instruments and Cash Equivalents.
Current Liabilities: at any date, the amount which, in conformity
with generally accepted accounting principles, would be set forth opposite the
caption "total current liabilities" (or any like caption) on a balance sheet of
Holding and its consolidated Subsidiaries at such date, less any portion thereof
attributable to the Notes, Debt of the GMH Companies outstanding under the
Senior Loan Agreement, Capital Leases, or bank overdrafts (but only to the
extent repaid in full on the Business Day following creation thereof).
Current Ratio: at any date, the ratio on such date of (a) Current Assets
(excluding Intangible Assets) to (b) Current Liabilities.
Debt: as applied to any Person (without duplication):
(a) any indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed; and
(b) any indebtedness, whether or not for borrowed money, secured
by any Lien in respect of property owned by such Person, whether or
not such Person has assumed or become liable for the payment of such
indebtedness; and
(c) any indebtedness, whether or not for borrowed money,
including any Capital Lease Obligation, with respect to which such
Person has become directly or indirectly liable and which represents
or has been incurred to finance the purchase price (or a portion
thereof) of any property or services or business acquired by such
Person, whether by purchase, consolidation, merger or otherwise
(excluding accounts payable incurred in the ordinary course of
business to finance the purchase of property and services from trade
suppliers, if such accounts payable are not more than 90 days past
due); and
(d) any indebtedness of such Person consisting of unpaid
reimbursement obligations in respect of drawings under letters of
credit issued for the account of such Person; and
(e) any indebtedness of any other Person of the character
referred to in subdivision (a), (b), (c) or (d) of this definition
with respect to which the Person whose Debt is being determined has
become liable by way of a Guaranty (other than in respect of the
Repurchase Obligations).
Environment: any water or water vapor, including
groundwater and surface water, any land, including land surface or subsurface,
air, fish, wildlife, biota and all other natural resources.
Environmental Laws: all federal, state and local environmental,
health, chemical use, safety and sanitation laws, environmental permit
requirements statutes, ordinances, rules, regulations and codes relating to the
protection of the Environment, including, but not limited to those laws and
requirements governing the use, storage, treatment, generation, transportation,
processing, handling, production or disposal of Hazardous Substances, those laws
with regard to record keeping, notification and reporting requirements
respecting hazardous materials, and the rules, regulations, policies,
guidelines, interpretations, decisions, orders and directives of federal, state
and local governmental agencies and authorities with respect thereto.
Environmental Permits: all permits, certificates, licenses,
approvals, authorizations, consents or registrations required by any applicable
Environmental Law, or required for the storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances.
Environmental Reports: the following reports prepared by United
Consulting Group, Ltd.: Phase 1 Environmental Site Assessment Report for Plants
1, 2 and 3 dated August 25, 1995; Asbestos Survey, Radon Gas Testing and ▇▇▇▇▇▇▇
Map Review for Plants 1, 2, 3 and 4 dated September 18, 1995; Phase 2
Environmental Site Assessment Report for Plants 1, 2 and 3 dated September 21,
1995; Phase 1 Environmental Site Assessment Report for Plant 4 dated October 2,
1995; Phase 1 Environmental Site Assessment Report for Plant 5 dated October 11,
1995; Proposal for Additional AST Investigation on Plant 1 and Plant 2, dated
September 25, 1995; Proposal for Phase 2 Environmental Site Assessment on Plant
4, dated October 4, 1995; Report regarding Asbestos Abatement Cost Estimate,
dated October 12, 1995; and Report regarding Well Survey for Plants 1 and 2,
dated October 20, 1995.
Equity Interests: any of the capital stock, and any options, warrants
and other rights to acquire the capital stock, of Holding.
Equity Sale: any issuance, sale, conveyance, transfer or other
disposition of any Equity Interests.
Equity Sale Proceeds: the aggregate cash proceeds payable to Holding
in connection with any Equity Sale, after deduction of all reasonable, customary
and documented costs and expenses of such Equity Sale.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended from time to time.
Exchange Act: the Securities Exchange Act of 1934, as amended from
time to time.
Event of Default: the meaning specified in section 11.
Fiscal Year: the fiscal year of the GMH Companies for financial
accounting purposes, which fiscal year ends on December 31. The 1995 Fiscal Year
of the GMH Companies shall commence on the Closing Date and end on December 31,
1995.
Fiscal Year 1995 Percentage: the percentage calculated by dividing
(a) the number of days from and including the Closing Date to and including
December 31, 1995 by (b) 365.
GMH: General Manufactured Housing, a Georgia corporation.
GMH Companies: Collectively, Holding, the Company and, as the context
may require, GMH.
Gross Capital Expenditures: for any period, the total of all
expenditures incurred by the GMH Companies in respect of the purchase or other
acquisition of fixed or capital assets
during such period, without any deduction for trade-ins, salvage values, resales
or similar recoveries, including the amount which in accordance with generally
accepted accounting principles is or should be initially posted to the balance
sheet of Holding and its consolidated Subsidiaries with respect to Capital
Leases.
Guaranty: as applied to any Person, any direct or indirect liability,
contingent or otherwise, of such Person with respect to any indebtedness, lease,
dividend or other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business) or discounted or sold
with recourse by such Person, or in respect of which such Person is otherwise
directly or indirectly liable, including, without limitation, any such
obligation in effect guaranteed by such Person through any agreement (contingent
or otherwise) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain the solvency or any balance sheet or
other financial condition of the obligor of such obligation, or to make payment
for any products, materials or supplies or for any transportation or services
regardless of the non-delivery or nonfurnishing thereof, in any such case if the
purpose or intent of such agreement is to provide assurance that such obligation
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will be protected against
loss in respect thereof. The amount of any Guaranty shall be equal to the
outstanding principal amount of the obligation guaranteed.
Hazardous Materials: materials defined as "hazardous substances,"
"hazardous wastes" or "solid wastes" in CERCLA, RCRA or in any similar federal,
state or local environmental statute.
Hazardous Substance: without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products (including, without
limitation, waste petroleum and waste petroleum products), methane, hazardous
materials, hazardous wastes, pollutants, contaminants, and hazardous or toxic
substances or related materials, or chemicals posing an unreasonable risk of
harm to health or the environment, as regulated or defined under CERCLA, RCRA,
the Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801,
et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601,
et seq.), or any other applicable Environmental Law and the regulations
promulgated thereunder.
Hazardous Waste: the meanings specified therefor in RCRA, CERCLA, or
comparable state Environmental Laws and the regulations thereunder.
Holding: GMH Holdings, Inc., a Delaware corporation.
Installment Promissory Notes: the Installment Promissory Notes to be
delivered by Holding to the Sellers on the Closing Date, pursuant to the Stock
Purchase Agreement, in the form attached as Exhibit E to the Stock Purchase
Agreement as in effect on the Closing Date.
Intangible Assets: licenses, franchises, patents, patent
applications, trademarks, trademark applications, tradenames, copyrights,
copyright applications, computer software rights, goodwill and research and
development expenses or other intangibles shown on the balance sheet of Holding
and its consolidated Subsidiaries.
Interest Coverage Ratio Number 1: for any period, the ratio of (a)
Adjusted Operating Profit for such period less the aggregate amount incurred by
the GMH Companies during such period on account of Gross Capital Expenditures
for such period to (b) Interest Expense for such period.
Interest Coverage Ratio Number 2: for any period, the ratio of (a)
Adjusted Operating Profit for such period to (b) Interest Expense for such
period.
Interest Expense: for any period, the amount which, in conformity
with generally accepted accounting principles, would be set forth opposite the
caption "interest expense" (or any like caption) on an income statement of
Holding and its consolidated Subsidiaries.
Investment: as applied to any Person, any direct or indirect purchase
or other acquisition by such Person of stock or other securities of any other
Person, or any direct or indirect loan, advance (other than advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by such
Person to any other Person, including all Debt and accounts receivable from such
other Person which are not current assets or did not arise from sales to such
other Person in the ordinary course of business, and excluding prepaid expenses
and lease, utility, workers compensation, performance and other similar
deposits, in each case incurred in the ordinary course of business. In computing
the amount involved in any Investment at the time outstanding, (a) undistributed
earnings of, and interest accrued in respect of Debt owing by, such other Person
accrued after the date of such Investment shall not be included, (b) there shall
not be deducted from the amounts invested in such other Person any amounts
received as earnings (in the form of dividends, interest or otherwise) on such
Investment or as loans from such other Person, and (c) unrealized increases or
decreases in value, or write-ups, write-downs or write-offs, of Investments in
such other Person shall be disregarded.
Investors' Rights Agreement: the Investors' Rights Agreement, dated
as of December 21, 1995, among Holding, The Equitable Life Assurance Society of
the United States, Bulldog and the RFE Group, substantially in the form of
Exhibit F.
IPO: the issuance by Holding in a registered public offering under
the Securities Act of a number of shares of Common Stock such that, after giving
effect to such offering, there shall be outstanding pursuant to one or more such
public offerings shares of Common Stock equal to at least 20% of the capital
stock of Holding on a fully-diluted basis.
Junior Securities: the Series A Preferred Stock, the Series B
Preferred Stock and the Junior Subordinated Notes.
Junior Subordinated Notes: the Junior Subordinated Notes to be issued
by the Company to the RFE Group on the Closing Date, in the principal amount of
$5,000,000, in the form attached as Exhibit B to the RFE Securities Purchase
Agreement.
Lien: as to any Person, any mortgage, lien, pledge, adverse claim,
charge, security interest or other encumbrance in or on, or any interest or
title of any vendor, lessor, lender or other secured party to or of such Person
under any conditional sale or other title retention agreement or Capital Lease
with respect to, any property or asset owned or held by such Person, or the
signing or filing of a financing statement which names such Person as debtor, or
the signing of any security agreement authorizing any other party as the secured
party thereunder to file any financing statement.
Make-Whole Premium: with respect to any Note, a premium equal to the
excess, if any, of the Discounted Value of the Called Principal of such Note
over the sum of (a) such Called Principal plus (b) interest accrued thereon as
of (including interest due on) the Settlement Date with respect to such Called
Principal. The Make-Whole Premium shall in no event be less than zero. As used
in this definition, the following terms have the following meanings:
Called Principal: with respect to any Note, the principal of
such Note that is to be prepaid, subject to a Make-Whole Premium,
pursuant to section 9.3 or is declared to be immediately due and
payable pursuant to section 11, as the context requires.
Discounted Value: with respect to the Called Principal of any
Note, the amount obtained by
discounting all Remaining Scheduled Payments with respect to such
Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance
with accepted financial practice and at a discount factor (applied on
a semiannual basis) equal to the Reinvestment Yield with respect to
such Called Principal.
Reinvestment Yield: with respect to the Called Principal of any
Note, the sum of (a) 2.5% plus (b) the yield to maturity determined by
reference to the Treasury Constant Maturity Series yields reported,
for the latest day for which such yields shall have been reported as
of the Business Day next preceding the Settlement Date with respect to
such Called Principal, in Federal Reserve Statistical Release H.15
(519) (or, if such Statistical Release is not published, any publicly
available source of similar market data acceptable to the holders of
more than 50% in principal amount of the Notes being prepaid or
accelerated) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield shall be
determined, if necessary, (x) by converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (y) by linear interpolation between reported
yields.
Remaining Average Life: with respect to the Called Principal of
any Note, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (a) such Called Principal into (b) the sum
of the products obtained by multiplying (i) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by (ii)
the number of years (calculated to the nearest one-twelfth year) which
will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled
Payment.
Remaining Scheduled Payments: with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date
with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date.
Settlement Date: with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid
pursuant to section 9.3 or is declared to be immediately due and
payable pursuant to section 11, as the context requires.
Management Fees: the fees and expenses payable by the Company to SIHI
pursuant to the Management Agreement, dated as of December 21, 1995.
Material Subsidiary: a Subsidiary which, at the date of
determination, has assets with a book value in excess of 5% of the aggregate
book value of all assets of Holding. and its Subsidiaries at the end of the then
most recently completed fiscal year of Holding, or which produced net income
during such fiscal year which is more than 5% of Net Income for such fiscal
year.
Merger: the merger of GMH Acquisition Corp., a Delaware corporation,
into General Manufactured Housing,, Inc., a Georgia corporation, with the latter
company as the surviving entity.
Multiemployer Plan: any Plan which is a "multi-employer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
Net Cash Generated: for any period, an amount equal to (a) Adjusted
Operating Profit for such period, less (b) Gross Capital Expenditures incurred
during such period, plus (c) the
amount of any reduction (minus the amount of any increase) in Working Capital in
such period.
Net Income: for any period, net income or loss of Holding and its
consolidated Subsidiaries as it would appear on an income statement of Holding
and its consolidated Subsidiaries for such period prepared in accordance with
generally accepted accounting principles, less, to the extent not subtracted
from gross income in computing net income, the amounts paid or payable by the
GMH Companies in respect of Restricted Payments permitted under section 10.4 and
Management Fees permitted by section 10.7.
Officers' Certificate: a certificate executed on behalf of Holding or
the Company, as the context may require, by its Chairman of the Board of
Directors (if an officer) or its President or one of its Vice Presidents and its
Treasurer or one of its Assistant Treasurers.
Operative Agreements: the Stock Purchase Agreement, the RFE
Securities Purchase Agreement, the Stockholders' Agreement, the Investors'
Rights Agreement, the Subordination Agreement and the Senior Loan Agreement.
Original Holder: The Equitable Life Assurance Society of the United
States or any affiliate thereof to which any of the Notes shall subsequent to
the Closing Date have been transferred.
PBGC: the Pension Benefit Guaranty Corporation or any governmental
authority succeeding to any of its functions.
Person: an individual, a partnership, an association, a joint
venture, a corporation, a limited liability company, a business, a trust, an
unincorporated organization or a government or any department, agency or
subdivision thereof.
Plan: an "employee pension benefit plan" (as defined in section 3 of
ERISA) which is or has been established or maintained, or to which contributions
are or have been made, by Holding or any of its Related Persons, or an employee
pension benefit plan as to which Holding or any of its Related Persons would be
treated as a contributing sponsor under section 4069 of ERISA if it were to be
terminated, or such a plan as to which Holding or any of its Related Persons
would be treated as a contributing sponsor under section 4212(c) of ERISA.
Plan of Merger: the Plan of Merger, dated as of December 21, 1995,
between GMH Acquisition Corp., a Delaware corporation, and General Manufactured
Housing, Inc., a Georgia corporation.
Potential Event of Default: any condition or event which, with notice
or lapse of time or both, would become an Event of Default.
Preferred Stock: the Series A Preferred Stock and the Series B
Preferred Stock.
Premises: the facilities owned or leased by GMH, which are identified
in the Environmental Reports.
Private Placement Memorandum: the Confidential Private Placement
Memorandum, dated July 18, 1995, as supplemented on December 14, 1995, prepared
by Larkspur Capital Corporation in connection with the offer and issuance of the
Notes and Warrants.
RCRA: the Resource Conservation and Recovery Act, as amended (42
U.S.C. Section 6901, et seq.).
Repurchase Obligations: the contingent obligations of the Company
under agreements with the lenders to the purchasers of the Company's inventory
(each a "dealer") relating to inventory purchased by such dealer pursuant to
which the Company agrees to repurchase any new and unused inventory remaining in
the possession of such dealer or repossessed by such dealer's lender after a
default under the financing agreements between such dealer and its lender,
subject to the terms and conditions of such repurchase agreements.
RFE: RFE Investment Partners V, L.P., a Delaware limited partnership.
RFE Group: collectively, RFE, the State of Michigan and Sterling
Commercial Capital, Inc.
RFE Securities Purchase Agreement: the Securities Purchase Agreement,
dated as of December 21, 1995, among RFE, the Company, Holding and the
purchasers listed therein.
Release: any past or present spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping of a Hazardous Substance into the Environment (including the abandonment
or discarding of barrels, containers, and other closed receptacles containing
any Hazardous Substance), including the meaning as given to that term in CERCLA
and the regulations promulgated thereunder.
Related Person: any trade or business, whether or not incorporated,
which, together with Holding, is treated as a single employer under section 414
of the Code.
Restricted Payment: with reference to Holding or the Company, as the
context requires, (a) any dividend or other distribution, direct or indirect, on
account of any shares of any.class of stock of Holding or the Company, as the
case may be, now or hereafter outstanding, except a dividend payable solely in.
shares of common stock; (b) any redemption, retirement, purchase or other
acquisition, direct or indirect, of any shares of any class of stock of Holding
or the Company, as the case may be, now or hereafter outstanding, or of any
warrants, rights or options to acquire any such shares, except to the extent
that the consideration therefor consists of shares of stock of Holding or the
Company; and (c) any payment, direct or indirect, of or on account of any
principal of or premium on any Junior Securities of Holding or any other
subordinated Debt of Holding or the Company now or hereafter outstanding or any
redemption, retirement, purchase or other acquisition, direct or indirect, of
any such Junior Securities or subordinated Debt.
Securities Act: the Securities Act of 1933, as amended from time to
time.
Sellers: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, as Trustee, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually, and as Joint Tenant with ▇▇▇▇▇▇ ▇.
▇▇▇▇▇; as "Sellers" under the Stock Purchase Agreement.
Senior Debt: all principal of and premium, if any, and interest on
Debt of the Company outstanding from time to time under (a) the Senior Loan
Agreement and (b) other Debt of the Company outstanding in compliance with
section 10.1(f) unless, under the instrument evidencing the same or under which
the same is outstanding, it is expressly provided that such Debt is junior and
subordinate to other Debt of the Company or its Subsidiaries.
Senior Lenders: First Source Financial LLP, as Lender under the
Senior Loan Agreement and any other "Lender" that may after the Closing Date
become an assignee of First Source Financial LLP under the Senior Loan
Agreement.
Senior Loan Agreement: The Loan Agreement, dated as of December 21,
1995, between the Company and First Source Financial LLP, as amended from time
to time.
Series A Preferred Stock: the Series A Redeemable Preferred Stock,
par value $.001 per share, of Holding, to be issued on the Closing Date to the
RFE Group, having an aggregate liquidation preference of $8,000,000.
Series B Preferred Stock: the Series B Convertible Preferred Stock,
par value $.001 per share, of Holding, to be issued on the Closing Date to
Bulldog and the RFE Group, having an aggregate liquidation preference of
$2,150,000.
State of Michigan: the Treasurer of the State of Michigan, as
Custodian for the Michigan Public School Employees Retirement System, the
Michigan State Employees Retirement
System, the Michigan State Police Retirement System and the Michigan Judges
Retirement System.
Stock Purchase Agreement: the Stock Purchase Agreement, dated as of
October 10, 1995, between the Company and the Sellers named therein, as amended
to the date hereof.
Stockholders' Agreement: the Stockholders' Agreement, dated as of
December 21, 1995, among Holding, The Equitable Life Assurance Society of the
United States and the Persons listed in Schedule B, substantially in the form
set forth in Exhibit E.
SIHI: Strategic Investments & Holdings, Inc., a Delaware corporation.
Subordination Agreement: the Subordination Agreement, dated as of
December 21, 1995, among Holding, The Equitable Life Assurance Society of the
United States, the RFE Group, SIHI and First Source Financial LLP, substantially
in the form of Exhibit G.
Subsidiary: with reference to any of the GMH Companies, as the
context may require, any corporation at least 50% (by number of votes) of the
Voting Stock of which is at the time owned by the such GMH Company or by one or
more Subsidiaries of such GMH Company or by such GMH Company and one or more
Subsidiaries.
Total Fixed Charges: for any period, the sum of (a) all scheduled or
accelerated payments of interest or principal on account of Debt of Holding or
its consolidated Subsidiaries, including any and all penalties, premiums,
prepayment fees or the like thereon (including without limitation any "Scheduled
Reduction" in the "Revolving Loan Commitment" (as such terms are defined in the
Senior Loan Agreement), whether or not such reduction gives rise to a payment of
any loans outstanding under the Senior Loan Agreement) with respect to such
period plus (b) taxes paid or payable with respect to such period directly by
the GMH Companies to any governmental authority, plus (c) to the extent not
subtracted in determining Net Income and without double counting, all amounts
paid by Holding and its consolidated Subsidiaries with respect to such period to
purchase, redeem or otherwise acquire any Equity Interests. For purposes of the
foregoing, "scheduled payments" shall not include repayment of Loans (i)
pursuant to clauses eighth and ninth of section 7.3 of the Senior Loan Agreement
or (ii) following any reductions or termination of the Commitments pursuant to
section 2.5 or 2.6 of the Senior Loan Agreement.
Total Liabilities: at any date, the sum of (a) the amount which, in
conformity with generally accepted accounting principles, would be set forth
opposite the caption "liabilities" (or any like caption) on a balance sheet of
Holding and its consolidated Subsidiaries at such date plus (b) the aggregate
amount of Guaranties of Holding and its consolidated Subsidiaries outstanding on
such date (other than those which would constitute liabilities under clause (a)
above).
Voting Stock: with reference to any corporation, stock of any class
or classes (or equivalent interests), if the holders of the stock of such class
or classes (or equivalent interests) are ordinarily, in the absence of
contingencies, entitled to vote for the election of the directors (or Persons
performing similar functions) of such corporation, even though the right so to
vote has been suspended by the happening of such a contingency.
Ware County Obligation: the Corporate Guaranty of Deed to Secure Debt
made by Waycross and Ware County Development Authority to ▇▇▇▇▇▇▇▇▇ Bank, dated
December 30, 1993, to secure Promissory Note in the original principal amount of
$613,727.63.
Warrants: the meaning specified in section 1.
Wholly-Owned: as applied to a Subsidiary of any GMH Company, a
Subsidiary all the outstanding shares (other than directors' qualifying shares,
if required by law) of every class of stock of which are at the time owned by
such GMH Company or by one or more Wholly-Owned Subsidiaries thereof or by such
GMH
Company and one or more Wholly-Owned Subsidiaries thereof.
15. Registration, Transfer and Substitution of Notes; Action by
Noteholders.
15.1. Note Register; Ownership of Notes. The Company will keep at
its principal office a register in which the Company will provide for the
registration of Notes and the registration of transfers of Notes. The Company
may treat the Person in whose name any Note is registered on such register as
the owner thereof for the purpose of receiving payment of the principal of and
the premium, if any, and interest on such Note and for all other purposes,
whether or not such Note shall be overdue, and the Company shall not be affected
by any notice to the contrary. All references in this Agreement to a "holder" of
any Note shall mean the Person in whose name such Note is at the time
.registered on such register.
15.2. Transfer and Exchange of Notes. Upon surrender of any Note for
registration of transfer or for exchange to the Company at its principal office,
the Company at its expense will execute and deliver in exchange therefor a new
Note or Notes in denominations of at least $100,000 (except one Note may be
issued in a lesser principal amount if the unpaid principal amount of the
surrendered Note is not evenly divisible by, or is less than $100,000), as
requested by the holder or transferee, which aggregate the unpaid principal
amount of such surrendered Note, registered as such holder or transferee may
request, dated so that there will be no loss of interest on such surrendered
Note and otherwise of like tenor.
15.3. Replacement of Notes. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Note and, in the case of any such loss, theft or destruction of any Note, upon
delivery of an indemnity bond in such reasonable amount as the Company may
determine (or, in the case of any Note held by you or another institutional
holder or your or its nominee, of an indemnity agreement from you or such other
holder) or, in the case of any such mutilation, upon the surrender of such Note
for cancellation to the Company at its principal office, the Company at its
expense will execute and deliver, in lieu thereof, a new Note in the unpaid
principal amount of such lost, stolen, destroyed or mutilated Note, dated so
that there will be no loss of interest on such Note and otherwise of like tenor.
Any Note in lieu of which any such new Note has been so executed and .delivered
by the Company shall not be deemed to be an outstanding Note for any purpose of
this Agreement.
15.4. Notes held by Company, etc., Deemed Not Outstanding. For the
purposes of determining whether the holders of the Notes of the requisite
principal amount at the time outstanding have taken any action authorized by
this Agreement with respect to the giving of consents or approvals or with
respect to acceleration upon an Event of Default, any Notes directly or
indirectly owned by the Company or any of its Subsidiaries or Affiliates shall
be disregarded and deemed not to be outstanding.
16. Payments on Notes.
16.1. Place of Payment. Payments of principal, premium, if any, and
interest becoming due and payable on the Notes shall be made at the principal
office of The Chase Manhattan Bank, N.A. in the Borough of Manhattan, the City
and State of New York, unless the Company, by written notice to each holder of
any Notes, shall designate the principal office of another bank or trust company
in such Borough as such place of payment, in which case the principal office of
such other bank or trust company shall thereafter be such place of payment.
16.2. Home Office Payment. So long as you or your nominee shall be
the holder of any Note, and notwithstanding anything contained in section 16.1
or in such Note to the contrary, the Company will pay all sums becoming due on
such Note for principal, premium, if any, and interest by the method and at the
address specified for such purpose in Schedule A, or by such other method or at
such other address as you shall have from time
to time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that any Note paid or prepaid in full shall be surrendered to the Company
at its principal office or at the place of payment maintained by the Company
pursuant to section 16.1 for cancellation. Prior to any sale or other
disposition of any Note held by you or your nominee you will, at your election,
either endorse thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to the Company in
exchange for a new Note or Notes pursuant to section 16.2. The Company will
afford the benefits of this section 16.2 to any institutional investor which is
the direct or indirect transferee of any Note purchased by you under this
Agreement and which has made the same agreement relating to such Note as you
have made in this section 16.2.
17. Expenses, etc. Whether or not the transactions contemplated by
this Agreement shall be consummated, the Company will pay all expenses in
connection with such transactions and in connection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement, the Notes and the Warrants, including, without limitation: (a) the
cost and expenses of preparing and reproducing this Agreement, the Notes or the
Warrants, of furnishing all opinions by counsel for the GMH Companies (including
any opinions requested by your special counsel as to any legal matter arising
hereunder) and all certificates on behalf of the GMH Companies, and of the GMH
Companies' performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with; (b) the cost of
delivering to your principal office, insured to your satisfaction, the Notes and
Warrants sold to you hereunder and any Notes or Warrants delivered to you upon
any substitution of Notes or Warrants pursuant to section 15 and of your
delivering any Notes or Warrants, insured to your satisfaction, upon any such
substitution; (c) the reasonable fees, expenses and disbursements of your
special counsel in connection with such transactions and any such amendments or
waivers; and (d) the reasonable out-of-pocket expenses incurred by you in
connection with such transactions and any such amendments or waivers. The
Company also will pay, and will save you and each holder of any Notes harmless
from, all claims in respect of the fees, if any, of brokers and finders and any
and all liabilities with respect to any taxes (including interest and penalties)
which may be payable in respect of the execution and delivery of this Agreement,
the issue of the Notes and Warrants and any amendment or waiver under or in
respect of this Agreement, the Notes and the Warrants. The obligation of the
Company under this section 17 shall survive any disposition or payment of the
Notes and the termination of this Agreement and the expiration of the Warrants.
18. Survival of Representations and Warranties. All representations
and warranties contained in this Agreement or made in writing by Holding or the
Company in connection with the transactions contemplated by this Agreement shall
survive the execution and delivery of this Agreement, any investigation at any
time made by you or on your behalf and the purchase of the Notes and Warrants by
you under this Agreement. All statements contained in any certificate or other
instrument delivered by or on behalf of Holding or the Company pursuant to this
Agreement shall be deemed representations and warranties of Holding and the
Company under this Agreement.
19. Amendments and Waivers. Any term of this Agreement or of the
Notes may be amended and the observance of any term of this Agreement or of the
Notes may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the holders of more than 50% in principal amount of the Notes at the time
outstanding (subject to section 15.4), provided that, without the prior written
consent of the holders of all the Notes at the time outstanding (subject to
section 15.4), no such amendment or waiver shall (a) change the maturity or the
principal amount of, or reduce the rate or change the time of payment of
interest on, or change the amount or the time of payment of any principal or
premium payable on any prepayment of, any Note, (b) reduce the aforesaid
percentages of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, (c) change the percentage of the principal amount of the
Notes the holders of which may declare the Notes to be due and payable as
provided in section 11, (d) modify the proviso to the first sentence of section
11, or (e) decrease the percentage of the principal amount of the Notes the
holders of which may rescind and-annul any such declaration as provided in
section 11. Any amendment or waiver effected in accordance with this section 19
shall be binding upon each holder of any Note at the time outstanding, each
future holder of any Note and the Company.
20. Notices, etc. Except as otherwise provided in this Agreement,
notices and other communications under this Agreement shall be in writing and
shall be delivered, or mailed by registered or certified mail, return receipt
requested, addressed, (a) if to you, at the address set forth in Schedule A or
at such other address as you shall have furnished to the Company in writing,
except as otherwise provided in section 16.2 with respect to payments on Notes
held by you or your nominee, or (b) if to any other holder of any Note, at such
address as such other holder shall have furnished to the Company in writing, or,
until any such other holder so furnishes to the Company an address, then to and
at the address of the last holder of such Note who has furnished an address to
the Company, or (c) if to Holding or the Company, at its address set forth at
the beginning of this Agreement, to the attention of the Chief Financial Officer
of the Company, or at such other address, or to the attention of such other
officer, as the Company shall have furnished to you and each such other holder
in writing. Any notice so addressed and delivered by hand or courier shall be
deemed to be given when received, and any notice so addressed and mailed by
registered or certified mail shall be deemed to be given three Business Days
after being so mailed.
21. Indemnification. The Company will indemnify and hold harmless
each of you and each person who controls you within the meaning of the
Securities Act or the Exchange Act and each of your subsidiaries and each of
your and their respective directors, officers, employees, agents and advisors
(any and all of whom are referred to as the "Indemnified Party") from and
against any and all losses, claims, damages and liabilities, whether joint or
several (including all legal fees or other expenses reasonably incurred by any
Indemnified Party in connection with the @reparation for or defense of any
pending or threatened third party claim, action or proceeding, whether or not
resulting in any liability), which such Indemnified Party actually and
reasonably incurs (whether or not such Indemnified Party is a party thereto)
under any applicable federal or state law or otherwise, caused by or arising out
of, or allegedly caused by or arising out of, the Acquisition or the Note
Agreement or any transaction contemplated hereby or thereby, other than, with
respect to any Indemnified Party, losses, claims, damages or liabilities that
are the result of any representation made by such Indemnified Party in section 6
or the result of the gross negligence or willful misconduct of such Indemnified
Party.
Promptly after receipt by an Indemnified Party of notice of any claim,
action or proceeding with respect to which an Indemnified Party is entitled to
indemnity hereunder, such Indemnified Party will notify the Company of such
claim or the commencement of such action or proceeding, provided that the
failure of an Indemnified Party to give notice as provided herein shall not
relieve the Company of its obligations under this section 21 with respect to
such Indemnified Party, except to the extent that the Company is actually
prejudiced by such failure. The Company will assume the defense of such claim,
action or proceeding and will employ counsel reasonably satisfactory to the
Indemnified Party and will pay the fees and expenses of such counsel.
Notwithstanding the preceding sentence, the Indemnified Party will be entitled,
at the expense of the Company, to employ counsel separate from counsel for the
Company and for any other party in such action if the Indemnified Party
reasonably determines that a conflict of interest or other reasonable basis
exists which makes representation by counsel chosen by the Company not
advisable, but the Company will not be obligated to pay the fees and expenses of
more than one counsel for all
Indemnified Parties.
22. Miscellaneous. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not, and, in particular, shall inure
to the benefit of and be enforceable by any holder or holders at the time of the
Notes or any part thereof. Except as stated in section 18, this Agreement
embodies the entire agreement and understanding between you, Holding and the
Company and supersedes all prior agreements and understandings relating to the
subject matter hereof. This Agreement and the Notes shall be construed and
enforced in accordance with and governed by the law of the State of New York.
The headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter and return one of the
same to the Company, whereupon this letter shall become a binding agreement
between you, Holding and the Company.
Very truly yours,
GMH ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
Title: President
GMH HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
Title: President
The foregoing Agreement is
hereby agreed to as of the
date thereof.
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: ▇▇▇▇▇ ▇. [illegible]
Investment Officer
SCHEDULES TO
NOTE AND WARRANT PURCHASE AGREEMENT
DATED AS OF DECEMBER 21, 1995
AMONG GMH ACQUISITION CORP., GMH HOLDINGS, INC.
AND THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
All capitalized terms contained in these schedules shall have the meanings
set forth in the Note and Warrant Purchase Agreement. Any item disclosed on any
schedule shall be deemed to have been disclosed on all schedules.
SCHEDULE A
Purchaser Information
The Equitable Life Assurance Society
of the United States
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
SCHEDULE B
Equity Purchasers
STOCKHOLDER NUMBER OF SHARES
SERIES A SERIES B CLASS A
PREFERRED PREFERRED COMMON
Bulldog Holdings LLC 1,400,000
RFE Investments Partners V, L.P. 4,690,351 439,720 714,546
State Treasurer of the State of
Michigan, Custodian of the
Michigan Public School
Employees' Retirement System,
State Employees' Retirement
System, Michigan State Police
Retirement System, and Michigan
Judges Retirement System 3,076,922 288,462 468,750
Sterling Commercial Capital, Inc. 232,727 21,818 35,454
The Equitable Life Assurance
Society of the United States
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, as Joint Tenants 92,749
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, as Trustee
for the ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Revocable Trust - 1995 71,167
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ 71,167
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 71,167
▇▇▇▇▇▇ ▇▇▇▇▇▇ 28,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 28,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 21,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 14,000
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇ 14,000
▇▇▇▇▇ ▇▇▇▇▇ 13,125
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 13,125
________ _________ __________
TOTAL 8,000,000 2,150,000 1,656,250
SCHEDULE C
Debt and Liens
C-1.
a. Debt to The ▇▇▇▇▇▇▇▇▇ Bank in the original principal amount of $613,727.63
in connection with sale and lease-back transaction.
i) Collateral:
Deed to secure debt to ▇▇▇▇▇▇▇▇▇ Bank described dated 12/30/93 from
Waycross and Ware County Development Authority encumbering Plants 2
and 3.
b. Installment Promissory Notes of GMH Acquisition Corp. to each of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as joint tenants, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, as Trustee, due January 25, 1996 in the
aggregate principal amount of $45,000,000.
C-2.
a. Debt to First Source LLP in a principal amount up to $26,000,000
b. Debt to the Equitable Life Assurance Society of the United States in an
amount up to $17,243,298.
c. Debt to RFE Investment Partners V, L.P., State of Michigan, as Custodian,
and Sterling Commercial Capital, Inc. in the amount of $5,000,000.
d. Promissory Note in the original principal amount of $600,000 dated 8/24/94
in favor of Nationsbank of Georgia, N.A., secured by Security Agreement
dated 8/24/94 encumbering aircraft, engines, propellers, accessories and
parts including UCC and FAA filings to be removed immediately following the
Closing.
e. Reimbursement obligations of GMH with respect to the following:
1) Letter of Credit No. PB020 dated 5/22/95 issued by The ▇▇▇▇▇▇▇▇▇ Bank
in favor of ▇▇▇-Bar Corporation in the maximum amount of $207,000 (said
balance declining at the rate of $9,000 per month) as Security Deposit
under Lease between Hi-Tech and ▇▇▇-Bar for Plant 4
2) Irrevocable Letter of Credit No. PB013 dated 5/18/93 issued by The
▇▇▇▇▇▇▇▇▇ Bank in favor of Bankers Insurance Company for $50,000, securing
South Carolina Manufacturer's Representative License Bonds
SCHEDULE D
Investment
The Company owns all of the outstanding stock of General Manufactured
Housing, Inc.
SCHEDULE E
A. ENVIRONMENTAL COMPLIANCE
1. There are two (2) 500 gallon above ground storage tanks (AST) at Plant
Nos. 1,2 and 3. One AST contains diesel fuel and the other AST
contains gasoline. The ASTs at Plant Nos. 1 and 2 had petroleum
residue underneath them. All three AST locations have no sealed
concrete floor beneath them. Elevated concentration levels of
petroleum constituents were detected in the soil and ground water
below the ASTs at Plant Nos. 1 and 2.
2. Plant No. 3 has a welding and painting Facility for Constructing steel
platforms. Stained soil is present at the maintenance/welding shop.
The painting area and nearby soil is also stained with a black coating
paint. The stained soil at the maintenance/welding shop was removed.
The painting area does not pose a threat.
3. Stained soil was evident around an air compressor located at Plant No.
2 and was removed.
4. Mineral spirits are stored in 55-gallon drums at Plant No. 1. Stained
soil was observed beneath thus storage area, but analytical results
from samples collected in this area were below state guidance levels.
5. Surface tar areas are located at Plant Nos. 1 and 2.
6. Contact adhesive containing acetone, toluene, and N-hexane are present
and used at each Plant. Scrapwood, steel parts and sheetrock are
stored at each Plant. Paint and non-toxic glue are present and used at
each Plant. Plastic roof cement and Plaster of Paris are stored at
Plant No. 2. Steel drums containing hydraulic oil is stored at Plant
No. 3.
7. Plant Nos. 1, 2, and 3 are located in an industrial park. General
American Transportation Corp. (GATX) is located adjacent to Plant No.
2 and is a listed CERCLIS site. A registered leaking underground
storage tank is located within a .5 mile radius of the Plants. RCRA
hazardous waste generators are located in the industrial park.
8. Asbestos containing pipe fitting insulation is located throughout the
ceiling areas and the boiler room in Plant No. 2 Asbestos containing
linoleum floor materials is located in Plant Nos. 1 and 3.
9. Plant No. 4 was used previously as a cardboard plant. A 10,000 gallon
diesel UST had previously been stored and removed. Two 270-gallon
steel ASTs currently are used. One AST contains diesel fuel and the
other AST contains gasoline.
10. Contact adhesive, glue, thread cutting oil, roof adhesive, roof
element, paint, oil/water mixture, hydraulic oil, formaldehyde resin,
and caustic soda beads are stored and used at Plant No. 4.
11. An old compressor is stored at Plant No. 4 and stained concrete is
present in the area of the compressor.
12. GATX is a listed CERCLIS site and RCRA hazardous waste generator and
is located adjacent to Plant No. 4. Groundwater beneath the GATX site
is contaminated with naphthalene. A registered leaking underground
storage tank is located within .5 miles of Plant No. 4
13. Plant No. 5 was used previously as a warehouse and was listed on
federal and state databases as a small quantity generator of hazardous
wastes.
14. Four (4) ASTs are located 200 feet northeast of Plant No. 5 and
stained soil is present beneath these tanks. Three (3) registered
leaking underground storage tanks are located within a .5 mile radius
of Plant No. 5.
B. MATERIAL ADVERSE CHANGE
1. Borrower and Oakwood Mobile Homes, a manufacturer and retailer
headquartered in North Carolina, had an agreement pursuant to which
Borrower was to supply 24 foot, double-wide homes to Oakwood's captive
retail network. Borrower expected to use Plant No. ▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ exclusively for the construction of these homes.
▇▇▇▇▇▇▇ gave notice to ▇▇▇▇▇▇▇▇, on or about August 25, 1995, that it
would not be ordering any further homes from Borrower for the
foreseeable future due to over manufacturing by Oakwood of its own
products, and the desire for their retail network to sell Oakwood's
products before those manufactured by Borrower. All homes that had
been ordered to that time were completed by ▇▇▇▇▇▇▇▇ and purchased by
▇▇▇▇▇▇▇. Borrower has shifted double-wide production to Plant No. 4 in
order to reduce its considerable backlog of orders. In its
notification, ▇▇▇▇▇▇▇ characterized this situation as temporary;
however, no assurances can be given that such suspension may not be
permanent. Sales to Oakwood accounted for approximately 10% of
Borrower's total revenues during the first six months of 1995.
EXHIBIT A
Form of Senior Note
EXHIBIT A
GENERAL MANUFACTURED HOUSING, INC.
Senior Subordinated Note due December 21, 2002
PPN# 37029* AA 7
No. R New York, N.Y.
$ , 19__
GENERAL MANUFACTURED HOUSING, INC. a Georgia corporation (the
"Company"), for value received, hereby promises to pay to
_________________________, or registered assigns, the principal amount of
$______ on December 21, 2002, with interest (computed on the basis of a 360-day
year of twelve 30-day months) on the unpaid balance of such principal amount at
the rate of (a) for the period from the date hereof to and including March 31,
2001, 10.87% per annum, and (b) 14.50% per annum thereafter, payable quarterly
on each March 31, June 30, September 30 and December 31 after the date hereof,
commencing March 31, 1996, until such unpaid balance shall become due and
payable (whether at maturity or at a date fixed for prepayment or by declaration
or otherwise), and with interest on any overdue principal (including any overdue
prepayment of principal) and premium, if any, and (to the extent permitted by
applicable law) on any overdue interest, at the rate of 2.00% per annum plus the
otherwise applicable rate until paid, payable quarterly as aforesaid or, at the
option of the holder hereof, on demand. Payments of principal, premium, if any,
and interest on this Note shall be made in lawful money of the United States of
America at the principal office of The Chase Manhattan Bank, N.A., in the
Borough of Manhattan, the City and State of New York, or at such other office or
agency in such Borough as the Company shall have designated by written notice to
the holder of this Note as provided in the Note and Warrant Purchase Agreement
referred to below.
This Note is one of the Company's Senior Subordinated Notes due
December 21, 2002 (the "Notes"), originally issued in the aggregate principal
amount of $17,243,295 pursuant to the Note and Warrant Purchase Agreement, dated
as of December 21, 1995, as from time to time amended, between the Company and
the institutional investor referred to therein. The holder of this
Note is entitled to the benefits of such Note and Warrant Purchase Agreement and
may enforce the agreements of the Company contained therein and exercise the
remedies provided for thereby or otherwise available in respect thereof.
The obligations evidenced hereby are subordinate in the manner and to
the extent set forth in that certain Subordination Agreement, dated as of
December 21, 1995 (the "Subordination Agreement"), among the Company, The
Equitable Life Assurance Society of the United States, RFE Investment Partners
V, L.P., Sterling Commercial Capital, Inc., the State Treasurer of the State of
Michigan, as Custodian, and First Source Financial LLP (the "Senior Lender"), to
the obligations (including interest) owed by the Company to the holders of all
the Notes issued pursuant to that certain Secured Credit Agreement, dated as of
December 21, 1995, between the Company and the Senior Lender, as such Secured
Credit Agreement has been and hereafter may be supplemented and amended from
time to time; and each holder hereof, by its acceptance hereof, agrees to be
bound by the provisions of the Subordination Agreement.
This Note is a registered Note and is transferable only upon surrender
of this Note for registration or transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed by the holder hereof or his
attorney duly authorized in writing. References in this Note to a "holder" shall
mean the person in whose name this Note is at the time registered on the
register kept by the Company as provided in such Note and Warrant Purchase
Agreement and the Company may treat such person as the owner of this Note for
the purpose of receiving payment and for all other purposes of receiving payment
and for all other purposes, and the Company shall not be affected by any notice
to the contrary.
The Notes are subject to required and optional prepayment, in whole or
in part, in certain cases with a premium and in other cases without a premium,
all as specified in such Note and Warrant Purchase Agreement.
In case an Event of Default, as defined in such Note and Warrant
Purchase Agreement, shall occur and be continuing, the unpaid balance of the
principal of this Note may become due and payable to the extent provided in such
Note and Warrant Purchase Agreement.
This Note is made and delivered in New York, New York, and shall be
governed by the laws of the State of New York.
GENERAL MANUFACTURED HOUSING INC.
By_______________________________
Title:
SCHEDULE A
SCHEDULE OF PURCHASERS
Principal Amount of
Name and Address Notes; Number of
of Purchaser Warrants
THE EQUITABLE LIFE ASSURANCE SOCIETY Principal Amount of
THE UNITED STATES Note:
(1) All payments by wire transfer of $17,226,308
immediately available funds (other
than in respect of transaction
fees) to: Number of Warrants:
The Chase Manhattan Bank, N.A. ▇▇▇,▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ABA No. 021-000021
A/C The Equitable Life Assurance
Society of the United States
Account No. ▇▇▇-▇-▇▇▇▇▇▇
Each such wire transfer shall set
forth the name of the Company,
the private placement number,
the due date of the payment
being made and if such payment
is a final payment.
Payments by wire transfer of
immediately available funds
in respect of transaction
fees to:
Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ABA No. ▇▇▇▇▇▇▇▇▇
A/C Alliance Corporate Finance Group
Incorporated
Account No. 3849-3365
(2) All notices of payment and written
confirmation of such wire transfers to
The Equitable Life Assurance Society
of the United States
c/o Alliance Capital Management L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Cash Operations
(3) All other communications to be
sent to:
The Equitable Life Assurance Society
of the United States
c/o Alliance Corporate Finance Group
Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(4) Securities to be delivered to:
The Equitable Life Assurance Society
of the United States
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇/▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(5) TIN ▇▇-▇▇▇▇▇▇▇
EXHBIIT B
Form of Warrant
EXHIBIT B
GMH HOLDINGS, INC.
COMMON STOCK PURCHASE WARRANT
Expiring December 21, 2002
This Warrant and any shares acquired upon the exercise of this Warrant have not
been registered under the Securities Act of 1933 and may not be transferred in
the absence of such registration or an exemption therefrom under such Act. This
Warrant and such shares are also subject to certain restrictions on
transferability imposed by a certain Stockholders' Agreement, a copy of which is
on file at the offices of the Company.
TABLE OF CONTENTS
1. Exercise of Warrant . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . 1
1.2. When Exercise Deemed Effected. . . . . . . . . . . . . . . . . 2
1.3. Delivery of Stock Certificates, etc. . . . . . . . . . . . . . 2
1.4. Company to Reaffirm Obligations. . . . . . . . . . . . . . . . 3
1.5. Payment by Application of the Notes. . . . . . . . . . . . . . 3
2. Adjustments; Dividends. . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Number of Shares; Warrant Price. . . . . . . . . . . . . . . . 3
2.2. Adjustment of Warrant Price; Payment of Regular
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2.1. Issuance of Additional Shares of Common
Stock. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2.2. Dividends and Distributions. . . . . . . . . . . . . . 4
2.3. Treatment of Options and Convertible Securities. . . . . . . . 5
2.4. Treatment of Stock Dividends, Stock Splits, etc. . . . . . . . 7
2.5. Computation of Consideration . . . . . . . . . . . . . . . . . 7
2.6. Adjustments for Combinations, etc. . . . . . . . . . . . . . . 9
2.7. Dilution in Case of Other Securities . . . . . . . . . . . . . 9
2.8. Minimum Adjustment of Warrant Price. . . . . . . . . . . . . 10
3. Consolidation, Merger, Sale of Assets,
Reorganization, etc . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1. General Provisions . . . . . . . . . . . . . . . . . . . . . . 10
3.2. Assumption of Obligations. . . . . . . . . . . . . . . . . . . 12
4. Other Dilutive Events . . . . . . . . . . . . . . . . . . . . . . . 12
5. No Dilution or Impairment . . . . . . . . . . . . . . . . . . . . . 12
6. Accountants' Report as to Adjustments . . . . . . . . . . . . . . . 13
7. Notices of Corporate Action . . . . . . . . . . . . . . . . . . . . 14
8. Restrictions on Transfer. . . . . . . . . . . . . . . . . . . . . . 15
8.1. Restrictive Legends. . . . . . . . . . . . . . . . . . . . . . 15
8.2. Notice of Proposed Transfer; Opinions of Counsel . . . . . . . 15
8.3. Termination of Restrictions. . . . . . . . . . . . . . . . . . 16
9. Registration under Securities Act . . . . . . . . . . . . . . . . . 17
10. Financial Information . . . . . . . . . . . . . . . . . . . . . . . 17
10.1. Financial Statements . . . . . . . . . . . . . . . . . . . . 17
10.2. Availability of Information. . . . . . . . . . . . . . . . . 18
11. Reservation of Stock, etc . . . . . . . . . . . . . . . . . . . . . 18
12. Ownership, Transfer and Substitution of Warrants. . . . . . . . . . 19
12.1. Ownership of Warrants. . . . . . . . . . . . . . . . . . . . 19
12.2. Transfer and Exchange of Warrants. . . . . . . . . . . . . . 19
12.3. Replacement of Warrants. . . . . . . . . . . . . . . . . . . 19
13. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15. No Rights or Liabilities as Stockholder . . . . . . . . . . . . . . 26
16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
17. Expiration; Notice. . . . . . . . . . . . . . . . . . . . . . . . . 26
18. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Common Stock Purchase Warrant
Expiring December 21, 2002
New York, New York
__________, 19__
PPN# 36189# 11 1
No. W-1
GMH HOLDINGS, INC., a Delaware corporation (the "Company"), for value
received, hereby certifies that _________________________________________ or
registered assigns, is entitled to purchase from the Company _______ duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
par value $.001 per share, of the Company (the "Common Stock"), which may be
either Class B Common Stock or (at the election of the holder of this Warrant if
such holder is an Eligible Holder) Class A Common Stock or (in the case of an
Eligible Holder) any combination thereof, at the purchase price per share of
$.01, at any time or from time to time prior to 3:00 P.M., New York City time,
on December 21, 2002, all subject to the terms, conditions and adjustments set
forth below in this Warrant.
This Warrant is one of the Common Stock Purchase Warrants (the
"Warrants", such term to include all Warrants issued in substitution therefor)
originally issued in connection with the issue and sale by General Manufactured
Housing, Inc., a wholly-owned subsidiary of the Company, of $17,243,295
aggregate principal amount of its Senior Subordinated Notes due 2002 (together
with all notes issued in substitution therefor, the "Notes"), pursuant to the
Note and Warrant Purchase Agreement (the "Purchase Agreement"), dated as of
December 21, 1995, between the Company and the institutional investor named
therein (the "Purchaser"). The Warrants originally so issued evidence rights to
purchase an aggregate of 350,000 shares of Common Stock, subject to adjustment
as provided herein. Certain capitalized terms used in this Warrant are defined
in section 13.
1. Exercise of Warrant. 1.1. Manner of Exercise. This Warrant may be
exercised by the holder hereof, in whole or in part, during normal business
hours on any Business Day by surrender of this Warrant, with the form of
subscription at the end hereof (or a reasonable facsimile thereof), setting
forth such holder's election to receive Class A Common Stock or Class B Common
Stock or a combination thereof, duly executed by such holder, to the Company at
its principal office (or, if such exercise shall be in connection with an
underwritten Public Offering of shares of Common Stock (or Other Securities)
subject to this Warrant, at the location at which the Company shall have agreed
to deliver the shares of Common Stock (or Other Securities) subject to such
offering), accompanied by payment, in cash or by certified or official bank
check payable to the order of the Company or by application of Notes in the
manner provided in section 1.5 (or by a combination of such methods), in the
amount obtained by multiplying (a) the number of shares of Common Stock (without
giving effect to any adjustment therein) designated in such form of subscription
by (b) $.01, and such holder shall thereupon be entitled to receive the number
of duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) determined as provided in sections 2 through
4.
1.2. When Exercise Deemed Effected. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Warrant shall have been surrendered to the
Company as provided in section 1.1, and at such time the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in
section 1.3 shall be deemed to have become the holder or holders of record
thereof.
1.3. Delivery of Stock Certificates, etc. As soon as practicable after
the exercise of this Warrant, in whole or in part, and in any event within five
Business Days thereafter (unless such exercise shall be in connection with an
underwritten Public Offering of shares of Common Stock (or Other Securities)
subject to this Warrant, in which event concurrently with such exercise), the
Company at its expense (including the payment by it of any applicable taxes
other than transfer taxes) will cause to be issued in the name of and delivered
to the holder hereof or, subject to section 8, as such holder (upon payment by
such holder of any applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Class A Common Stock
or Class B Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to which
such holder would otherwise be entitled, cash in an amount equal to the
same fraction of the Market Price per share of such Common Stock (or Other
Securities) on the Business Day next preceding the date of such exercise,
and
(b) in case such exercise is in part only, a new Warrant or Warrants
of like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock equal (without giving effect to any
adjustment therein) to the number of such shares called for on the face of
this Warrant minus the number of such shares designated by the holder upon
such exercise as provided in section 1.1.
1.4. Company to Reaffirm Obligations. The Company will, at the time of
or at any time after each exercise of this Warrant, upon the request of the
holder hereof or of any shares of Common Stock (or Other Securities) issued upon
such exercise, acknowledge in writing its continuing obligation to afford to
such holder all rights (including, without limitation, any right of registration
of any shares of Common Stock (or Other Securities) issuable upon exercise of
this Warrant pursuant to section 9) to which such holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such holder shall fail to make any such request, the
failure shall not affect the continuing obligation
of the Company to afford such rights to such holder.
1.5. Payment by Application of the Notes. Upon any exercise of this
Warrant, the holder hereof may, at its option, instruct the Company, by so
specifying in the form of subscription submitted therewith as provided in
section 1.1, to apply to the payment required by section 1.1 all or any part of
the principal amount then unpaid and of the interest on such principal amount
then accrued on any one or more Notes at the time held by such holder, in which
case the Company will accept the aggregate amount of principal and accrued
interest on such principal specified in such form of subscription in
satisfaction of a like amount of such payment. In case less than the entire
unpaid principal amount of any Note shall be so specified, the principal amount
so specified shall be credited, as of the date of such exercise, against the
installments of principal then remaining unpaid on such Note pro rata to all
such remaining installments. Within ten days after receipt of any such notice,
the Company will pay to the holder of the Notes submitting such form of
subscription, in the manner provided in such Notes and the Purchase Agreement,
all unpaid interest accrued to the date of exercise of such Warrant on the
principal amount so specified in such form of subscription that is not applied
to the payment required by section 1.1 under this section 1.5. In the event that
the entire unpaid principal amount of any Note is applied to the payment
required by section 1.1 under this section 1.5, such Note shall be promptly
surrendered and cancelled in accordance with the Purchase Agreement.
2. Adjustments; Dividends. 2.1. Number of Shares; Warrant Price. The
number of shares of Common Stock which the holder of this Warrant shall be
entitled to receive upon each exercise hereof shall be determined by multiplying
the number of shares of Common Stock which would otherwise (but for the
provisions of this section 2) be issuable upon such exercise, as designated by
the holder hereof pursuant to section 1.1, by a fraction of which (a) the
numerator is $.01 and (b) the denominator is the Warrant Price in effect on the
date of such exercise. The "Warrant Price" shall initially be $.01 per share,
shall be adjusted and readjusted from time to time as provided in this section 2
and, as so adjusted or readjusted, shall remain in effect until a further
adjustment or readjustment thereof is required by this section 2.
2.2. Adjustment of Warrant Price; Payment of Regular Dividends. 2.2.1.
Issuance of Additional Shares of Common Stock. In case the Company, at any time
or from time to time after December 21, 1995 (the "Initial Date"), shall issue
or sell Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to section 2.3 or 2.4) without consideration
or for a consideration per share less than the Current Market Price in effect,
in each case, on the date of and immediately prior to such issue or sale, then,
and in each such case, subject to section 2.8, such Warrant Price shall be
reduced, concurrently with such issue or sale, to a price (calculated to the
nearest .0001 of a cent) determined by multiplying such Warrant Price by a
fraction,
(a) the numerator of which shall be (i) the number of shares of
Common Stock outstanding immediately prior to such issue or sale plus (ii)
the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such Additional Shares of
Common Stock so issued or sold would purchase at the Current Market Price,
and
(b) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale,
provided that, for the purposes of this section 2.2.1 (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
section 2.3 or 2.4, such Additional Shares shall be deemed to be outstanding,
and (y) treasury shares shall not be deemed to be outstanding.
2.2.2. Dividends and Distributions. In case the Company at any time
or from time to time after the Initial Date
shall declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of other or additional stock or other
securities or property or Options by way of dividend or spin-off,
reclassification, recapitalization or similar corporate rearrangement) on any
Common Stock, other than a dividend payable in Additional Shares of Common Stock
or in Options for Common Stock, then, and in each such case, the holder of this
Warrant shall be entitled to receive the amount in cash or other property to
which such holder would actually have been entitled as a shareholder upon the
payment thereof by the Company if such holder had exercised this Warrant
immediately prior to the close of business on the record date fixed for the
determination of holders of Common Stock entitled to receive such dividend.
2.3. Treatment of Options and Convertible Securities. In case the
Company at any time or from time to time after the Initial Date shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be issued for purposes of
section 2.1 as of the time of such issue, sale, grant or assumption or, in case
such a record date shall have been fixed, as of the close of business on such
record date (or, if the Common Stock trades on an ex-dividend basis, on the date
prior to the commencement of ex-dividend trading), provided that such Additional
Shares of Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to section 2.5) of such shares
would be less than the Current Market Price in effect, in each case, on the date
of and immediately prior to such issue, sale, grant or assumption or immediately
prior to the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of ex-
dividend trading), as the case may be, and provided, further, that in any such
case in which Additional Shares of Common Stock are deemed to be issued,
(a) no further adjustment of the Warrant Price shall be made upon the
subsequent issue or sale of Additional Shares of Common Stock or
Convertible Securities upon the exercise of such Options or the conversion
or exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise, conversion
or exchange thereof (by change of rate or otherwise), the Warrant Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement
of ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options, or the rights of conversion or
exchange under such Convertible Securities, which are outstanding at such
time;
(c) upon the expiration of any such Options or of the rights of
conversion or exchange under any such Convertible Securities which shall
not have been exercised (or upon purchase by the Company and cancellation
or retirement of any such Options which shall not have been exercised or of
any such Convertible Securities the rights of conversion or exchange under
which shall not have been exercised), the Warrant Price computed upon the
original issue, sale, grant or assumption thereof (or upon the occurrence
of the record date, or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case
may be), be recomputed as if:
(x) in the case of options for Common Stock or of Convertible
Securities, the only Additional Shares of Common Stock issued or sold
were the Additional Shares of Common Stock, if any, actually issued or
sold upon the exercise of such Options or the conversion or exchange
of such Convertible Securities and the consideration received therefor
was (i) an amount equal to (A) the consideration actually received by
the Company for the issue, sale, grant or assumption of all such
Options, whether or not exercised, plus (B) the consideration actually
received by the Company upon such exercise, minus (C) the
consideration paid by the Company for any purchase of such Options
which were not exercised, or (ii) an amount equal to (A) the
consideration actually received by the Company for the issue, sale,
grant or assumption of all such Convertible Securities which were
actually converted or exchanged, plus (B) the additional
consideration, if any, actually received by the Company upon such
conversion or exchange, minus (C) the consideration paid by the
Company for any purchase of such Convertible Securities the rights of
conversion or exchange under which were not exercised, and
(y) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued or sold upon the
exercise of such Options were issued at the time of the issue, sale,
grant or assumption of such options, and the consideration received by
the Company for the Additional Shares of Common Stock deemed to have
then been issued was an amount equal to (i) the consideration actually
received by the Company for the issue, sale, grant or assumption of
all such Options, whether or not exercised, plus (ii) the
consideration deemed to have been received by the Company (pursuant to
section 2.5) upon the issue or sale of the Convertible Securities with
respect to which such Options were actually exercised, minus (iii) the
consideration paid by the Company for any purchase of such Options
which were not exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above shall
have the effect of increasing the Warrant Price by an amount in excess of
the amount of the adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such options or Convertible Securities;
and
(e) in the case of any such Options which expire by their terms not
more than 30 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment shall
be made in the manner provided in subdivision (c) above.
In case at any time after the Initial Date the Company shall be
required to increase the number of Additional Shares of Common Stock subject to
any Option or into which any Convertible Securities (other than the Warrants)
are convertible or exchangeable pursuant to the operation of anti-dilution
provisions applicable thereto, such Additional Shares shall be deemed to be
issued for purposes of section 2.1 as of the time of such increase.
2.4. Treatment of Stock Dividends, Stock Splits, etc. In case the
Company at any time or from time to time after the Initial Date shall declare or
pay any dividend or other distribution on any class of stock of the Company
payable in Common Stock, or shall effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock),
then, and in each such case, Additional Shares of Common Stock shall be deemed
to have been issued (a) in the case of any such dividend, immediately after the
close of business on the record date for the determination of holders of any
class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.
2.5. Computation of Consideration. For the purposes of this section
2:
(a) The consideration for the issue or sale of any Additional Shares
of Common Stock or for the issue, sale, grant or assumption of any Options
or Convertible Securities, irrespective of the accounting treatment of such
consideration, shall
(x) insofar as it consists of cash, be an amount equal to the
amount of cash received by the Company, without deducting any expenses
paid or incurred by the Company or any commissions or compensation
paid or concessions or discounts allowed to underwriters, dealers or
others performing similar services and any accrued interest or
dividends in connection with such issue or sale,
(y) insofar as it consists of consideration (including
securities) other than cash, be computed at the fair value thereof at
the time of such issue or sale, as determined in good faith by the
Board of Directors of the Company, without deducting any expenses paid
or incurred by the Company for any commissions or compensation paid or
concessions or discounts allowed to underwriters, dealers or others
performing similar services and any accrued interest or dividends in
connection with such issue or sale, and
(z) in case Additional Shares of Common Stock are issued or sold
or Convertible Securities are issued, sold, granted or assumed
together with other stock or securities or other assets of the Company
for a consideration which covers both, be the proportion of such
consideration so received, computed as provided in subdivisions (x)
and (y) above, allocable to such Additional Shares of Common Stock or
Convertible Securities, as the case may be, all as determined in good
faith by the Board of Directors of the Company.
(b) All Options issued, sold, granted or assumed together with other
stock or securities or other assets of the Company for a consideration
which covers both, all Additional Shares of Common Stock, Options or
Convertible Securities issued in payment of any dividend or other
distribution on any class of stock of the Company and all Additional Shares
of Common Stock issued to effect a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by reclassi-
fication or otherwise than by payment of a dividend in Common Stock) shall
be deemed to have been issued without consideration (unless, in the case of
Options issued, sold, granted or assumed together with other stock or
securities or other assets of the Company for a consideration which covers
both, the portion of the consideration allocated to the Options is
specifically stated under the terms of such transaction).
(c) Additional Shares of Common Stock deemed to have been issued for
consideration pursuant to section 2.3, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration per
share determined by dividing
(x) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption of
the Options or Convertible Securities in question, plus the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration)
payable to the Company upon the exercise in full of such Options or
the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, in each case computing
such consideration as provided in the foregoing sub-division (a), by
(y) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of
such Convertible Securities.
(d) Additional Shares of Common Stock issued or deemed to have been
issued pursuant to the operation of anti-dilution provisions applicable to
Convertible Securities (other than the Warrants), Options or other
securities of the Company (either as a result of the adjustments provided
for by the Warrants or otherwise) shall be deemed to have been issued
without consideration.
2.6. Adjustments for Combinations, etc. In case the outstanding shares
of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.7. Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in section 3) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this section 2, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this section 2 with respect to the Warrant Price shall be made
as nearly as possible in the manner so provided and applied to determine the
amount of Other Securities from time to time receivable upon the exercise of the
Warrants, so as to protect the holders of the Warrants against the effect of
such dilution.
2.8. Minimum Adjustment of Warrant Price. If the amount of any
adjustment of the Warrant Price required pursuant to this section 2 would be
less than one percent of the Warrant Price in effect at the time such adjustment
is otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one percent of such Warrant
Price; provided that, upon the exercise of this Warrant, all adjustments carried
forward and not theretofore made up to and including the date of such exercise
shall be made to the nearest one one-hundredth of a cent.
3. Consolidation, Merger, Sale of Assets, Reorganization, etc. 3.1.
General Provisions. In case the Company, after the Initial Date, (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall permit
any other Person to consolidate with or merge into the Company and the Company
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, Common Stock or Other Securities shall be changed into
or exchanged for cash, stock or other securities of any other Person or any
other property, or (c) shall transfer all or substantially all of its properties
and assets to any other Person, or (d) shall effect a capital reorganization or
reclassification of Common Stock or Other Securities (other than a capital
reorganization or reclassification resulting in the issue of Additional Shares
of Common Stock for which adjustment in the
Warrant Price is provided in section 2.2.1 or 2.2.2), then, and in the case of
each such transaction, the Company shall give written notice thereof to each
holder of any Warrant not less than 30 days prior to the consummation thereof
and proper provision shall be made so that, upon the basis and the terms and in
the manner provided in this section 3, the holder of this Warrant, upon the
exercise hereof at any time after the consummation of such transaction, shall be
entitled to receive, at the aggregate Warrant Price in effect at the time of
such consummation for all Common Stock (or other Securities) issuable upon such
exercise immediately prior to such consummation, in lieu of the Common Stock (or
Other Securities) issuable upon such exercise prior to such consummation, either
of the following, as such holder shall elect by written notice to the Company on
or before the date immediately preceding the date of the consumma-tion of such
transaction (and, in the absence of such notice, the provisions of subdivision
(y) below shall be deemed to have been elected by such holder):
(x) the highest amount of cash, securities or other property to which
such holder would actually have been entitled as a shareholder upon such
consummation if such holder had exercised this Warrant immediately prior
thereto, subject to adjustments (subsequent to such consummation) as nearly
equivalent as possible to the adjustments provided for in section 2 and
this section 3, provided that if a purchase, tender or exchange offer shall
have been made to and accepted by the holders of Common Stock under
circumstances in which, upon completion of such purchase, tender or
exchange offer, the maker thereof, together with members of any group
(within the meaning of Section 13(d)(3) of the Exchange Act) of which such
maker is a part, and together with any affiliate or associate of such maker
(within the meaning of Rule 12b-2 under the Exchange Act) and any members
of any such group of which any such affiliate or associate is a part, own
beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more
than 50% of the outstanding shares of Common Stock, and if the holder of
this Warrant so designates in such notice given to the Company, the holder
of this Warrant shall be entitled to receive the highest amount of cash,
securities or other property to which such holder would actually have been
entitled as a shareholder if the holder of this Warrant had exercised this
Warrant prior to the expiration of such purchase, tender or exchange offer,
accepted such offer and all of the Common Stock held by such holder had
been purchased pursuant to such purchase, tender or exchange offer, subject
to adjustments (from and after the consummation of such purchase, tender or
exchange offer) as nearly equivalent as possible to the adjustments
provided for in section 2 and this section 3; or
(y) the number of shares of Voting Common Stock (or equivalent equity
interests) of the Acquiring Person or, if the Acquiring Person fails to
meet, but its Parent meets, the requirements set forth in the proviso
below, of its Parent, subject to adjustments (subsequent to such corporate
action) as nearly equivalent as possible to the adjustments provided for in
section 2 and this section 3, determined by dividing (x) the product
obtained by multiplying (A) the number of shares of Common Stock (or Other
Securities) to which the holder of this Warrant would have been entitled
had such holder exercised this Warrant immediately prior to the
consummation of such transaction, times (B) the greater of the Acquisition
Price and the Warrant Price in effect on the date immediately preceding the
date of such consummation, by (y) the Current Market Price per share of the
Voting Common Stock (or equivalent equity interests) of the Acquiring
Person or its Parent, as the case may be, on the date immediately preceding
the date of such consummation.
3.2. Assumption of Obligations. Notwithstanding anything contained in
this Warrant or the Purchase Agreement to the contrary, the Company will not
effect any of the transactions described in subdivisions (a) through (d) of
section 3.1 unless, prior to the consummation thereof, each Person (other than
the Company) which may be required to deliver any cash, stock or
other securities or other property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the holder of this Warrant, (a) the obligations of the Company
under this Warrant (and if the Company shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release the
Company from, any continuing obligations of the Company under this Warrant) and
(b) the obligation to deliver to such holder such cash, stock or other
securities or other property as, in accordance with the foregoing provisions of
this section 3, such holder may be entitled to receive, and such Person shall
have similarly delivered to such holder an opinion of counsel for such Person,
which counsel shall be reasonably satisfactory to such holder, stating that this
Warrant shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of section 2 and this
section 3) shall be applicable to the cash, stock or other securities or other
property which such Person may be required to deliver upon any exercise of this
Warrant or the exercise of any rights pursuant hereto. Nothing in this section 3
or in section 7 shall be deemed to authorize the Company to enter into any
transaction not otherwise permitted by the Purchase Agreement.
4. Other Dilutive Events. In case any event shall occur as to which
the provisions of section 2 or section 3 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such sections, then, in each such case, the Company shall appoint
a firm of independent public accountants of recognized national standing (which
may be the regular auditors of the Company), which shall give their opinion upon
the adjustment, if any, on a basis consistent with the essential intent and
principles established in sections 2 and 3, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon receipt of such
opinion the Company will promptly mail a copy thereof to the holder of this
Warrant and shall make the adjustments described therein.
5. No Dilution or Impairment. The Company will not, by amendment of
its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities
(other than the shares of Common Stock and Preferred Stock issued on the date of
the Closing under the Purchase Agreement and any securities issued upon
conversion or exchange thereof) or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a)
will not permit the par value of any shares of stock receivable upon the
exercise of this Warrant to exceed the amount payable therefor upon such
exercise, (b) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock upon the exercise of all of the Warrants from time
to time outstanding, (c) will not take any action which results in any
adjustment of the Warrant Price if the total number of shares of Common Stock
(or Other Securities) issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock (or other
Securities) then authorized by the Company's certificate of incorporation and
available for the purpose of issue upon such exercise and, (d) will not issue
any capital stock of any class which has the right to more than one vote per
share or which is preferred as to dividends or as to the dis-tribution of assets
upon voluntary or involuntary dissolution, liquidation or winding-up, unless
such stock is sold for a cash consideration at least equal to the amount of its
preference upon voluntary or involuntary dissolution, liquidation or winding-up
and the rights of the holders thereof shall be limited to a fixed percentage
(not exceeding 15%) of such cash consideration in respect of participation in
dividends.
6. Accountants' Report as to Adjustments. In each
case of any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable upon the exercise of the Warrants, the Company at its
expense will promptly compute such adjustment or readjustment in accordance with
the terms of the Warrants and cause independent public accountants of recognized
national standing selected by the Company (which may be the regular auditors of
the Company) to verify such computation and prepare a report setting forth such
adjustment or readjustment and showing in reasonable detail the method of
calculation thereof and the facts upon which such adjustment or readjustment is
based, including without limitation a statement of (a) the consideration
received or to be received by the Company for any Additional Shares of Common
Stock issued or sold or deemed to have been issued, (b) the number of shares of
Common Stock outstanding or deemed to be outstanding, and (c) the Warrant Price
in effect immediately prior to such issue or sale and as adjusted and readjusted
(if required by section 2) on account thereof. The Company will forthwith mail a
copy of each such report to each holder of a Warrant and will, upon the written
request at any time of any holder of a Warrant, furnish to such holder a like
report setting forth the Warrant Price at the time in effect and showing in
reasonable detail how it was calculated. The Company will also keep copies of
all such reports at its principal office and will cause the same to be available
for inspection at such office during normal business hours by any holder of a
Warrant or any prospective purchaser of a Warrant designated by the holder
thereof.
7. Notices of Corporate Action. In the event of
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer of all or substantially all the assets of the Company to any other
Person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (x) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (y) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall be
mailed at least 20 days prior to the date therein specified, in the case of any
date referred to in the foregoing subdivision (x), and at least 90 days prior to
the date therein specified, in the case of the date referred to in the foregoing
subdivision (y).
8. Restrictions on Transfer. 8.1. Restrictive Legends. Except as
otherwise permitted by this section 8, each Warrant originally issued pursuant
to the Purchase Agreement and each Warrant issued upon direct or indirect
transfer or in substitution for any Warrant pursuant to section 12 shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"This Warrant and any shares acquired upon the exercise of this Warrant
have not been registered under the Securities Act of 1933 and may not be
transferred in the absence of
such registration or an exemption therefrom under such Act. This Warrant
and such shares are also subject to certain restrictions on transferability
imposed by a certain Stockholders' Agreement, a copy of which is on file at
the offices of the Company."
Except as otherwise permitted by this section 8, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant and each
certificate issued upon the direct or indirect transfer of any such Common Stock
(or Other Securities) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 and may not be transferred in the absence of
such registration or an exemption therefrom under such Act. Such shares are
also subject to certain restrictions on transferability imposed by Common
Stock Purchase Warrants expiring December 21, 2002 and by a certain
Stockholders' Agreement, copies of which are on file at the offices of the
Company."
8.2. Notice of Proposed Transfer; Opinions of Counsel. Prior to any
transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act (other than a transfer
pursuant to Rule 144 or any comparable rule under such Act), the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this section 8.2. Each
such notice (a) shall describe the manner and circumstances of the proposed
transfer in sufficient detail to enable counsel to render the opinions referred
to below, and (b) shall designate counsel for the holder giving such notice (who
may be internal counsel for such holder). The holder giving such notice will
submit a copy thereof to the counsel designated in such notice and the Company
will promptly submit a copy thereof to its counsel. The following provisions
shall then apply:
(x) If in the opinion of each such counsel the proposed transfer may
be effected without registration, such holder shall thereupon be entitled
to transfer such Restricted Securities in accordance with the terms of the
notice delivered by such holder to the Company. Each Warrant or
certificate, if any, issued upon or in connection with such transfer shall
bear the appropriate restrictive legend set forth in section 8.1 unless, in
the opinion of each such counsel, such legend is no longer required to
insure compliance with the Securities Act. If for any reason counsel for
the Company shall fail to deliver to the Company an opinion upon such
matters, or the Company shall fail to notify such holder thereof, within 15
days after counsel for such holder shall have delivered its opinion upon
such matters to such holder (with a copy to the Company), then for all
purposes of such Restricted Securities the opinion for the Company shall be
deemed to be the same as the opinion of counsel for such holder.
(y) If the opinion of either or both such counsel is not to the
effect that the proposed transfer may legally be effected without
registration of such Restricted Securities under the Securities Act (such
opinion or opinions to state the basis of the legal conclusions reached
therein), the Company will promptly so notify the holder thereof and
thereafter such holder shall not be entitled to transfer such Restricted
Securities (other than in a transfer pursuant to Rule 144 or any comparable
rule under the Securities Act) until the conditions specified in
subdivision (x) above shall be satisfied or until registration of such
Restricted Securities under the Securities Act has become effective.
Notwithstanding the foregoing provisions of this section 8.2, the holder of any
Restricted Securities shall be permitted to transfer any such Restricted
Securities pursuant to Rule 144A under the Securities Act, provided that each
transferee agrees in writing to be bound by all the restrictions on transfer of
such Restricted Securities contained in this section 8.2. The Company
and the holder of Restricted Securities will pay the fees and disbursements of
their respective counsel in connection with all opinions rendered by them
pursuant to this section 8.2 and pursuant to section 8.3.
8.3. Termination of Restrictions. The restrictions imposed by this
section 8 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when such securities
shall have been effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering such Restricted
Securities, (b) when, in the opinions of both counsel for the holder thereof and
counsel for the Company, such restric-tions are no longer required in order to
insure compliance with the Securities Act, or (c) when such securities have been
beneficially owned, by a person who has not been an affiliate of the Company for
at least three months, for a period of at least three years, all as determined
under Rule 144 under the Securities Act. Whenever such restrictions shall
terminate as to any Restricted Securities, as soon as practicable thereafter and
in any event within five days, the holder thereof shall be entitled to receive
from the Company, without expense (other than transfer taxes, if any), new
securities of like tenor not bearing the applicable legend set forth in section
8.1 hereof.
9. Registration under Securities Act. The holders of Registrable
Securities shall have the rights with respect to the registration of Registrable
Securities set forth in Exhibit B (Registration Rights) of the Stockholders'
Agreement.
10. Financial Information. 10.1. Financial Statements. Until the
occurrence of an IPO, the Company will deliver to each holder of Registrable
Securities:
(a) within 45 days after the end of each of the first three quarterly
fiscal periods in each fiscal year of the Company, consolidated balance
sheets of the Company and its Subsidiaries as at the end of such period and
the related consolidated statements of income, stockholders' equity and
cash flows of the Company and its Subsidiaries for such period and (in the
case of the second and third quarterly periods) for the period from the
beginning of the current fiscal year to the end of such quarterly period,
setting forth in each case in comparative form the consolidated figures for
the corresponding periods of the previous fiscal year, all in reasonable
detail and certified by a principal financial officer of the Company as
presenting fairly, in accordance with generally accepted accounting
principles (except for the absence of notes thereto) applied (except as
specifically set forth therein) on a basis consistent with such prior
fiscal periods, the information contained therein, subject to changes
resulting from normal year-end audit adjustments;
(b) within 90 days after the end of each fiscal year of the Company,
consolidated balance sheets of the Company and its Subsidiaries as at the
end of such year and the related consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries for
such fiscal year, setting forth in each case in compara-tive form the
consolidated figures for the previous fiscal year, all in reasonable detail
and accompanied by a report thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other
independent public accountants of recognized national standing selected by
the Company and reasonably satisfactory to the Requisite Holders, which
report shall state that such consolidated financial statements present
fairly the financial position of the Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with generally accepted accounting
principles applied on a basis consistent with prior years (except as
otherwise specified in such report) and that the audit by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(c) in addition to the financial statements required by subdivisions
(a) and (b) of this section 10.1, within 30
days after the end of each month, consolidated balance sheets of the
Company and its Subsidiaries as at the end of such month and the related
consolidated statements of income, stockholders' equity and cash flows of
the Company and its Subsidiaries for such month and (in the case of the
second through twelfth month of the fiscal year) for the period from the
beginning of the current fiscal year to the end of such month, setting
forth in each case in comparative form the consolidated figures for the
corresponding periods of the previous fiscal year, all in reasonable detail
and certified by a principal financial officer of the Company as presenting
fairly, in accordance with generally accepted accounting principles (except
for the absence of notes thereto) applied (except as specifically set forth
therein) on a basis consistent with such prior fiscal periods, the
information contained therein, subject to changes resulting from normal
year-end audit adjustments; and
(d) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its security holders, of all regular and
periodic reports and all registration statements and prospectuses filed by
the Company or any Subsidiary with any securities exchange or with the
Commission, and of all press releases and other statements made available
generally by the Company or any Subsidiary to the public concerning
material developments in the business of the Company or its Subsidiaries.
10.2. Availability of Information. The Company will cooperate with
each holder of any Restricted Securities in supplying such information as may be
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities.
11. Reservation of Stock, etc. The Company will at all times reserve
and keep available, solely for issuance and delivery upon exercise of the
Warrants, the number of shares of Common Stock (or Other Securities) from time
to time issuable upon exercise of all Warrants at the time outstanding. All
shares of Common Stock (or Other Securities) shall be duly authorized and, when
issued upon such exercise, shall be validly issued and, in the case of shares,
fully paid and nonassessable, with no liability on the part of the holders
thereof.
12. Ownership, Transfer and Substitution of Warrants. 12.1. Ownership
of Warrants. The Company may treat the person in whose name any Warrant is
registered on the register kept at the principal office of the Company as the
owner and holder thereof for all purposes, notwithstanding any notice to the
contrary, except that, if and when any Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the bearer thereof as the
owner of such Warrant for all purposes, notwithstanding any notice to the
contrary. Subject to section 8 a Warrant, if properly assigned, may be exercised
by a new holder without first having a new Warrant issued.
12.2. Transfer and Exchange of Warrants. Upon the surrender of any
Warrant, properly endorsed, for registration of transfer or for exchange at the
principal office of the Company, the Company at its expense will (subject to
compliance with section 8, if applicable) execute and deliver to or upon the
order of the holder thereof a new Warrant or Warrants of like tenor, in the name
of such holder or as such holder (upon payment by such holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant or Warrants so surrendered.
12.3. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant
held by a Person other than the Purchaser or any institutional investor, upon
delivery of indemnity reasonably satisfactory to the Company in form and amount
or, in the case of any such mutilation, upon
surrender of such Warrant for cancellation at the principal office of the
Company, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
13. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Acquiring Person: the continuing or surviving corporation of a
consolidation or merger with the Company (if other than the Company), the
transferee of substantially all of the properties and assets of the Company, the
corporation consolidating with or merging into the Company in a consolidation or
merger in connection with which the Common Stock is changed into or exchanged
for stock or other securities of any other Person or cash or any other property,
or, in the case of a capital reorganization or reclassification, the Company.
Acquisition Price: as applied to the Common Stock, with respect to any
transaction to which section 3 applies, (a) the price per share equal to the
greater of the following, determined in each case as of the date immediately
preceding the date of consummation of such transaction: (x) the Market Price of
the Common Stock and (y) the highest amount of cash plus the Fair Value of the
highest amount of securities or other property which the holder of this Warrant
would have been entitled as a shareholder to receive upon such consummation if
such holder had exercised this Warrant immediately prior thereto, or (b) if a
purchase, tender or exchange offer is made by the Acquiring Person (or by any of
its affiliates) to the holders of the Common Stock and such offer is accepted by
the holders of more than 50% of the outstanding shares of Common Stock, the
greater of (i) the price determined in accordance with the foregoing subdivision
(a) and (ii) the price per share equal to the greater of the following,
determined in each case as of the date immediately preceding the acceptance of
such offer by the holders of more than 50% of the outstanding shares of Common
Stock: (A) the Market Price of the Common Stock and (B) the highest amount of
cash plus the Fair Value of the highest amount of securities or other property
which the holder of this Warrant would be entitled as a shareholder to receive
pursuant to such offer if such holder had exercised this Warrant immediately
prior to the expiration of such offer and accepted the same.
Additional Shares of Common Stock: all shares (including treasury
shares) of Common Stock issued or sold (or, pursuant to section 2.3 or 2.4,
deemed to be issued) by the Company after the Initial Date hereof, whether or
not subsequently reacquired or retired by the Company, other than (a) shares of
Common Stock issued upon the exercise of Warrants, (b) shares of Common Stock
issued upon the exercise of shares of the Series B Preferred Stock issued on the
Initial Date, (c) the shares of Common Stock issued upon the conversion of the
Series B Convertible Preferred Stock, par value $.001 per share, of the Company
and (d) the shares of Common Stock and Preferred Stock issued on the date of the
Closing under the Purchase Agreement and any securities issued upon conversion
or exchange thereof.
Business Day: any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in the City of New York are authorized by
law to be closed, provided that, in determining the period within which
certificates or Warrants are to be issued and delivered pursuant to section 1.3
at a time when shares of Common Stock (or Other Securities) are listed or
admitted to trading on any national securities exchange or in the over-the-
counter market and in determining the Market Price of any securities listed or
admitted to trading on any national securities exchange or in the over-the-
counter market, "Business Day" shall mean any day when the principal exchange in
which securities are then listed or admitted to trading is open for trading or,
if such securities are traded in the over-the-counter market in the United
States, such system is open for trading, and provided, further, that any
reference to "days" (unless Business Days are specified) shall mean calendar
days.
Class A Common Stock: the Company's Class A Common Stock, par value
$.001 per share, as constituted on the date hereof and any stock into which such
Class A Common Stock shall
have been changed or any stock resulting from any reclassi-fication of such
Class A Common Stock.
Class B Common Stock: the Company's Class B Common Stock, par value
$.001 per share, as constituted on the date hereof and any stock into which such
Class B Common Stock shall have been changed or any stock resulting from any
reclassi-fication of such Class B Common Stock.
Class C Common Stock: the Company's Class C Common Stock, par value
$.001 per share, as constituted on the date hereof and any stock into which such
Class C Common Stock shall have been changed or any stock resulting from any
reclassi-fication of such Class C Common Stock.
Commission: the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act or the Exchange Act,
whichever is the relevant statute for the particular purpose.
Common Stock: the Class A Common Stock, the Class B Common Stock, the
Class C Common Stock and all other stock of any class or classes (however
designated) of the Company (other than the Warrants) the holders of which have
the right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
Company: GMH Holdings, Inc., a Delaware corporation.
Convertible Securities: any evidences of indebtedness, shares of stock
(other than Common Stock) or other securities directly or indirectly convertible
into or exchangeable for Additional Shares of Common Stock.
Current Market Price: on any date specified herein, (a) with respect
to Common Stock or to Voting Common Stock (or equivalent equity interests) of an
Acquiring Person or its Parent, (x) the average daily Market Price during the
period of the most recent 20 consecutive Business Days ending on such date, or
(y) if shares of Common Stock or such Voting Common Stock (or equivalent equity
interests), as the case may be, are not then listed or admitted to trading on
any national securities exchange and if the closing bid and asked prices thereof
are not then quoted or published in the over-the-counter market, the Market
Price on such date; and (b) with respect to any other securities, the Market
Price on such date.
Eligible Holder: a holder of this Warrant that is not The Equitable
Life Assurance Society of the United States or an insurance company affiliate
thereof.
Exchange Act: the Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the commission thereunder, all
as the same shall be in effect at the time of determination.
Fair Value: with respect to any securities or other property, the fair
value thereof as of a date which is within 15 days after the date as of which
the determination is to be made (a) determined by an agreement between the
Company and the Requisite Holders or (b) if the Company and the Requisite
Holders fail to agree, determined jointly by a nationally recognized independent
investment banking or a nationally recognized securities valuation firm retained
by the Company and by a nationally recognized independent investment banking or
a nationally recognized securities valuation firm retained by the Requisite
Holders, either of which firms may be an independent investment banking or
securities valuation firm regularly retained by the Company or any such holder
or (c) if the Company or such holders shall fail so to retain an independent
investment banking or securities valuation firm within ten Business Days after
the retention of such firm by such holders or the Company, as the case may be,
determined solely by the firm so retained or (d) if the firms so retained by the
Company and by such holders shall be unable to reach a joint determination
within 15 Business Days after the retention of the last firm so retained,
determined
by another nationally recognized independent investment banking or nationally
recognized securities valuation firm which is not a regular investment banking
or securities valuation firm of the Company or any such holder chosen by the
first two such firms.
Initial Date: the meaning specified in section 2.2.
Market Price: on any date specified herein, (a) with respect to Common
Stock, or with respect to Voting Common Stock (or equivalent equity interests)
of an Acquiring Person or its Parent, the amount per share equal to (x) the last
sale price of shares of such security, regular way, on such date or, if no such
sale takes place on such date, the average of the closing bid and asked prices
thereof on such date, in each case as officially reported on the principal
national securities exchange on which the same are then listed or admitted to
trading, or (y) if no shares of such security are then listed or admitted to
trading on any national securities exchange but such security is designated as a
national market system security by the NASD, the last trading price of such
security on such date, or if such security is not so designated, the average of
the reported closing bid and asked prices thereof on such date as shown by the
NASDAQ system or, if no shares thereof are then quoted in such system, as
published by the National Quotation Bureau, Incorporated or any successor
organization, and in either case as reported by any member firm of the New York
Stock Exchange selected by the Company, or (z) if no shares of such security are
then listed or admitted to trading on any national exchange or designated as a
national market system security and if no closing bid and asked prices thereof
are then so quoted or published in the over-the-counter market, the higher of
(x) the book value thereof as determined by agreement between the Company and
the Requisite Holders, or if the Company and the Requisite Holders fail to
agree, by any firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company, as of the last day of any
month ending within 60 days preceding the date as of which the determination is
to be made and (y) the Fair Value thereof; and (b) with respect to any other
securities, the Fair Value thereof.
NASD: the National Association of Securities Dealers.
NASDAQ: the Automated Quotation System of the NASD.
Notes: the meaning specified in the opening paragraphs of this
Warrant.
Options: rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
Other Securities: any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
section 3 or otherwise.
Parent: as to any Acquiring Person, any corporation which (a) controls
the Acquiring Person directly or indirectly through one or more intermediaries,
(b) is required to include the Acquiring Person in its consolidated financial
statements under generally accepted accounting principles and (c) is not itself
included in the consolidated financial statements of any other Person (other
than its consolidated subsidiaries).
Person: an individual, a partnership, an association, a joint venture,
a corporation, a limited liability company, a business, a trust, an
unincorporated organization or a government or any department, agency or
subdivision thereof.
Public Offering: any offering of Common Stock or Other Securities, or
any securities issued or issuable with respect to any Common Stock or Other
Securities by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization
or otherwise, in each case to the public pursuant to an effective
registration statement under the Securities Act.
Purchase Agreement: the meaning specified in the opening
paragraphs of this Warrant.
Purchaser: the meaning specified in the opening paragraphs
of this Warrant.
Registrable Securities: (a) the Warrants, (b) any shares of
Common Stock or Other Securities issued or issuable upon exercise
of the Warrants and (c) any securities issued or issuable with
respect to any Common Stock or Other Securities referred to in
subdivision (b) by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to
any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (x) a
registration statement with respect to the sale of such
securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance
with such registration statement, (y) they shall have been sold
as permitted under Rule 144 (or any successor provision) under
the Securities Act, or (z) they shall have ceased to be
outstanding.
Requisite Holders: the holders of more than 50% of (a) the
Warrants at the time outstanding determined on the basis of the
number of shares of Common Stock or Other Securities deliverable
upon exercise thereof and (b) as to any Warrants that shall have
been exercised, the number of shares of Common Stock or Other
Securities outstanding after giving effect to such exercise;
voting as a single class.
Restricted Securities: (a) any Warrants bearing the
applicable legend set forth in section 8.1, (b) any shares of
Common Stock (or Other Securities) which have been issued upon
the exercise of Warrants and which are required to be evidenced
by a certificate or certificates bearing the applicable legend
set forth in such section, and (c) unless the context otherwise
requires, any shares of Common Stock (or Other Securities) which
are at the time issuable upon the exercise of Warrants and which,
when so issued, will be required to be evidenced by a certificate
or certificates bearing the applicable legend set forth in such
section.
Securities Act: the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time of
determination.
Series B Preferred Stock: the Series B Convertible Preferred
Stock, par value $.001 per share, of the Company.
Stockholders' Agreement: the Stockholders' Agreement, dated
as of December 21, 1995, among the Company and the Stockholders
signatory thereof.
Subsidiary: any corporation, association or other business
entity a majority (by number of votes) of the Voting Common Stock
of which is at the time owned by the Company or by one or more
Subsidiaries or by the Company and one or more Subsidiaries.
Transfer: unless the context otherwise requires, any sale,
assignment, transfer, pledge, hypothecation, mortgage, charge,
lien, encumbrance gift, bequest, transmission or other
disposition of any security, provided that the encumbrances
contemplated by, and transfers of securities pursuant to the
terms and provisions of, the Stockholders' Agreement shall not be
deemed to be "transfers".
Voting Common Stock: with respect to any corporation,
association or other business entity, stock of any class or
classes (or equivalent interest), if the holders of the stock of
such class or classes (or equivalent interests) are ordinarily,
in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or persons performing
similar functions) of such corporation, association or business
entity, even if the right so to vote has been suspended by the
happening of such a contingency.
Warrant Price: the meaning specified in section 2.1.
Warrants: the meaning specified in the opening paragraphs of
this Warrant.
14. Remedies. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will
not be adequate and that, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or
otherwise.
15. No Rights or Liabilities as Stockholder. Nothing
contained in this Warrant shall be construed as conferring upon
the holder hereof any rights as a stockholder of the Company or
as imposing any liabilities on such holder to purchase any
securities or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors or
stockholders of the Company or otherwise.
16. Notices. All notices and other communications under
this Warrant shall be in writing and shall be mailed by
registered or certified mail, return receipt requested, addressed
(a) if to any holder of any Warrant or any holder of any Common
Stock (or Other Securities), at the registered address of such
holder as set forth in the register kept at the principal office
of the Company, or (b) if to the Company, to the attention of its
Chief Financial Officer at its principal office, provided that
the exercise of any Warrant shall be effected in the manner
provided in section 1.
17. Expiration; Notice. The right to exercise this Warrant
shall expire at 3:00 P.M., New York City time, December 21, 2002.
18. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. The
agreements of the Company contained in this Warrant other than
those applicable solely to the Warrants and the holders thereof
shall inure to the benefit of and be enforceable by any holder or
holders at the time of any Common Stock (or Other Securities)
issued upon the exercise of Warrants, whether so expressed or
not. This Warrant shall be construed and enforced in accordance
with and governed by the laws of the State of New York. The
section headings in this Warrant are for purposes of convenience
only and shall not constitute a part hereof.
GMH HOLDINGS, INC.
By:___________________________
Title:
FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To _________________
The undersigned registered holder of the within Warrant
hereby irrevocably exercises such Warrant for, and purchases
thereunder, __________ shares of Class A Common Stock and
__________ shares of Class B Common Stock of GMH HOLDINGS, INC.,
a Delaware corporation, and herewith makes payment of $_________
therefor [by application pursuant to section 1.5 of such Warrant
of $________ aggregate principal amount of Notes (as defined in
such Warrant) plus $ _______ accrued interest thereon], and
requests that the certificates for such shares be issued in the
name of, and delivered to ______________, whose address is
______________.
Dated: ________________
_____________________
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant)
[insert address]
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the
within Warrant hereby sells, assigns and transfers unto
_____________________ the right represented by such Warrant to
purchase __________ shares of Common Stock of GMH HOLDINGS, INC.,
a Delaware corporation, to which such Warrant relates, and
appoints ______________ Attorney to make such transfer on the
books of __________ maintained for such purpose, with full power
of substitution in the premises.
Dated: ________________
______________________
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant)
[insert address]
Signed in the presence of:
__________________________
EXHIBIT C-1
Form of Opinion of Company Counsel
[Letterhead of Nixon, ▇▇▇▇▇▇▇▇, Devans & ▇▇▇▇▇ LLP]
December 21, 1995
The Equitable Life Assurance Society
of the United States
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
General Manufactured Housing, Inc.
Senior Subordinated Notes due 2002
GMH Holdings, Inc,
Warrants to Purchase Common Stock
Ladies and Gentlemen:
We have acted as counsel to GMH Acquisition Corp., a
Delaware corporation ("Acquisition Co.") and its successor by
merger, General Manufactured Housing, Inc., a Georgia corporation
(together with Acquisition Co., the "Company") and GMH Holdings,
Inc., a Delaware corporation ("Holdings"), and have acted in such
capacity in connection with:
(a) the issue and sale to you today by the Company of
$17,243,295 aggregate principal amount of its Senior Subordinated
Notes due 2002 (the "Notes") pursuant to the Note and Warrant
Purchase Agreement, dated as of the date hereof (the "Note
Agreement") among Acquisition Co., Holdings and you;
(b) the issue and sale to you today by Holdings of
warrants (the "Warrants") to purchase shares of the common stock,
par value $.001 per share (the "Common Stock"), of Holdings;
(c) the acquisition by Acquisition Co., pursuant to
the Stock Purchase Agreement, dated as of October 10, 1995, as
amended (the "Stock Purchase Agreement"), between Acquisition Co.
and the sellers named therein, of all of the issued and
outstanding shares of the capital stock of the Company; and the
merger of Acquisition Co. into the Company pursuant to the Plan
of Merger, dated December 21, l995 (the "Merger Agreement"),
between Acquisition Co. and the Company (the transactions
contemplated by the Stock Purchase Agreement and the merger of
Acquisition Co. into the Company, being sometimes collectively
referred to herein as the "Acquisition);
(d) the issuance and sale (i) by the Company and
Holdings to RFE Investment Partners V, L.P., the State of
Michigan and Sterling Commercial Capital, Inc., pursuant to the
Securities Purchase Agreement, dated as of December 21, 1995 (the
"RFE Securities Purchase Agreement"), of 8,000,000 shares of the
Series A Preferred Stock, 750,000 shares of the Series B
Preferred Stock, 1,218,750 shares of the Class A Common Stock and
$5,000,000 aggregate principal amount of the Junior Subordinated
Notes of the Company and (ii) by Holdings to Bulldog Holdings
LLC, pursuant to the Subscription Agreement, dated as of December
21, 1995 (the "Bulldog Subscription Agreement"), of 1,400,000
shares of the Series B Preferred Stock (the shares of Common
Stock and Preferred Stock and the Junior Subordinated Notes
issued pursuant to the RFE Securities Purchase Agreement and the
Bulldog Subscription Agreement being referred to herein
collectively as the "Junior Securities");
(e) the entering into by Holdings and its stockholders
of the Stockholders' Agreement, dated as of the date hereof
(including the Registration Rights provisions attached as Exhibit
B thereto, the "Stockholders' Agreement"), and by Holdings and
certain stockholders of the Investors' Rights Agreement, dated as
of the date hereof (the "Investors' Rights Agreement"), setting
forth certain agreements as to the transfer and registration of
the shares of Preferred Stock and Common Stock held by such
stockholders; and
(f) the restatement of the Certificate of
Incorporation of Holdings set forth in the Restated Certificate
of Incorporation, dated December 20, 1995 (the "Restated
Certificate").
The Company, Acquisition Co. and Holdings are sometimes
hereinafter referred to as the "GMH Companies." The Note
Agreement, the Stockholders' Agreement and the Investors' Rights
Agreement are sometimes hereinafter referred to collectively as
the "Holdings Agreements"). Other capitalized terms used herein
without definition have the meanings specified therefor in the
Note Agreement.
In rendering these opinions, we have examined the following
(each of which is dated as of the Closing Date unless another
date is indicated):
(a) the Notes;
(b) the Warrants;
(c) the Holdings Agreements; and
(d) the Certificate of Incorporation and By-Laws of each of
Acquisition Co. and Holdings and all amendments thereto and
restatements thereof (including the Restated Certificate), each
dated as set forth therein.
In addition, we have examined such other records and
documents as we have deemed relevant or material in order to
enable us to render the opinions herein, including, without
limitation, originals or copies, certified or otherwise
identified to our satisfaction, of all such records of the GMH
Companies, certificates of public officials, certificates of
officers or other representatives of the GMH Companies, and such
other documents, certificates and corporate or other records as
we have deemed necessary or appropriate as a basis for the
opinions set forth herein, including certified copies of certain
resolutions duly adopted by the Stockholders and Board of
Directors of each of the GMH Companies.
We have obtained and relied on evidence or advice
satisfactory to us from the Secretary of State of the States of
Delaware and New York, as the case may be, with respect to: (a)
the corporate good standing of Acquisition Co. in Delaware; (b)
the corporate good standing of Holdings in Delaware; (c) the
authority to do business and good standing of Holdings in New
York; and (d) the effectiveness of the Merger in Delaware.
In all such examinations, we have assumed the genuineness of
all signatures by each party (other than signatures of the GMH
Companies), the authenticity of all documents submitted to us as
originals and the conformity to original documents of all
documents submitted to us as conformed or photostatic copies. For
the purposes of the opinions hereinafter expressed, we have
further assumed (a) the due formation, organization or
qualification to do business, valid existence and good standing
of each entity which is a party to any of the Holdings Agreements
(other than the GMH Companies) under the laws of each
jurisdiction in which such entity does business; (b) the legal
capacity of all natural persons executing the Holdings
Agreements; (c) due execution and delivery, pursuant to due
authorization, of each Holdings Agreement referred to in this
opinion by each party thereto (other than the GMH Companies) and
(d) that each Holdings Agreement constitutes the valid and
binding obligation of each party thereto (other than the GMH
Companies), enforceable against such party in accordance with its
terms.
Based upon and subject to the foregoing, and to the
qualifications and limitations set forth below, we are of the
following opinion:
1. Incorporation, Standing, etc. (a) Acquisition Co.
Acquisition Co. is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to
own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into the Note
Agreement and to carry out the terms of the Note Agreement.
(b) Holdings. Holdings is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate
power and authority to own and operate its properties, to carry
on its business as now conducted and as proposed to be conducted,
to enter into each of the Holdings Agreements, to issue and sell
the Warrants and to carry out the terms of the Holdings
Agreements and the Warrants.
2. Qualification. Holdings is duly qualified and in good
standing as a foreign corporation authorized to do business in
the State of New York.
3. Compliance with Other Instruments, etc.
(a) Neither Acquisition Co. nor Holdings, after giving
effect to the Acquisition, is in violation of any term of its
certificate of incorporation or by-laws or of any term of any
agreement or instrument to which it is a party or by which it is
bound or any term of any applicable law, ordinance, rule or
regulation of any governmental authority or, to our knowledge,
any term of any applicable order, judgment or decree of any
court, arbitrator or governmental authority binding on it, the
consequences of which violation would have a material adverse
effect on the business, operations, affairs, condition (financial
or otherwise), properties or assets of either of them. Neither
the execution and delivery nor the performance of the Note
Agreement by Acquisition or the Note Agreement, the Stockholders'
Agreement, the Investors' Rights Agreement and the Warrants by
Holdings will result in any violation of or constitute a default
under any agreement to which such corporation is a party or
result in the creation of (or impose any obligation on either
Acquisition Co. or Holdings to create) any Lien upon any of the
properties or assets of either Acquisition Co. or Holdings
pursuant to any such agreement.
(b) The Company is not in default under any terms of
any material agreement or instrument to which it is a party or by
which it is bound. Neither the execution and delivery nor the
performance of the Notes by the Company will result in any
violation of or constitute a default under any term of any
agreement or instrument to which it is a party or by which it is
bound or any term of any applicable New York or federal law,
ordinance, rule or regulation of any New York or federal
governing authority binding upon it.
4. Governmental Consent. No consent, approval or
authorization of, or declaration or filing with, any governmental
authority on the part of any of the GMH Companies is required for
the valid execution and delivery of the Note Agreement, the
Stockholders' Agreement or the Investors' Rights Agreement or the
valid offer, issue, sale and delivery of the Notes or the
Warrants pursuant to the Note Agreement or the offer, issue, sale
and delivery of the Junior Securities, other than (a) the filing
of the Restated Certificate with the Secretary of State of the
State of the State of Delaware and (b) such consents, approvals,
authorizations, declarations or filings which have been duly
obtained and are in full force and effect.
5. Certain Regulatory Matters. (a) None of the GMH
Companies, after giving effect to the Acquisition, is an
"investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of
1940, as amended.
(b) None of the GMH Companies, after giving effect to
the Acquisition, is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act
of 1935, as amended.
(c) None of the GMH Companies, after giving effect to
the Acquisition, is a "public utility" as such term is defined in
the Federal Power Act, as amended.
(d) The issue and sale of the Notes and Warrants do
not violate Regulation G, T, X or U of the Board of Governors of
the Federal Reserve System.
6. Agreements, Notes and Warrants. The Note Agreement, the
Stockholders' Agreement, the Investors' Rights Agreement and the
Warrants have been duly authorized by all necessary corporate
action on the part of Holdings. The Note Agreement has been duly
executed and delivered by Acquisition Co. and, as a result of the
Acquisition, constitutes the legal, valid and binding obligation
of Acquisition Co., enforceable against Acquisition Co. in
accordance with its terms. The Holdings Agreements and the
Warrants have been duly executed and delivered by Holdings and
constitute legal, valid and binding obligations of Holdings,
enforceable against Holdings in accordance with their respective
terms. The Notes have been duly executed and delivered by the
Company and constitute legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with
their terms.
7. Acquisition. The Acquisition, including the acquisition
of stock pursuant to the Stock Purchase Agreement and the merger
of Acquisition Co. into the Company, has been duly consummated.
The Merger Agreement is in proper form for filing and has been
duly filed in the offices of the Secretary of State of the State
of Delaware. All other consents, approvals and authorizations of
and all declarations and filings with all governmental
authorities required on the part of any GMH Company in order to
consummate the Acquisition have been duly obtained and made and
are in full force and effect.
8. Restated Certificate. The Restated Certificate is in
proper form for filing with the Secretary of State of the State
of Delaware, has been duly adopted by all necessary corporate
action on the part of Holdings, has been duly executed and
acknowledged by a duly authorized officer of Holdings and has
been duly filed with such Secretary of State. The terms of
Article FOURTH of such Certificate of Amendment are valid under
the laws of the State of Delaware, and the shares of Common Stock
issuable upon exercise of the Warrants have or upon such issuance
will have the terms set forth in such Article FOURTH.
9. Holdings Capital Stock. The authorized capital stock of
Holdings consists of 17,462,500 shares of common stock, par value
$.001 per share, divided into 4,375,000 shares of the Class A
Common Stock, of which 1,656,250 shares have been issued and are
outstanding; 787,500 shares of the Class B Common Stock, none of
which shares have been issued and are outstanding; 2,150,000
shares of the Class C Common Stock, none of which shares have
been issued and are outstanding; and 10,150,000 shares of
preferred stock, par value $.001 per share, divided into
8,000,000 shares of Series A Redeemable Preferred Stock, all of
which shares have been issued and are outstanding, and 2,150,000
shares of Series B Convertible Preferred Stock, all of which
shares have been issued and are outstanding; in each case after
giving effect to the Acquisition. The shares of Class A Common
Stock and Class B Common Stock issuable upon the exercise of the
Warrants have been duly authorized and validly reserved for
issuance upon such exercise and, when so issued in accordance
with the terms of the Warrants, will be validly issued, fully
paid and nonassessable, and except as set forth in the
Stockholders Agreement, there are no preemptive rights of
stockholders with respect to the issuance of such shares upon
such exercise. All of the outstanding shares of the Common Stock
have been duly authorized and are validly issued, fully paid and
nonassessable, and the certificates evidencing such shares have
been duly executed and delivered by Holdings and are in proper
form under the Delaware General Corporation Law. Other than (i)
the Series B Preferred Stock, (ii) the Class A Common Stock,
(iii) the Class B Common Stock, (iv) the Warrants and (ii) the
warrants to purchase an aggregate of 218,750 shares of Class A
Common Stock issued to principals and employees of Larkspur
Capital Corporation, Holdings does not have outstanding
securities convertible into or exchangeable for any shares of its
capital stock. Except as set forth in the Investors' Rights
Agreement and the Stockholders' Agreement, Holdings does not have
any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, any shares of its capital stock or
any securities convertible into or exchangeable for any shares of
its capital stock; and Holdings is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise to acquire
or retire any shares of its capital stock, except as set forth in
the Investors' Rights Agreement.
10. Securities Act and Trust Indenture Act. The offer,
issue, sale and delivery of the Notes, the Warrants and the
Junior Securities, in each case under the circumstances
contemplated by the Note Agreement, the RFE Securities Purchase
Agreement and the Bulldog Subscription Agreement, constitute
exempted transactions under the registration provisions of the
Securities Act, and neither the registration of the Notes, the
Warrants or the Junior Securities under the Securities Act nor
the qualification of an indenture in respect of the Notes or any
Junior Securities under the Trust Indenture Act of 1939, as
amended, is required in connection with such offer, issue, sale
and delivery.
11. Litigation. There is, to our knowledge, no action,
proceeding or investigation pending or threatened which questions
the validity of any of the Holdings Agreements, the Notes or the
Warrants or any action taken or to be taken pursuant to the
Holdings Agreements, the Notes or the Warrants, or which if
rendered adversely, would result, either in any case or in the
aggregate, in any adverse change in the business, operations,
affairs, condition (financial or otherwise), properties or assets
of the GMH Companies, taken as a whole or in any liability on the
part of any GMH Company which would be material to the GMH
Companies, taken as a whole.
Our opinions are qualified as follows:
a. The enforceability of the Holdings Agreements, the
Warrants and the Notes is subject to or limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity).
b. With respect to our opinions regarding enforceability,
we call your attention to the fact that we express no opinion
with respect to the enforceability of (i) the indemnification
provisions contained in the Holdings Agreements to the extent
that such provisions may be construed to include indemnification
for liabilities arising under federal or state securities or blue
sky laws, (ii) any Holdings Agreements against any person or
entity who or which is not a party thereto or with respect to any
provisions thereof requiring a party thereto to cause such person
or party to take or further refrain from taking specified actions
or (iii) any provisions which expressly purport to waive
statutory rights, including without limitation, the statutory
right of redemption.
c. With respect to our opinions regarding the
enforceability of the Holdings Agreements, we have assumed
compliance by all persons other than Acquisition Co. and Holdings
with the terms, conditions and restrictions set forth in the
Holdings Agreements.
d. We express no opinion regarding the status of title to
any real or personal property.
e. We express no opinion with respect to the Investment
Advisors Act of 1940 or the provisions of the Securities Exchange
Act of 1934 regarding registration of brokers and dealers.
f. No opinion is expressed herein as to the enforceability
of choice of law provisions (except as to the Note Agreement, the
Notes and the Warrants), or any waivers of jurisdiction or venue.
g. We express no opinion with respect to Paragraph 4
hereof as to any authorization, consent, approval, license,
exemption of or filing or registration by any of the GMH
Companies which they may be required to obtain as a result of the
involvement of parties other than such Person, and the
transactions contemplated by the Holdings Agreements, the
Warrants or the Notes because of any of such other party's legal
or regulatory status or because of any other facts specifically
pertaining to any of such other parties.
h. We express no opinion with respect to statutes and
ordinances, administrative decisions and rules and regulations,
in each case of counties, towns, municipalities and special
political subdivisions, and judicial decisions to the extent they
deal with any of the foregoing.
As to any facts material to our opinions, we have relied
upon oral or written statements and certifications of officers
and other representatives of the GMH Companies and others, upon
certificates and other documents from public officials and upon
the accuracy of the representations and warranties contained in
the Holdings Agreements. We have not independently investigated
or verified such facts and do not opine as to their accuracy.
The phrases "to our knowledge" or "known to us," when used
herein, mean that our opinion is based solely on matters within
the actual knowledge of the attorneys in this Firm actively
involved in the transactions contemplated by the Holdings
Agreements which, in the case of factual information with respect
to the GMH Companies, is derived from inquiry of the appropriate
officers of the GMH Companies (without independent
investigation), reviewing certificates of such officers,
reviewing our files, and reviewing the documents described
herein.
In rendering the opinions expressed in Paragraphs 1 and 2
above, we have relied solely upon certificates of public
officials as to the qualification to do business and good
standing of Acquisition Co. and Holdings.
We are licensed to practice law under the laws of the State
of New York. The opinions herein expressed are limited to the
laws of the State of New York, the General Corporation Law of the
State of Delaware and to the extent not otherwise excluded
herein, the federal laws of the United States of America. Insofar
as any of the opinions contained herein involve matters of
Georgia law, we have relied on the opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ dated the date hereof, a copy of which is
attached hereto.
The opinions expressed in this letter are based upon the law
in effect on the date hereof, and we assume no obligation to
revise or supplement this opinion should such law be changed by
legislative action, judicial decision or otherwise.
This opinion is being furnished to you at the direction, and
with the authorization of the Acquisition Co. pursuant to Section
4.4(a) of the Note Agreement, solely for your benefit and may be
relied upon by you with respect to the transactions recited
herein and therein. This opinion may not be relied upon by,
quoted in any manner to or delivered to, any person or entity
without, in each instance, our prior written consent; provided,
however, that any of your assignees or participants permitted
under the Note Agreement shall be entitled to rely on such
opinions as if it were addressed to them.
Very truly yours,
/s/ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, Devans & ▇▇▇▇▇ LLP
[On Letterhead of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇]
December 21, 1995
The Equitable Life Assurance Society
of the United States
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: General Manufactured Housing, Inc.
Ladies and Gentlemen:
We have served as Georgia local counsel to General
Manufactured Housing, Inc., a Georgia corporation and successor
by merger to GMH Acquisition Corp., a Delaware corporation (the
"Company"), and have acted in such capacity in connection with:
(a) the issue and sale to you today by the Company of
$17,243,295.00 aggregate principal amount of its Senior
Subordinated Notes due 2002 (the "Notes") pursuant to the
Note and Warrant Purchase Agreement, dated as of December
21, 1995 (the "Note Agreement"), among GMH Acquisition
Corp., a Delaware corporation ("Acquisition"), GMH Holdings
and you;
(b) the acquisition by Acquisition, pursuant to the
Stock Purchase Agreement, dated as of October 10, 1995, as
amended (the "Stock Purchase Agreement"), between Holdings
and the sellers named therein, of all the issued and
outstanding shares of the capital stock of the Company; and
the merger of Acquisition into the Company pursuant to the
Plan of Merger, dated December 21, 1995 (the "Merger
Agreement") between Acquisition and the Company (the
transactions contemplated by the Stock Purchase Agreement
and the merger of Acquisition into the Company being
sometimes collectively referred to herein as the
"Transaction"); and
(c) The issuance and sale by the Company to RFE
Investment Partners V, L.P., the State of Michigan and
Sterling Commercial Capital, Inc., pursuant to the
Securities Purchase Agreement, dated as of December 21, 1995
(the "RFE Securities Purchase Agreement"), of $5,000,000
aggregate principal amount of the Junior Subordinated Notes
of the Company (the "Junior Securities").
The Notes, the Note Agreement, the Stock Purchase
Agreement and the Merger Agreement are referred to collectively
as the "Documents."
This opinion letter is limited by, and is in accordance
with, the January 1, 1992 edition of the Interpretive Standards
applicable to Legal Opinions to Third Parties in Corporate
Transactions adopted by the Legal Opinion Committee of the
Corporate and Banking Law Section of the State Bar of Georgia,
which Interpretive Standards are incorporated in this opinion
letter by this reference and are attached as Exhibit A.
Capitalized terms used in this opinion letter and not otherwise
defined herein shall have the meanings assigned to such terms in
the Interpretive Standards or the Note Agreement, as appropriate.
In rendering this opinion we have examined copies of
the Documents forwarded to us by your counsel dated December 21,
1995, certified copies of the articles of incorporation, bylaws
and corporate resolutions of the Company and a certificate of
good standing for the Company from the State of Georgia. In
giving the opinions hereinafter expressed, we have relied only
upon our examination of the foregoing documents and certificates,
and we have made no independent verification of the factual
matters set forth in such documents or certificates and no other
investigation or inquiry. With respect to the due execution and
delivery of the Documents by the Company, we have relied solely
upon a facsimile copy of an officer's certificate from an officer
of the Company in the form of Exhibit B hereto.
The opinions set forth herein are limited to the laws
of the State of Georgia.
For purposes of this opinion, we have assumed that:
(i) The execution and delivery of the Documents and
other documents reviewed by us, and the entry into and
performance of the transactions contemplated by the Documents, by
all parties other than the company have been duly authorized by
all necessary actions and constitute the
valid and bonding obligations of all parties other than the
Company.
(ii) The necessary merger documents were duly filed
with the Secretary of State of Delaware to effect the merger of
Acquisition with and into the Company as of the Closing Date
under the laws of the state of Delaware.
(iii) All of the Documents are enforceable, to the
extent not controlled by the laws of the State of Georgia.
We are of the following opinion:
1. Incorporation, Standing, etc. The Company is a
corporation validly existing and in good standing under the laws of
the State of Georgia and has all requisite corporate power and
authority to own and use its properties, to carry on its business as
now conducted, to enter into the Note Agreement, to issue and sell the
Notes and to carry out the terms of the Note Agreement and the Notes.
2. Compliance with Charter. The Transaction does not
violate of any term of the Company's articles of incorporate or bylaws
or any term of any applicable law, ordinance, rule or regulation of
any governmental authority of the State of Georgia.
3. Governmental Consent. No consent, approval or
authorization of, or declaration or filing with, any governmental
authority of the State of Georgia on the part of the Company is
required for the valid execution and delivery of the Note Agreement,
or the valid offer, issue, sale and delivery of the Notes pursuant to
the Note Agreement or the offer, issue, sale and delivery of the
Junior Securities.
4. Agreement and Notes. The Note Agreement and the
Notes have been duly authorized by all necessary corporate action on
the part of this Company. The Notes have been duly executed and
delivered by the Company and constitute legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms; the Note Agreement was duly
executed and delivered by Acquisition and, as a result of the
Transaction, constitutes legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms;
except in each case (a) that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or effecting the
rights and remedies of creditors, (b) that acceleration of the Notes
may affect the collectibility of that portion of the stated principal
amount thereof which might be determined to constitute unearned
interest thereon, and (c) no opinion is expressed as to any provision
for the indemnification of persons for liability under any federal or
state securities laws.
5. The Transaction. The Merger Agreement is in proper
form for filing and has been duly filed in the office of the Secretary
of State of Georgia and the merger was effective as of the Closing
Date in accordance with such agreement and the laws of the State of
Georgia. All other consents, approvals and authorizations of the
declarations and filings with all governmental authorities or offices
of public registry of the state of Georgia required on the part of the
Company in order to consummate the Transaction have been duly obtained
and made and are in full force and effect.
6. The Company. After giving effect to the
Transaction, the authorized capital stock of the Company consists of
100,000 shares of the common stock, par value $100.00 per share, of
which 5,250 shares have been issued and are outstanding. All of the
outstanding shares of such common stock have been duly authorized and
are validly issued, fully paid and nonassessable. The form of stock
certificate attached hereto as Exhibit C is in proper form under the
laws of the State of Georgia.
Our opinions expressed in this letter are subject to
the following qualifications:
(a) We express no opinion as to the enforceability of
(A) provisions which purport to appoint the Lender, in any
capacity, as the attorney-in-fact or proxy of the Borrower, and
(B) provisions which purport to waive rights which cannot be
waived by law. In particular, we point out that in an opinion
issued July 11, 1994, the Supreme Court of Georgia held that pre-
litigation contractual waivers of trial by jury are not
enforceable in Georgia, Bank South, N.A. vs. ▇▇▇▇▇▇, 264 Ga. 339
(1994).
(b) We point out that O.C.G.A. 13-1-11 limits the
enforceability of attorneys fees provisions to an amount not in
excess of 15 percent of the principal and interest owing on the
evidence of indebtedness [the statutory definition of the term
"reasonable attorneys fees" in a note or other evidence of
indebtedness in O.C.G.A. 13-1-11(a)(2) being an amount equal to
15 percent of the first $500.00 of principal and interest owing
and 10 percent of the principal and interest owing in excess of
$500.00]. We further point out that a lender's right to collect
attorneys fees in the event of a default under an evidence of
indebtedness is limited by O.C.G.A. 13-1-11, in that, upon
acceleration of payment of an indebtedness under Georgia law, the
obligated party has a period of ten days from the receipt of
notice of acceleration within which to pay all principal and
interest without the payment of attorneys fees. We express no
opinion as to the ability of the Lender to collect actual
attorneys fees, regardless of their reasonableness, incurred in
enforcing rights under the Documents.
This opinion is limited to the matters set forth
herein. No opinion may be inferred or implied beyond the matters
expressly contained herein. This opinion letter is provided to you for
your exclusive use solely in connection with the transactions listed
in paragraphs (a) through (c) above, and may not be relied upon by any
other person or for any other purpose without our prior written
consent; provided, however that any of your assignees or participants
permitted under the Documents shall be entitled to rely on this
opinion letter as if it were addressed to them and provided further
that ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP may rely on this opinion
solely for the purpose of rendering an opinion to you with respect to
the transactions set forth herein, to the extent their opinion relates
to the laws of the State of Georgia.
Very truly yours,
/s/ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
Exhibit A
INTERPRETIVE STANDARDS
APPLICABLE TO CERTAIN LEGAL OPINIONS
TO THIRD PARTIES IN CORPORATE TRANSACTIONS
Effective January 1, 1992
Purpose and Scope of Interpretive Standards
The purpose of these Interpretive Standards is to explain the meaning
of Opinion Letters (which incorporate these Interpretive Standards by
reference) addressed to non-client third parties in connection with
corporate acquisition or financing transactions. Included in these
Interpretive Standards are general qualifications to legal opinions, common
assumptions as to fact and law, standards governing an opinion that an
agreement is "enforceable" and interpretations of certain recurring legal
opinions and confirmations of fact. Incorporation in an Opinion Letter of
these Interpretive Standards is intended to shorten the content of the
letter while expanding the mutual understanding of its meaning. Any part of
these Interpretive Standards, however, may be overridden by a specific
statement in an Opinion Letter which supersedes a contrary Interpretive
Standard.
Definitions of Terms Used in Interpretive Standards
The following capitalized terms have the following meanings when used
in these Interpretive Standards:
Agreement means the primary legal document which evidences the
Transaction.
Assets means all of the tangible and intangible real and personal
property of Company.
Company means the entity which is the client of Opinion Giver and on
whose behalf the Opinion Letter is given.
Documents means the Agreement, together with any other document
identified in the Opinion Letter, which contains one or more obligations of
Company related to the Transaction.
GBCC means the Georgia Business Corporation Code in effect on the date
of the Opinion Letter.
Law(s), whether or not a capitalized term, means the constitution,
statutes, judicial and administrative decisions, and rules and regulations
of governmental agencies of the Opining Jurisdiction and, unless otherwise
specified, federal law.
Local Law means the statutes, administrative decisions, and rules and
regulations of any county, municipality or subdivision, whether created at
the federal, state or regional level.
Opining Jurisdiction means a jurisdiction, the law of which Opinion
Giver addresses.
Opinion means a legal opinion contained in an Opinion Letter.
Opinion Giver means the law firm or lawyer giving an Opinion.
Opinion Letter means the letter containing one or more Opinions or
confirmations of fact by Opinion Giver.
Opinion Recipient means the person or persons to whom the Opinion
Letter is addressed.
Other Agreements means documents (other than the Documents) to which
Company is a party or by which Company is bound.
Other Counsel means counsel (other than Opinion Giver) providing a
legal opinion or confirmation of fact on aspects of the Transaction
directed to Opinion Recipient or Opinion Giver or both.
Other Jurisdiction means any jurisdiction (other than the Opining
Jurisdiction) the law of which is stipulated to be the governing law.
Personal Property means all of the tangible and intangible personal
property of Company.
Primary Lawyer Group has the meaning discussed in Interpretive
Standard 7.
Public Authority Documents means certificates issued by a governmental
office or agency, such as the Secretary of State, or by a private
organization having access to and regularly reporting on government files
and records, as to a person's property or status.
Remedies Opinion means an Opinion dealing with the enforceability
against Company of one or more Documents.
Transaction means the transaction with respect to which the Opinion
Letter is given.
Qualifications To Each Opinion
1. Law Addressed by Opinion.
If an Opinion Letter is expressly limited to the Law of one or more
specified jurisdictions or to one or more discrete laws within one or more
jurisdictions, an Opinion with respect to any other law, or the effect of
any other law, is disclaimed.
2. Scope of Opinion.
An Opinion covers only those matters both essential to the conclusion
stated by the Opinion and, based upon prevailing norms and expectations
found among experienced legal practitioners in the Opining Jurisdiction,
reasonable in the circumstances. Other matters are not included in an
Opinion by implication. The following matters, including their effects and
the effects of noncompliance, are not covered by implication or otherwise
in any Opinion, unless coverage is specifically addressed in the Opinion
Letter as provided by Interpretive Standard 11:
(1) Local Law
(2) Law relating to permissible rates, computation or
disclosure of interest, e.g., usury
(3) Antitrust and unfair competition law
(4) Securities law
(5) Fiduciary obligations
(6) Pension and employee benefit law, e.g., ERISA
(7) Regulations G, T, U and X of the Board of Governors
of the Federal Reserve System
(8) Fraudulent transfer law
(9) Environmental law
(10) Land use and subdivision law
(11) Except with respect to a No Consent Opinion
(interpretative Standard 28), ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇,
Exon-▇▇▇▇▇▇ and other laws related to filing
requirements, other than charter-related filing
requirements, such as requirements for filing
articles of merger
(12) Except with respect to a No Violation Opinion
(interpretive Standard 27), law concerning creation,
attachment, perfection or priority of a security
interest in any Assets
(13) Bulk transfer law
(14) Tax law
(15) Patent, copyright, trademark and other intellectual
property law
(16) Racketeering law, e.g., RICO
(17) Criminal statutes of general application, e.g., mail
fraud and wire fraud
(18) Health and safety law, e.g., OSHA
(19) Labor law
(20) Law concerning national or local emergency
3. Unwarranted Reliance.
Opinion Giver may not rely for purposes of the Opinion Letter upon
information, whether or not in a Public Authority Document, or (except in
the case of arbitrary or hypothetical assumptions contained in an
overriding agreement referred to in Interpretive Standard 11 or as stated
in Interpretive Standard 22 with respect to choice of law) upon an
assumption otherwise appropriate, if Opinion Giver has knowledge that such
information or assumption is false, or recognizes factors that compel the
conclusion that reliance upon such information or assumption would be
unreasonable. "Knowledge" or "recognizes" for purposes of the foregoing
sentence and wherever used in these Interpretive Standards means the
current awareness of information by any lawyer in the Primary Lawyer Group.
4. Reliance on Other Sources of Information.
Subject to Interpretive Standard 3, Opinion Giver may rely, without
investigation, upon facts established by a Public
Authority Document, facts provided by an agent of Company or others and, if
disclosed in the Opinion Letter, facts asserted by a party to the
Transaction in a representation or warranty embodied in the Documents,
provided:
(1) if not established by a Public Authority Document, the facts
do not constitute a statement, directly or in practical effect, of the
legal conclusion in question;
(2) the person providing facts is, in Opinion Giver's
professional judgment, an appropriate source; and
(3) if the facts are set forth in a certificate, Opinion Giver
has used reasonable professional judgment as to its form and content.
5. Scope of Opinion Giver's Inquiry.
Opinion Giver is presumed to have reviewed such documents and given
consideration to such matters of law and fact as Opinion Giver deemed
appropriate in order to give an Opinion or confirmation of fact, unless
Opinion Giver has expressly limited the scope of inquiry in the Opinion
Letter. A recital of specific documents reviewed or specific procedures
followed, without more, is not a limitation on the scope of Opinion Giver's
inquiry for purposes of the foregoing presumption.
6. Opinion or Confirmation Qualified by Knowledge of Opinion Giver.
Whenever an Opinion Letter qualifies an Opinion or confirmation of
fact by the words "to our knowledge," known to us" or words of similar
meaning, the quoted words mean the current awareness by lawyers in the
Primary Lawyer Group of information such lawyers recognize as relevant to
the Opinion or confirmation so qualified. The quoted words do not include
within what is "known" information not within such current awareness that
might be revealed if a canvass of lawyers outside the Primary Lawyer Group
were made, if the Opinion Giver's files were searched or if any other
investigation were made.
7. "Primary Lawyer Group."
"Primary Lawyer Group" means that lawyer in Opinion Giver's
organization who signs the Opinion Letter and, solely as to information
relevant to an Opinion or confirmation issue, any lawyer in Opinion Giver's
organization who is primarily responsible for providing the response
concerning the particular issue.
8. Who May Rely On Opinion.
Opinion Recipient and designated principals of Opinion Recipient, if
Opinion Recipient is identified in the Opinion Letter as an agent for
designated principals, are the only persons entitled to rely upon any
Opinion or confirmation of fact contained in the Opinion Letter, and then
only for purposes of the Transaction.
9. Other Counsel.
Opinion Giver's responsibility for the opinion of Other Counsel
depends upon what is stated in the Opinion Letter. A statement that Opinion
Giver has relied on an opinion of Other Counsel means only that Opinion
Giver believes that (i) based upon Other Counsel's professional reputation,
it is competent to render such opinion, and (ii) such opinion on its face
appears to address the matters upon which Opinion Giver places reliance. A
statement that Opinion Giver believes that Opinion Recipient is justified
in relying on an opinion of Other Counsel means only that Opinion Giver
believes that, based upon Other Counsel's professional reputation, it is
competent to render such opinion. A statement that Opinion Giver concurs in
an opinion of Other Counsel means that Opinion Giver has assumed the
responsibility for verifying the accuracy of the opinion of Other Counsel.
If no concurrence by Opinion Giver is expressed, no concurrence is implied.
If Opinion Giver merely identifies or remains silent with respect to the
opinion of Other Counsel, Opinion Giver
assumes no responsibility for Other Counsel's opinion, and Opinion
Recipient may not assume that Opinion Giver has relied upon Other Counsel's
opinion.
10. Updating.
An Opinion Letter speaks as of the date of its delivery, and Opinion
Giver has no obligation to advise Opinion Recipient or anyone else of any
matter of fact or law thereafter occurring, whether or not brought to the
attention of Opinion Giver, even though that matter affects any analysis or
conclusion in the Opinion Letter.
11. Overriding Agreement.
Opinion Giver and Opinion Recipient may agree upon arbitrary or
hypothetical assumptions that may not be true and upon qualifications,
standards or interpretations inconsistent with these Interpretive
Standards. Any such agreement with respect to such assumptions,
qualifications, standards or interpretations, when described with
reasonable particularity in the Opinion Letter, will supersede any contrary
provision of these Interpretive Standards.
Assumptions
12. Assumptions As To Parties Other Than Company.
Opinion Recipient in the Transaction has acted in good faith and
without notice of any defense against enforcement or rights created by, or
adverse claim to any property transferred as part of, the Transaction. Each
party to the Transaction other than Company has complied with all laws
applicable to it that affect the Transaction.
13. Assumptions As To Natural Persons and Documents.
Each natural person acting on behalf of any party to the Transaction
has sufficient legal competency to carry out such person's role in the
Transaction. Each document submitted to Opinion Giver for review is
accurate and complete, each document purporting to be original is
authentic, each document purporting to be a copy conforms to an authentic
original, and each signature on a document is genuine.
14. Assumptions As To Transaction.
The Transaction complies with any test required by law of good faith
or fairness. Each party will act in accordance with the terms and
conditions of the Documents.
15. Assumption As To Accessibility of Laws.
Each Law for which Opining Giver is deemed to be responsible is
published, accessible and generally available to lawyers practicing in the
Opining Jurisdiction.
16. Assumptions As To Company.
No discretionary act of Company or on its behalf will be taken after
the date of the Transaction if such act might result in a violation of law
or breach or default under any agreement, decree, writ, judgment or court
order. Company will obtain all permits and governmental approvals and take
all other actions which are both (i) relevant to performance of the
Documents or consummation of the Transaction, and (ii) required in the
future under applicable law. Company holds requisite title and rights to
its Assets.
17. Assumptions As To Other Agreement.
Any Other Agreement will be enforced as written.
18. Assumption As To Understandings.
There is no understanding or agreement not embodied in a Document
among parties to the Transaction that would modify any term of a Document
or any right or obligation of a party.
19. Assumption As To Absence of Mistake or Fraud.
With respect to the Transaction and the Documents, there has been no
mutual mistake of fact and there exists no fraud or duress.
20. Assumption As To Invalidity.
No issue of unconstitutionality or invalidity of a relevant Law exists
unless a reported case has so held.
Remedies Opinion Standards
21. Meaning of Remedies Opinion.
A. General Meaning. The Remedies Opinion, with respect to any
referenced Document, and subject to the limitations contained in these
Interpretive Standards and in the Opinion Letter, means that:
(i) a contract has been formed under the law of contracts
of the jurisdiction applicable under Interpretive Standard 22;
and
(ii) under laws normally applicable to contracts like the
Document, to parties like the Company and to transactions like
the Transaction, each obligation imposed on Company by the
Document, each agreement made by Company in the Document, and
each right, benefit and remedy conferred by Company in the
Document, will be given effect as stated in the Document.
B. Existence of Contract. The professional judgment reflected in
subparagraph A(i) above requires the Opinion Giver to conclude that:
(i) All legal requirements under contract law for the
formation of a contract of the type involved in the referenced
Document effective against Company (other than requirements that
would be covered by a Corporate Status Opinion, a Corporate
Powers Opinion and a Corporate Acts Opinion discussed at
Interpretive Standards 24, 25 and 26) are met, such as necessary
formalities (including compliance with any applicable statute of
frauds), consideration (where necessary), definiteness, and the
inclusion of essential terms.
(ii) The Document does not violate a law as to formation
of contracts that would prevent a court presented with the
Document from enforcing it.
(iii) Company does not presently have available any
contractual defense to the Document, such as the statute of
limitations.
22. Choice of Law in Remedies Opinion.
If a Document covered by the Remedies Opinion contains no governing
law provision, or contains a governing law provision which names the
Opining Jurisdiction, the Remedies Opinion means that if Company is brought
before a proper court of the Opining Jurisdiction to enforce rights under
the Document, and if such court applies the substantive law of the Opining
Jurisdiction, the result will be as stated in the Opinion and these
Interpretive Standards.
If the Document contains a governing law provision which names a
jurisdiction other than the Opining Jurisdiction, the Remedies Opinion does
not opine whether any court of any jurisdiction will give effect to the
governing law provision in the Agreement, but assumes that if Company is
brought before a proper court of the Opining Jurisdiction to enforce rights
under the Document, such court will apply the substantive law of the
Opining Jurisdiction, notwithstanding the governing law provision in the
Document, and based upon such assumption the result will be as stated in
the Opinion and these Interpretive Standards.
The Remedies Opinion does not extend to the content or effect of any
law other than the law of the Opining Jurisdiction and federal law.
23. Exceptions To The Remedies Opinion.
Any Remedies Opinion contained in an Opinion Letter which incorporates
these Interpretive Standards by reference will be deemed not to address the
matters excluded in Interpretive Standard 2 and subject to the following
exceptions:
(i) The effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights and
remedies of creditors. This includes the effect of the Federal
Bankruptcy Code in its entirety, including matters of contract
rejection, fraudulent conveyance and obligation, turn-over,
preference, equitable subordination, automatic stay, conversion
of a non-recourse obligation into a recourse obligation, and
substantive consolidation. This also includes state laws
regarding fraudulent transfers, obligations, and conveyances,
including O.C.G.A. 18-2-20, et seq., and state receivership
laws.
(ii) The effect of general principles of equity, whether
applied by a court of law or equity. This includes the following
concepts: (a) principles governing the availability of specific
performance, injunctive relief or other traditional equitable
remedies; (b) principles affording traditional equitable defenses
(e.g., waiver, laches and estoppel); (c) good faith and fair
dealing; (d) reasonableness; (e) materiality of the breach; (f)
impracticability or impossibility of performance; (g) the effect
of obstruction, failure to perform or otherwise to act in
accordance with an agreement by any person other than Company;
(h) the effect of Section 1-102(3) of the Uniform Commercial
Code; and (i) unconscionability.
(iii) The effect and possible unenforceability of
contractual provisions providing for choice of governing law.
(iv) The possible unenforceability of provisions
purporting to waive certain rights of guarantors .
(v) The possible unenforceability of provisions requiring
indemnification for, or providing exculpation, release or
exemption from liability for, action or inaction, to the extent
such action or inaction involves negligence or willful misconduct
or to the extent otherwise contrary to public policy.
(vi) The possible unenforceability of provisions purporting
to require arbitration of disputes.
(vii) The possible unenforceability of provisions
prohibiting competition, the solicitation or acceptance of
customers, of business relationships or of employees, the use or
disclosure of information, or other activities in restraint of
trade.
(viii) The possible unenforceability of provisions
imposing increased interest rates or late payment charges upon
delinquency in payment or default or providing for liquidated
damages, or for premiums on prepayment, acceleration, redemption,
cancellation, or termination, to the extent any such provisions
are deemed to be penalties or forfeitures.
(ix) The possible unenforceability of waivers or advance
consents that have the effect of waiving statutes of limitation,
marshalling of assets or similar requirements, or as to the
jurisdiction of courts, the venue of actions, the right to jury
trial or, in certain cases, notice.
(x) The possible unenforceability of provisions
that waivers or consents by a party may not be given effect
unless in writing or in compliance with particular requirements
or that a person's course of dealing, course of performance, or
the like or failure or delay in taking actions may not constitute
a waiver of related rights or provisions or that one or more
waivers may not under certain circumstances constitute a waiver
of other matters of the same kind.
(xi) The effect of curse of dealing, course of
performance, or the like, that would modify the terms of an
agreement or the respective rights or obligations of the parties
under an agreement.
(xii) The possible unenforceability of provisions that
enumerated remedies are not exclusive or that a party has the
right to pursue multiple remedies without regard to other
remedies elected or that all remedies are cumulative.
(xiii) The effect of O.C.G.A. 13-1-11 on provisions
relating to attorneys fees.
(xiv) The possible unenforceability of provisions that
determinations by a party or a party's designee are conclusive.
(xv) The possible unenforceability of provisions
permitting modifications of an agreement only in writing.
(xvi) The possible unenforceability of provisions that
the provisions of an agreement are severable.
(xvii) The effect of laws requiring mitigation of damages.
(xviii) The possible unenforceability of provisions
permitting the exercise, under certain circumstances, of rights
without notice or without providing opportunity to cure failures
to perform.
(xix) The effect of agreements as to rights of set off
otherwise than in accordance with the applicable law.
Interpretations
24. Corporate Status Opinion.
An Opinion to the effect that Company was duly organized as a
corporation and is existing in good standing under the laws of the State of
Georgia (Corporate Status Opinion) is subject to the following
understandings:
(1) "duly organized" means that Company (i) properly complied
with the Georgia statutory requirements for incorporation, and (ii)
thereafter properly complied with the Georgia statutory requirements
for organization;
(2) "is existing" means that company is a corporation which has
not ceased to exist under the GBCC;
(3) the Opinion refers to the status of Company only for
purposes of and under the GBCC; and
(4) "good standing" has no official meaning under the GBCC, and
for purposes of any Opinion with respect to a corporation subject to
the GBCC means:
(i) Company has filed no notice of intent to dissolve under
Section 1403 of the GBCC;
(ii) the Secretary of State has signed no certificate of
dissolution with respect to Company;
(iii) the Superior Court of the county of Company's
registered office has entered no decree ordering
Company dissolved; and
(iv) Company has satisfied its tax and annual registration
requirements under Section 1420 of the GBCC.
An Opinion limited to the conclusion that the Company "is a
corporation" means that third parties may not challenge Company's corporate
existence, the State of Georgia recognizes such existence, and the state
may challenge Company's incorporation only under the circumstances
described in Section 203(b) of the GBCC.
25. Corporate Powers Opinion.
An Opinion to the effect that Company has the corporate power to
execute and deliver a Document, to perform its obligations under a
Document, to own and use its Assets and to conduct its business (Corporate
Powers Opinion) is subject to the following understandings:
(1) the Opinion refers only to the GBCC and Company's articles
of incorporation as sources of corporate power;
(2) "power" refers only to whether the acts referenced in the
Opinion are ultra ▇▇▇▇▇;
(3) the Opinion is built upon an assumption that the Corporate
Status Opinion could also be given;
(4) "own and use" refers to every right Company has in the
Assets;
(5) the Opinion refers to Assets owned and used and business
conducted on the date of the Opinion, and not those contemplated for
future ownership, use or conduct except to the extent the acquisition
of the Assets or conduct of the business is concurrent with, and
recognized by Opinion Giver as constituting part of, the consummation
of the Transaction; and
(6) the Opinion does not affirm that Company is engaged in no
unlawful business and in no business which Georgia law would not
permit to be conducted by a corporation incorporated under the GBCC.
26. Corporate Acts Opinion.
An Opinion to the effect that Company has duly authorized the
execution and delivery of, and performance by Company under, the Documents
and has duly executed and delivered the Documents (Corporate Acts Opinion)
is subject to the following understandings:
(1) the Opinion affirms compliance with all corporate action
necessary under the GBCC, Company's articles of incorporation and
bylaws and, if applicable, Company's duly adopted policies and
practices for delegation of authority in order to authorize the
execution and delivery of, and performance under, the Documents;
(2) the Opinion affirms that the execution and delivery of the
Documents was, and Company's performance of its obligations under the
Documents in accordance with the Documents as written will be, in
accordance with the authorization;
(3) the Opinion is built upon an assumption that the Corporate
Status Opinion and the Corporate Powers Opinion could also be given:
(4) the Opinion addresses no law other than the GBCC and
applicable law of agency.
27. No Violation Opinion.
An Opinion to the effect that Company's execution and delivery of the
Documents do not, and if Company were now to
perform its obligations under the Documents such performance would not,
result in (i) a violation of Company's articles of incorporation, bylaws or
any law to which Company or its Assets are subject, or (ii) a breach of or
default under described agreements, or (iii) a creation or imposition of
contractual liens or security interests arising out of described
agreements, or (iv) a violation of any known judicial or administrative
decree, writ, judgment or order to which Company or its Assets are subject
(No Violation Opinion) is subject to the following understandings:
(1) a "violation" or "breach or default" means any act or
omission that, by itself or upon notice or the passage of time or
both, would constitute a violation, breach or default giving rise to a
remedy under the document or law in question;
(2) the Opinion addresses only the relevant facts and law as
they exist on the date of the Opinion Letter;
(3) "agreements" refers to agreements, indentures, documents and
other instruments in writing, identified in the Opinion Letter;
(4) references to any law or to "decree, writ, judgment or
order" or the like include only those (i) which either prohibit
performance by Company under the Documents or subject Company to a
fine, penalty or other similar sanction, and (ii) which a lawyer,
using customary professional diligence, would reasonably recognize as
applicable to Company and the Transaction;
(5) the Opinion addresses only whether the specific terms of the
relevant Document violate law or cause a breach of or default under
the specific terms of an obligation created by a described Other
Agreement, taking into account information provided in accordance with
Interpretive Standard 4 and other facts known to Opinion Giver;
(6) the Opinion does not address acts permitted or contemplated
but not required, or inferred but not set forth, by the relevant
Documents, except to the extent such acts are concurrent with, and
recognized by Opinion Giver as constituting part of, the consummation
of the Transaction;
(7) to the extent the interpretation of words in described
agreements requires resort to law, the law is that of the Opining
Jurisdiction; and
(8) the Opinion does not address liens or security interests
created by or in favor of Opinion Recipient, created under a Document
or arising by operation of law.
28. No Consent Opinion.
An Opinion to the effect that no consent, approval, authorization or
other action by, or filing with, any governmental authority is required for
Company's execution and delivery of the Documents and consummation of the
Transaction (No Consent Opinion) is subject to the understandings set forth
in Interpretive Standards 2 and 27(2) and (4). "Required" means that there
is no governmental consent, approval, authorization or filing, the absence
of which would either prohibit performance by Company of its obligations
under the Documents or subject Company to a fine, penalty or other similar
sanction.
29. Capitalization Opinion.
An Opinion to the effect that described shares have been duly
authorized and are, or upon issuance will be, validly issued, fully paid
and nonassessable (Capitalization Opinion) is subject to the following
understandings:
(1) the Opinion affirms compliance with all corporate action
necessary to create and issue the shares under the Georgia corporate
law in effect at the time of such creation and issuance ("Corporate
Code") and Company's articles of incorporation and bylaws;
(2) "duly authorized" means Company had the corporate power to
create the shares, the shares so created have the rights and
attributes required by the Corporate Code, and the rights and
attributes of the shares so created were permitted by the Corporate
Code and are permitted by the GBCC and Company's articles of
incorporation and bylaws;
(3) "validly issued" means that at the time of issuance Company
had sufficient authorized and unissued shares to permit the shares to
be issued, Company took the steps necessary to accord shareholder
status to the persons to whom the shares were issued and Company has
taken no step to deprive the shares of the "validly issued" status;
(4) "fully paid and nonassessable" means that the consideration
received upon issuance of the shares (i) was legally sufficient, (ii)
satisfied the requirements of the Corporate Code, Company's articles
of incorporation and bylaws, and relevant corporate resolutions, (iii)
was approved (e.g., as to value of property or services) by the
directors or shareholders, as required, and (iv) was in fact received,
subject to paragraph (1) above; and
(5) the Opinion is based upon the assumption that the Corporate
Status Opinion could also be given.
30. Share Transfer Opinion.
The only laws addressed in any Opinion as to the rights of a seller in
shares of Company acquired by any purchaser are the GBCC and Article 8 of
the UCC, and no Opinion is given regarding liens (other than UCC security
interests) that may be perfected without filing or possession of the share
certificate. The Opinion is based upon the assumption that the
Capitalization Opinion could also be given.
31. Personal Property Transfer Opinion.
An Opinion as to Company's transfer of Personal Property expresses no
opinion as to Company's title. See Interpretive Standard 16.
32. Foreign Qualification Confirmation.
A confirmation to the effect that Company is qualified to transact
business as a foreign corporation in any one or more named jurisdictions is
not a legal opinion, but a statement which may be based solely upon one or
more certificates referenced in the Opinion Letter and limited in meaning
to the words of each certificate. No implication arises from such
confirmation that certificates have been acquired from all jurisdictions in
which Company is required to be qualified, or that certificates obtained
are from the appropriate public officials in the jurisdictions referenced.
33. Litigation Confirmation.
A confirmation regarding litigation pending or threatened in writing
against Company or any Assets derives from Opinion Giver's knowledge as
defined at Interpretive Standard 6 and certificate reliance discussed at
Interpretive Standard 4, but not from any reviews of public or court
records or files of Opinion Giver or others.
Incorporation by Reference Accord
34. These Interpretive Standards may be incorporated by reference in
the Opinion Letter by a statement similar to the following:
The Opinion Letter is limited by, and is in accordance with, the
January 1, 1992 edition of the Interpretive Standards applicable
to Legal Opinions to Third Parties in Corporate Transactions
adopted by the Legal Opinion Committee of the Corporate and
Banking Law Section of the State Bar of Georgia, which
Interpretive Standards are incorporated in this Opinion Letter by
this reference.
OPINION LETTER CERTIFICATE
The undersigned, being the duly elected and appointed President of
General Manufactured Housing, Inc., a Georgia corporation (the "Company"),
hereby gives this certificate to induce ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
to issue (i) an opinion letter in favor of First Source Financial LLP and
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ in connection with a credit facility to the Company
being made pursuant to the terms and conditions of a certain Secured Credit
Agreement of even date herewith between the Company and First Source
Financial LLP (the "Agreement") (the "First Source Opinion"); (ii) an
opinion letter in favor of RFE Associates V, L.P., the State of Michigan
and Sterling Commercial Capital, Inc. in connection with the issuance and
sale by the Company of $5,000,000 aggregate principal amount of its Junior
Subordinated Notes, and (iii) an opinion letter in favor of The Equitable
Life Assurance Society of the United States in connection with the issuance
and sale by the Company of $15,000,000 aggregate principal amount of its
Senior Subordinated Notes.
The undersigned hereby certifies as follows:
A. Attached hereto as Exhibit A are the Articles of Incorporation of
the Company which have been certified by the Secretary of State
of Georgia, as in full force and effect as of the date hereof. No
amendment to such Articles of Incorporation has been filed in the
office of the Secretary of State of Georgia since the effective
date of certification of such Articles of Incorporation by the
Secretary of State of Georgia;
B. Attached hereto as Exhibit B are true, complete and correct
copies of the By-laws of the Company, and all amendments thereto,
as in full force and effect as of the date hereof;
C. Attached hereto as Exhibit C are true, complete and correct
copies of resolutions of the Board of Directors of the Company
(collectively, the "Company Resolutions"). The Company
Resolutions have not been amended or revoked since the date of
adoption and are the only resolutions relating to the Agreement
and were adopted in compliance with all procedural requirements
of the Company's Articles of Incorporation and Bylaws and the
Georgia Business Corporation Code;
D. Attached hereto as Exhibit D is a copy of the stock certificate
issued to GMH Holdings, Inc., a Delaware corporation and the sole
shareholder of the Company, representing 5250 shares of common
stock of the Company;
E. The directors voting on the Company Resolutions and the officers
acting on behalf of Company in the transactions contemplated by
the Agreement were duly appointed and incumbent in the offices at
the time of all relevant corporate action and at all relevant
times thereafter;
F. As of the date hereof, the Company has not received any notice
from the Secretary of Georgia of a determination that any grounds
exist for administratively dissolving the Company, and the
Company has not received notice of a commencement of any action
to judicially dissolve the Company;
▇. ▇▇▇▇▇▇▇ the board of directors nor the shareholders of the
Company has taken any action with respect to dissolution of the
Company, and the Company has not filed any notice of intent to
dissolve with the State of Georgia; and
H. Purchaser does not report to, and is not regulated by, any
federal or state governmental regulatory agency.
IN WITNESS WHEREOF, the undersigned has executed this Certificate, as
of the 21st day of December, 1995.
GENERAL MANUFACTURED HOUSING, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
Title: President
I, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Assistant Secretary of the Company, do hereby
certify that ▇▇▇▇ ▇. ▇▇▇▇▇ is the duly elected, qualified and acting
President of the Company, and that the signature of ▇▇▇▇ ▇. ▇▇▇▇▇ set forth
above is his true and genuine signature.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Secretary
EXHIBIT A
ARTICLES OF INCORPORATION
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
GENERAL MANUFACTURED HOUSING, INC.
I.
The name and style of the Corporation shall be GENERAL
MANUFACTURED HOUSING, INC.
II.
General Manufactured Housing, Inc. is organized
pursuant to the Georgia Business Corporation Code.
III.
General Manufactured Housing, Inc. is incorporated as a Georgia
For-Profit Corporation and is organized for the following purposes: To
construct, manufacture, assemble, buy, and sell all types of manufactured
buildings, structures and homes; to engage in any activity incidental to or
connected with the construction, erection, etc. of the manufactured
buildings, structures and homes; and to engage in any other for profit
business authorized under the laws of the State of Georgia.
IV.
The Corporation has the authority to issue not more than 100,000
shares of common stock at a par value of $100.00 per share.
V.
The Board of Directors is hereby expressly authorized to make,
alter or repeal the by-laws of the corporation.
VI.
The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate of Incorporation, in
any manner now or hereafter prescribed by statute in the State of Georgia,
and all rights conferred upon stockholders herein are granted subject to
this reservation.
VII.
Except as prohibited by law, the Corporation may indemnify any
person who is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise (including, without limitation,
any employee benefit plan) and may take such steps as may be deemed
appropriate by the Board of Directors, including purchasing and maintaining
insurance, entering into contracts (including, without limitation,
contracts of indemnification between the Corporation and its directors and
officers), creating a trust fund, granting security interests or using
other means (including, without limitation, a letter of credit) to ensure
the payment of such amounts as may be necessary to effect such
indemnification.
VIII.
No director shall have any personal liability to the Corporation
or to its shareholders for monetary damages for breach of duty of care or
other duty as a director, by reason of any act or omission occurring
subsequent to the date when this provision becomes effective, except that
this provision shall not eliminate or limit the liability of a director for
(a) any appropriation, in violation of his duties, or any business
opportunity of the Corporation; (b) acts or omissions which involve
intentional misconduct or a knowing violation of law; (c) liabilities of a
director imposed by Section 14-2-832 of the Georgia Business Corporation
Code; or (d) any transaction from which the director derived an improper
personal benefit.
IX.
Except for the Merger of GMH Acquisition Corp. into the
Corporation which is occurring simultaneously with the filing of these
Amended and Restated Articles of Incorporation, the Corporation shall not,
without first obtaining the affirmative vote or written consent of its
shareholders:
(i) authorize, approve or consummate any of the following
transactions or series of transactions: (A) any acquisition
of the Corporation by means of merger of the Corporation
with or into any other corporation or other entity or person
or other form of corporate reorganization in which the
Corporation shall not be the continuing or surviving entity
of such merger or reorganization (other than a mere
reincorporation transaction) or a transaction in which the
Corporation is the surviving entity but the shares of the
Corporation's capital stock outstanding immediately prior to
the transaction are exchanged or converted by virtue of the
transaction into other property, whether in the form of
securities, cash or otherwise, or (B) a sale of all or
substantially all of the assets of the Corporation, or (C) a
liquidation, dissolution or winding up of the Corporation;
(ii) make any loan, advance or capital contribution to, or
investment in, any of the officers, directors, employees,
providers, consultants, agents or other representatives of
the Corporation, other than travel or salary advances in the
ordinary course of business in a manner consistent with past
practice;
(iii) incur or assume or permit to exist any indebtedness for
borrowed money (including capitalized leases) other than
amounts owing under (A) that certain Secured Credit
Agreement dated as of December 21, 1995 by and between the
Corporation and First Source Financial LLP plus up to
$2,600,000, (B) that certain Note and Warrant Purchase
Agreement dated as of December 21, 1995 by and between the
Corporation, GMH Holdings, Inc. ("Holdings") and The
Equitable Life Assurance
Society of the United States and (C) that certain Securities
Purchase Agreement dated as of December 21, 1995 between and
among the Corporation, Holdings, RFE Investment Partners V,
L.P., Sterling Commercial Capital, Inc. and the State
Treasurer of the State of Michigan, as Custodian, as each
such documents may be amended, restated, supplemented or
otherwise modified from time to time, or issue any debt
securities or assume, guarantee, endorse (other than in the
ordinary course of business consistent with past practice)
or otherwise as an accommodation become responsible for,
liabilities of any other person;
(iv) purchase, hold or own any capital stock, evidence of
indebtedness or other security of any subsidiary of the
Corporation or other corporation, partnership, or other
entity, unless such corporation, partnership or other entity
is a wholly-owned subsidiary of the Corporation;
(v) engage in any new line of business outside the purposes set
forth in these Articles of Incorporation;
(vi) authorize or issue shares of any equity securities of the
Corporation, including any preferred stock, options or
warrants to purchase any such equity security;
(vii) make any acquisition of, or loan, advance or capital
contribution to, or investment in any business entity,
which, individually or together with any related series of
such transactions, exceeds $1,000,000;
(viii) make any capital expenditures in any one fiscal year in
excess of the sum of (A) $500,000 plus (B) the difference
between $500,000 and any unexpended amounts from prior
years; or
(ix) enter into any contract or transaction with an affiliate of
the Corporation that does not deal at arm's length with the
Corporation or which exceeds $25,000 in amount.
GENERAL MANUFACTURED HOUSING, INC.
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
EXHIBIT B
BY-LAWS
AMENDED AND RESTATED
BYLAWS
OF
GENERAL MANUFACTURED HOUSING, INC.
(amended as of 12/21/95)
ARTICLE I
OFFICES
The Corporation shall at all times maintain a registered office
in the State of Georgia and a registered agent at that address but may have
other offices located within or outside the State of Georgia as the Board
of Directors may determine.
ARTICLE II
SHAREHOLDERS' MEETING
2.1 Annual Meetings. The annual meeting of the shareholders for
the election of directors and the transaction of other business as may come
before the meeting shall be held each year on such day and at such hour as
shall be fixed by the Board of Directors.
2.2 Special Meetings. A special meeting of the shareholders may
be called at any time by the President or any holder or holders of as much
as twenty-five percent of the votes entitled to be cast on any issue
proposed to be considered at the meeting. Special meetings shall be held at
such a time and place and on such date as shall be specified in the notice
of the meeting.
2.3 Place. Annual or special meetings of shareholders may be held
within or without the State of Georgia.
2.4 Notice. Notice of annual or special shareholders meetings
stating place, day and hour of the meeting shall be given in writing not
less than ten nor more than fifty days before the date of the meeting,
either mailed to the last known address or personally given to each
shareholder and First Source Financial LLP ("First Source") at ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Notice of a meeting
may be waived by an instrument in writing executed before or after the
meeting. The waiver need not specify the purpose of the meeting or the
business transacted, unless one of the purposes of the meeting concerns a
plan of merger or consolidation, in which event the waiver shall comply
with the further requirements of law concerning such waivers. Attendance at
such meeting in person or by proxy shall constitute a waiver of notice
thereof. Notice of any special meeting at which amendments to or
restatements of the articles of incorporation, merger or consolidation of
the Corporation, or the disposition of corporate assets requiring
shareholder approval are to be considered shall state such purpose, and
further comply with all requirements of law.
2.5 Quorum. At all meetings of shareholders, shares representing
a majority of the votes entitled to be cast shall constitute a quorum for
the transaction of business, and no resolution or business shall be
transacted without the favorable vote of the holders of a majority of the
shares represented at the meeting and entitled to vote. A lesser number may
adjourn from day to day, and shall announce the time and place to which the
meeting is adjourned.
2.6 Action in Lieu of Meeting. Any action to be taken at a
meeting of the shareholders of the Corporation, or any action that may be
taken at a meeting of the shareholders, may be taken without a meeting if a
consent in writing setting forth the action so taken shall be signed by the
holders of all the shares entitled to vote with respect to the subject
matter thereof, or by the holders of such lesser number of shares as may be
required in accordance with any lawful provision of the Articles of
Incorporation, and any further requirements of law pertaining to such
consents have been complied with.
ARTICLE III
DIRECTORS
3.1 Management. Subject to these Bylaws, or any lawful agreement
between the shareholders, the full and entire management of the affairs and
business of the Corporation shall be vested in the Board of Directors,
which shall have and may exercise all of the powers that may be exercised
or performed by the Corporation.
3.2 Number of Directors. The shareholders shall fix by resolution
the precise number of members of the Board of Directors, provided that the
Board of Directors shall consist of at least one (1) member. Directors
shall be elected at each annual meeting of the shareholders and shall serve
for a term of one year and until their successors are elected. A majority
of said directors shall constitute a quorum for the transaction of
business. All resolutions adopted and all business transacted by the Board
of Directors shall require the affirmative vote of a majority of the
directors present at the meeting.
3.3 Vacancies. The directors may fill the place of any director
which may become vacant prior to the expiration of his term, such
appointment by the directors to continue until the expiration of the term
of the director whose place has become vacant, or may fill any directorship
created by reason of an increase in the number of directors, such
appointment by the directors to continue for a term of office until the
next election of directors by the shareholders and until the election of
the successor.
3.4 Meetings. The directors shall meet annually, without notice,
following the annual meeting of the shareholders provided, however, that
notice shall be provided to First ▇▇▇▇▇ at the address set forth above.
Special meetings of the directors may be called at any time by the
President or by any two directors, on two days' notice to each director and
First Source at the address set forth above, which notice shall specify the
time and place of the meeting. Notice of any such meeting may be waived by
an instrument in writing executed before or after the meeting. Directors
may attend and participate in meetings either in person or by means of
conference telephones or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and
participation in a meeting by means of such communication equipment shall
constitute presence in person at any meeting. Attendance in person at such
meeting shall constitute a waiver of notice thereof.
3.5 Action in Lieu of Meeting. Any action to be taken at a
meeting of the directors, or any action that may be taken at a meeting of
the directors, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the directors
and any further requirements of law pertaining to such consents have been
complied with.
3.6 Executive and Other Committees of Directors. The Board of
Directors may, by resolution passed by a majority of the whole Board,
designate an Executive Committee and one or more other committees, each
consisting of three or more directors of the Corporation and each having
such power and authority as the Board of Directors may by resolution
provide (except as limited by the laws of the State of Georgia). The Board
of Directors may authorize any such committee to exercise all or some of
the powers and authority of the Board of Directors in the management of the
property, business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it;
provided, however, that no such committee shall have the power or authority
in reference to:
(a) Amending the Certificate of Incorporation,
(b) Adopting an agreement of merger or consolidation,
(c) Recommending to the stockholders the sale, lease
or exchange of all or substantially all of the
Corporation's property and assets,
(d) Recommending to the stockholders a dissolution of
the Corporation or a revocation of a dissolution,
(e) Amending the By-laws of the Corporation,
(f) Declaring dividends, or
(g) Authorizing the issuance of stock.
Subject to any requirements of law, each committee shall take action in
accordance with such rules as are provided by resolution of the Board of
Directors or as the committee members shall unanimously agree upon.
3.7 Compensation Committee. The Board of Directors shall appoint
a Compensation Committee, consisting of any number of its members as it may
designate, consistent with the Articles of Incorporation, the bylaws and
the laws of the State of Georgia. Notwithstanding the foregoing, RFE
Investment Partners V, L. P. shall have the right to designate a member of
the Compensation Committee so long as it remains a holder of Preferred
Stock and Common Stock of the Corporation. The Compensation Committee shall
establish a general compensation
policy for the Corporation and shall have responsibility for the approval
of increases in directors' fees and in salaries.
3.8 Audit Committee. The Board of Directors shall appoint an
Audit Committee consisting of any number of its members as it may
designate, consistent with the Articles of Incorporation, the Bylaws and
the laws of the State of Georgia. Notwithstanding the foregoing, RFE
Investment Partners V, L.P. shall have the right to designate a member of
the Audit Committee so long as it remains a holder of Preferred Stock and
Common Stock of the Corporation. The Audit Committee shall select and
engage on behalf of the Corporation, subject to the consent of the
shareholders, and fix the compensation of, a firm of certified public
accountants whose duty it shall be to audit the books and accounts of the
Corporation and its subsidiaries for the fiscal year in which they are
appointed, and who shall report to such Committee. The Audit Committee
shall confer with the auditors and shall determine, and from time to time
shall report to the Board of Directors upon, the scope of the auditing of
the books and accounts of the Corporation and its subsidiaries. The Audit
Committee shall also be responsible for determining that the business
practices and conduct of employees and other representatives of the
Corporation, and its subsidiaries comply with the policies and procedures
of the Corporation.
3.9 Observatory Seat. So long as any Liabilities (as defined in
the Secured Credit Agreement dated as of December 21, 1995 between the
Corporation and First Source) remain outstanding, a representative of First
Source may attend meetings of the Board as an observer and have the right
to receive a copy of all Board materials.
3.10 Removal. Any director may be removed from office, with or
without cause, upon the vote of the shareholders holding a majority of the
shares entitled to be cast with respect to the election of directors, at a
meeting with respect to which notice of such purpose is given.
ARTICLE IV
OFFICERS
4.1 General Provisions. The officers of the Corporation shall
consist of a President, a Secretary and a Treasurer who shall be elected by
the Board of Directors, and such other officers as may be elected by the
Board of Directors or appointed as provided in these Bylaws. Each officer
shall be elected or appointed for a term of office running until the
meeting of the Board of Directors following the next annual meeting of the
shareholders of the Corporation, or such other term as provided by
resolution of the Board of Directors or the appointment to office. Each
officer shall serve for the term of office for which he is elected or
appointed and until his successor has been elected or appointed and has
qualified or his earlier resignation, removal from office or death. Any two
or more offices may be held by the same person.
4.2 President. The President shall be the chief executive officer
of the Corporation and shall have general and active management of the
operation of the Corporation. He shall be responsible for the
administration of the Corporation, including general supervision of the
policies of the Corporation and general and active management of the
financial affairs of the Corporation, and shall execute bonds, mortgages or
other contracts in the name and on behalf of the Corporation.
4.3 Secretary. The Secretary shall keep minutes of all meetings
of the shareholders and directors and have charge of the minute books,
stock books and seal of the Corporation and shall perform such other duties
and have such other powers as may from time to time be delegated to him by
the President or the Board of Directors.
4.4 Treasurer. The Treasurer shall be charged with the management
of the financial affairs of the Corporation, shall have the power to
recommend action concerning the Corporation's affairs to the President, and
shall perform such other duties and have such other powers as may from time
to time be delegated to him by the President or the Board of Directors.
4.5 Assistant Secretaries and Treasurers. Assistants to the
Secretary and Treasurer may be appointed by the President or elected by the
Board of Directors and shall perform such duties and have such powers as
shall be delegated to them by the President or the Board of Directors.
4.6 Vice Presidents. The Corporation may have one or more Vice
Presidents, elected by the Board of Directors, who shall perform such
duties and have such powers as may be delegated by the President or the
Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Share Certificates. Share certificates shall be numbered in
the order in which they are issued. They shall be signed by the President
or a Vice President and the Secretary or an Assistant Secretary and the
seal of the Corporation shall be affixed thereto. Share certificates shall
be kept in a book and shall be issued in consecutive order therefrom. The
name of the person owning the shares, the number of shares, and the date of
issue shall be entered on the stub of each certificate. Share certificates
exchanged or returned shall be cancelled by the Secretary or an Assistant
Secretary and placed in their original place in the stock book.
5.2 Transfer of Shares. Transfer of shares shall be made on the
stock books of the Corporation by the holder in person or by power of
attorney, on surrender of the old certificate for such shares, duly
assigned.
5.3 Voting. The holders of the capital stock shall be entitled to
one vote for each share of stock standing in their name.
ARTICLE VI
SEAL
The seal of the Corporation shall be in such form as the Board of
Directors may from time to time determine. In the event it is inconvenient
to use such a seal at any time, the signature of the Corporation followed
by the word "Seal" enclosed in parentheses or scroll shall be deemed the
seal of the Corporation. The seal shall be in the custody of the Secretary
and affixed by him or by his assistants on the certificates of stock and
other appropriate papers.
ARTICLE VII
AMENDMENT
These Bylaws may be amended by majority vote of the Board of
Directors of the Corporation or by vote of the shareholders holding a
majority of the shares entitled to vote, provided that the shareholders may
provide by resolution that any Bylaw provision repealed, amended, adopted
or altered by them may not be repealed, amended, adopted or altered by the
Board of Directors.
ARTICLE VIII
INDEMNIFICATION
Each person who is or was a director of officer of the
Corporation, and each person who is or was a director or officer of the
Corporation who at the request of the Corporation is serving or has served
as an officer, director, partner, joint venturer or trustee of another
Corporation, partnership, joint venture, trust or other enterprise shall be
indemnified by the Corporation against those expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement which are allowed to
be paid or reimbursed by the Corporation under the laws of the State of
Georgia and which are actually and reasonably incurred in connection with
any action, suit or proceeding, pending or threatened, whether civil,
criminal, administrative or investigative, in which such person may be
involved by reason of his being or having been a director of officer of
this Corporation or of any such other enterprise. Such indemnification
shall be made only in accordance with the laws of
the State of Georgia and subject to the conditions prescribed therein.
In any instance where the laws of the State of Georgia permit
indemnification to be provided to persons who are or have been an officer or
director of the Corporation or who are or have been an officer, director,
partner, joint venturer or trustee of any such other enterprise only on a
determination that certain specified standards of conduct have been met, upon
application for indemnification by any such person the Corporation shall
promptly cause such determination to be made (i) by the Board of Directors by
majority vote of a quorum consisting of directors not at the time parties to the
proceeding; (ii) if a quorum cannot be obtained, by majority vote of a committee
duly designated by the Board of Directors (in which designation directors who
are parties may participate), consisting of two or more directors not at the
time parties to the proceeding; (iii) by special legal counsel selected by the
Board of Directors or its committee in the manner prescribed in (i) or (ii), or
if a quorum of the Board of Directors cannot be obtained under (i), and a
committee cannot be designated under (ii), selected by majority vote of the full
Board of Directors (in which selection directors who are parties may
participate) or (iv) by the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination.
As a condition to any such right of indemnification, the Corporation
may require that it be permitted to participate in the defense of any such
action or proceeding through legal counsel designated by the Corporation and at
the expense of the Corporation.
The Corporation may purchase and maintain insurance on behalf of any
such persons whether or not the Corporation would have the power to indemnify
such officers and directors against any liability under the laws of the State of
Georgia. If any expenses or other amounts are paid by way of indemnification,
other than by court order, action by shareholders or by an insurance carrier,
the Corporation shall provide notice of such payment to the shareholders in
accordance with the provisions of the laws of the State of Georgia.
EXHIBIT C
COMPANY RESOLUTIONS
GENERAL MANUFACTURED HOUSING, INC.
_____________________________________________
ACTION TAKEN BY UNANIMOUS WRITTEN CONSENT
OF BOARD OF DIRECTORS
_____________________________________________
The undersigned, being all of the directors of General Manufactured
Housing, Inc. (the "Corporation") hereby consent, pursuant to Article III,
Section 3.5 of the By-laws of the Corporation and Section 14-2-821 of the
Georgia Business Corporation Code of the State of Georgia, to the adoption of
the following resolutions with the same force and effect as if said resolutions
had been duly adopted at a meeting of the Board of Directors of the Corporation,
and direct that this Consent be filed with the minutes of the Board of
Directors:
Election of Officers.
RESOLVED: That the following are hereby elected officers of the
Corporation until their successors are elected and have qualified:
▇▇▇▇ ▇. ▇▇▇▇▇ President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President
▇▇▇▇ ▇. ▇▇▇▇▇ Treasurer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Secretary
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Assistant Secretary
Merger
RESOLVED: That the Corporation hereby approves the merger into itself
of GMH Acquisition Corp., a Delaware Corporation (the "Parent"),
owning 100% of all issued and outstanding shares of the Corporation;
and further
RESOLVED: That the merger shall become effective when the Articles of
Merger (the "Articles of Merger") have been filed in the office of the
Secretary of State of the State of Georgia and the Certificate of
Ownership and Merger (the "Certificate of Ownership and Merger") has
been filed in the office of the Secretary of State of Delaware; and
further
RESOLVED: That the Articles of Incorporation, By-Laws, directors and
officers of the Corporation shall be the Articles of Incorporation,
By-Laws, directors and officers of the surviving corporation provided,
however, that the Articles of Incorporation of the Corporation shall
be amended and restated, upon filing of the Articles of Merger, to
read in its entirety as set forth in Exhibit A attached hereto; and
further
RESOLVED: That the Corporation has authorized one hundred thousand
(100,000) shares of common stock, $100.00 par value, of which five
thousand two hundred and fifty (5,250) shares of common stock are
issued and outstanding, of which five thousand two hundred and fifty
(5,250) shares are owned by the Parent. At the time the merger becomes
effective, all of the issued and outstanding shares of the Parent
shall be cancelled. The authorized capital stock of the Corporation
outstanding at the time of the merger, all of which is owned by the
Parent shall, at the time the merger becomes effective, be reissued to
GMH Holdings, Inc., a Delaware corporation; and further
RESOLVED: That the Plan of Merger, the Articles of Merger and the
Certificate of Ownership and ▇▇▇▇▇▇ presented to the Board of
Directors on the date hereof are hereby authorized and approved.
Secured Credit Agreement and Related Documents
RESOLVED: That the Secured Credit Agreement to be entered into by and
between First Source Financial LLP ("First Source") and the
Corporation (the "Secured Credit Agreement"), in substantially the
form presented to the Directors on the date hereof, is hereby
authorized and approved; and further
RESOLVED: That the Revolving Note in the maximum principal amount of
$16,000,000 made by the Corporation to First Source (the "Revolving
Note"), in substantially the form presented to the Directors on the
date hereof is hereby authorized and approved; and further
RESOLVED: That the Working Capital Note in the maximum principal
amount of $6,000,000 made by the Corporation to First Source (the
"Working Capital Note"), in substantially the form presented to the
Directors on the date hereof is hereby authorized and approved; and
further
RESOLVED: That the Term Loan Note in the maximum principal amount of
$4,000,000 made by the Corporation to First Source (the "Term Loan
Note"), in substantially the form presented to the Directors on the
date hereof is hereby authorized and approved; and further
RESOLVED: That the Security Agreement to be entered into by the
Corporation in favor of First Source (the "Security Agreement") and
the Assignment of Trademarks contemplated thereby (the "Assignment of
Trademarks"), in substantially the form presented to the Directors on
the date hereof, are hereby authorized and approved.
Subordination Agreement
RESOLVED: That the Subordination Agreement to be entered into by and
among the Corporation, First Source, The Equitable Life Assurance
Society of the United States ("Equitable"), RFE Investment Partners V,
L.P. ("RFE"), Sterling Commercial Capital, Inc. ("Sterling"), the
State Treasurer of the State of Michigan, Custodian of the Michigan
Public School Employees' Retirement System, Michigan State Police
Retirement System and Michigan Judges' Retirement System (" State of
Michigan"), GMH Holdings, Inc. and Strategic Investments & Holdings,
Inc. (the "Subordination Agreement"), in substantially the form
presented to the Directors on the date hereof, is hereby authorized
and approved.
Senior Subordinated Note
RESOLVED: That the Senior Subordinated Note in the maximum principal
amount of $17,243,295 ("Senior Subordinated Note") made by the
Corporation to Equitable in the execution form presented to the
Directors on the date hereof, is hereby authorized and approved.
Securities Purchase Agreement
RESOLVED: That the Securities Purchase Agreement (the "Securities
Purchase Agreement") to be entered into by and among the Corporation,
GMH Holdings, Inc., RFE, Sterling and State of Michigan, in
substantially the form presented to the Directors on the date hereof,
is hereby authorized and approved.
Junior Subordinated Notes
RESOLVED: That the Junior Subordinated Notes in the aggregate maximum
principal amount of $5,000,000 ("Junior Subordinated Notes") made by
the Corporation to each of RFE, Sterling and State of Michigan, in
substantially the form presented to the Directors on the date hereof,
is hereby authorized and approved.
Solvency Affidavit
RESOLVED: That the Solvency Affidavit to be executed by the
Corporation for the benefit of First Source, in substantially the form
presented to the Directors on the date hereof, is hereby authorized
and approved.
Deed to Secure Debt
RESOLVED: That the Deed to Secure Debt with respect to the property
known as ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the "Deed to
Secure Debt") to be executed by the Corporation in favor of First
Source, in substantially the form presented to the Directors on the
date hereof, is hereby authorized and approved.
Assignments of Leases
RESOLVED: That the Assignments of Leases with respect to the
properties known as Plant 2, Plant 3, Plant 4, Vacant Lot adjacent to
Plant 4 and Airplane Hangar (the "Assignments of Leases"), to be
executed by the Corporation in favor of First Source, in substantially
the form presented to the Directors on the date hereof, is hereby
authorized and approved.
Leasehold Mortgage
RESOLVED: That the Leasehold Mortgage, Assignment of Leases and Rents
and Security Agreement (the "Leasehold Mortgage"), to be executed by
the Corporation in favor of First Source, in substantially the form
presented to the Directors on the date hereof, is hereby authorized
and approved.
Execution of Documents
RESOLVED: That the President, any Vice President and any Executive
Vice Presidents, the Treasurer, the Secretary and the Assistant
Secretary of the Corporation, acting singly, be and hereby are
authorized to execute and deliver the First Amendment, the Articles of
Merger, Certificate of Ownership and Merger, the Secured Credit
Agreement, Revolving Note, Working Capital Note, Term Loan Note,
Subordination Agreement, Senior Subordinated Note, Securities Purchase
Agreement, Junior Subordinated Notes, Solvency Affidavit, Deed to
Secure Debt, Assignments of Leases, Security Agreement, Assignment of
Trademarks and Leasehold Mortgage on behalf of the Corporation with
such changes therein as the officer executing the same may approve
(his execution and delivery thereof to be conclusive evidence of such
approval), and each officer of the Corporation is hereby authorized to
take all such actions and execute and deliver all such other
agreements, certificates, instruments and other documents, and to
affix thereto the Corporation's seal as required, as may be necessary
or appropriate to perform and to carry out the purposes and intent of
the foregoing resolutions and the consummation of the transactions
contemplated thereby.
General Ratifications
RESOLVED: That the appropriate officers of the Corporation are
authorized to execute and deliver all such instruments, and amendments
to instruments, on behalf of the Corporation, and to take all such
action, as they deem necessary or appropriate to carry out the intent
of the agreements and documents referenced above and the above
resolutions and to consummate the Transactions. All acts authorized in
the above resolutions, but performed prior to the adoption of these
resolutions, are hereby ratified and affirmed.
RESOLVED: That any and all actions heretofore taken in furtherance of
the transactions authorized or contemplated by the foregoing
resolutions by each officer of the Corporation, be and hereby are,
ratified, approved and confirmed, including without limiting the
foregoing, the execution and delivery of any agreements, certificates,
financing statements, filings, affidavits, instruments and other
documents as may be or have been necessary or appropriate in order to
effectuate the purposes of the foregoing resolutions, and the
consummation of all transactions contemplated thereby and in
connection therewith.
This consent may be executed in two or more counterparts,
each of which shall be deemed to be an original and all which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have signed this
Consent as of the 21st day of December, 1995.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
▇▇▇▇ ▇. ▇▇▇▇▇
Director
GENERAL MANUFACTURED HOUSING, INC.
ACTION TAKEN BY WRITTEN CONSENT
OF SOLE STOCKHOLDER
The undersigned, being the sole stockholder of General Manufactured
Housing, Inc., a Georgia corporation (the "Corporation"), does hereby consent,
pursuant to Article II, Section 2.6 of the By-Laws of the Corporation and
Section 12-2-704 of the Georgia Business Corporation Code, to the adoption of
the following resolutions with the same force and effect as if said resolutions
had been duly adopted at a meeting of the stockholders of the Corporation, and
direct that this Consent be filed with the minutes of the stockholders:
Merger
RESOLVED: That GMH Acquisition Corp., a corporation organized and existing
under the laws of the State of Delaware ("Parent") be merged into the
Corporation; and further
RESOLVED: That the merger shall become effective when the Articles of
Merger (the "Articles of Merger") have been filed in the office of the
Secretary of State of the State of Georgia and the Certificate of
Ownership and Merger (the "Certificate of Ownership and Merger") has been
filed in the office of the Secretary of State of Delaware; and further
RESOLVED: That the Articles of Incorporation, By-Laws, directors and
officers of the Corporation shall be the Articles of Incorporation, By-
Laws, directors and officers of the surviving corporation provided,
however, that the Articles of Incorporation of the Corporation shall be
amended and restated, upon filing of the Articles of Merger, to read in
their entirety as set forth in Exhibit A attached thereto; and further
RESOLVED: That the Corporation has authorized one hundred thousand
(100,000) shares of common stock, $100.00 par value, of which five
thousand two hundred and fifty (5,250) shares of common stock are issued
and outstanding, of which five thousand two hundred and fifty (5,250)
shares are owned by the Parent. At the time the merger becomes effective,
all of the issued and outstanding shares of the Parent shall be cancelled.
The authorized capital stock of the Corporation outstanding at the time of
the merger, all of which is owned by the Parent shall, at the time the
merger becomes effective, be reissued to GMH Holdings, Inc., a Delaware
corporation, which, prior to the merger, is the sole shareholder of
Parent; and further
RESOLVED: That the Plan of Merger, the Articles of Merger and the
Certificate of Ownership and Merger presented to the Board of Directors on
the date hereof are hereby authorized and approved; and further
RESOLVED: That the undersigned hereby acknowledges that the 5,250 shares
of common stock of the Corporation (the "Shares") being converted in the
merger are being converted for the undersigned's own account without the
participation of any other person, with the intent of holding the Shares
for investment and without the intent of participating, directly or
indirectly, in a distribution of the Shares or any portion thereof, nor is
the undersigned aware of the existence of any distribution of the
Corporation's securities.
RESOLVED: That the President, any Vice President or Executive Vice
President, the Treasurer, the Secretary and the Assistant Secretary of the
Corporation, acting singly, be and hereby are authorized to execute and
deliver the Articles of ▇▇▇▇▇▇ and the Certificate of Ownership and Merger
on behalf of the Corporation with such changes therein as the officer
executing the same may approve (his execution and delivery thereof to be
conclusive evidence of such approval), and each officer of the Corporation
is hereby authorized to take all such actions and execute and deliver all
such other agreements, certificates, instruments and other documents, and
to affix thereto the Corporation's seal as required, as may be necessary
or appropriate to perform and to carry out the purposes and intent of the
foregoing resolutions and the consummation of the transactions
contemplated thereby.
IN WITNESS WHEREOF, the undersigned have executed this
Consent as of the 21st day of December, 1995.
GMH ACQUISITION CORP.,
as sole stockholder
By: /s ▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇ ▇. ▇▇▇▇▇, President
GMH ACQUISITION CORP.
GENERAL MANUFACTURED HOUSING, INC.
____________________________________________________
ACTION TAKEN BY WRITTEN CONSENT
IN LIEU OF JOINT MEETING
____________________________________________________
The undersigned, being the sole director of GMH Acquisition Corp., a
Delaware corporation ("Acquisition"), and of General Manufactured Housing ,
Inc., a Georgia corporation ("GMH"), (collectively, the "Corporations"), does
hereby consent, pursuant to Article II, Section 7 of the By-Laws of Acquisition
and Section 141(f) of the General Corporation Law of the State of Delaware and
Article III, Section 3.5 of the By-laws of GMH and Section 14-2-821 of the
Georgia Business Corporation Code to the adoption of the following resolutions
with the same force and effect as if said resolutions had been duly adopted at a
meeting of the Boards of Directors of each of the Corporations, and direct that
this Consent be filed with the minutes of the Board of Directors of each:
Election of Officers
RESOLVED: That the following are hereby elected officers of each of the
Corporations:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President
▇▇▇▇▇ ▇▇▇▇▇▇ Assistant Secretary
Execution of Merger Documents
RESOLVED: That any Vice President and any Assistant Secretary of the
Corporations, acting singly, be, and each of them hereby is, authorized to
execute and deliver the Articles of Merger in the form attached hereto as
Exhibit A (the "Articles of Merger") merging Acquisition into GMH with the
latter surviving, to be filed with the Secretary
of State of the State of Georgia on behalf of the Corporations with such
changes therein as the officer executing the same may approve (his or her
execution and delivery thereof to be conclusive evidence of such
approval), and each officer of the Corporations is hereby authorized to
take all such actions and execute and deliver all such other documents,
and to affix thereto the Corporations' respective seals as required, as
may be necessary or appropriate to perform and to carry out the purposes
and intent of the foregoing resolutions and the consummation of the
transactions contemplated thereby.
Execution of Amended and Restated Articles of Incorporation
RESOLVED: That any Vice President and any Assistant Secretary of the
Corporations, acting singly, be, and each of them hereby is, authorized to
execute and deliver the Amended and Restated Articles of Incorporation of
GMH attached to the Articles of Merger, with such changes therein as the
officer executing the same may approve (his or her execution and delivery
thereof to be conclusive evidence of such approval), and each officer of
the Corporations is hereby authorized to take all such actions and execute
and deliver all such other documents, and to affix thereto the
Corporations' respective seals as required, as may be necessary or
appropriate to perform and to carry out the purposes and intent of the
foregoing resolutions and the consummation of the transactions
contemplated thereby.
Resignation of Officers.
RESOLVED: That, effective immediately following the execution and filing
of the Articles of Merger, with the attached Amended and Restated Articles
of Incorporation, with the Secretary of State of the State of Georgia, the
resignations of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ as officers of the
Corporations are accepted by each of the Corporations.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of the
21st day of December, 1995.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
___________________________________
▇▇▇▇ ▇. ▇▇▇▇▇, Sole Director
of GMH Acquisition Corp. and
Sole Director of General
Manufactured Housing, Inc.
EXHIBIT A
ARTICLES OF MERGER
EXHIBIT D
STOCK CERTIFICATE
[Form of Stock Certificate No. 27 for 5,250 shares of Common Stock of General
Manufactured Housing, Inc. issued to GMH Holdings, Inc. on December 21, 1995.]
EXHIBIT C
EXHIBIT C-2
Form of Opinion of Georgia Counsel
See attachment to Exhibit C-1.
EXHIBIT C-3
Form of Opinion of Company Counsel
Not Included.
EXHIBIT D
Form of Restated Certificate of Incorporation
RESTATED
CERTIFICATE OF INCORPORATION
OF
GMH HOLDINGS, INC.
Pursuant to the provisions of Sections 241 and 245 of the General
Corporation Law of the State of Delaware (the "G.C.L.") the undersigned, ▇▇▇▇ ▇.
▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the President and Assistant Secretary,
respectively, of GMH HOLDINGS, INC., a corporation organized and existing in the
State of Delaware (the "Corporation"), do hereby certify as follows:
FIRST: The name of the Corporation is GMH HOLDINGS, INC.
SECOND: The Certificate of Incorporation of the Corporation was filed
with the Secretary of State on November 20, 1995.
THIRD: This Restated Certificate of Incorporation restates, integrates
and amends the Certificate of Incorporation of the Corporation. This Restated
Certificate of Incorporation amends the authorized capital stock of the
Corporation and the relative rights and preferences thereof. The Corporation has
not received any payment for any of its stock, and this Restated Certificate of
Incorporation has been duly adopted by the Directors of the Corporation in
accordance with the provisions of Sections 241 and 245 of the G.C.L.
FOURTH: The capital of the Corporation will not be reduced under or by
reason of the amendments to the Certificate of Incorporation effected hereby.
FIFTH: The text of the Certificate of Incorporation is hereby amended
and restated to read as herein set forth in full:
FIRST: The corporate name of the corporation (hereinafter called the
"Corporation") is GMH HOLDINGS, INC.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ 19901, and the name of the registered agent of
this Corporation in the State of Delaware at such address is The ▇▇▇▇▇▇▇▇-▇▇▇▇
Corporation/System, Inc.
THIRD: The purposes for which the Corporation is organized shall
include the transaction of any or all lawful business for which corporations may
be organized under the provisions of the General Corporation Law of the State of
Delaware.
FOURTH: A. The Corporation is authorized to issue four (4) classes
of capital stock, to be designated, respectively, Preferred Stock ("Preferred
Stock"), Class A Common Stock, Class B Common Stock and Class C Common Stock
(collectively, "Common Stock"). The total number of shares of capital stock
which the Corporation is authorized to issue is Seventeen Million, Four Hundred
Sixty-Two Thousand, Five Hundred (17,462,500). The total number of shares of
Preferred Stock which the Corporation shall have the authority to issue is Ten
Million, One Hundred Fifty Thousand (10,150,000). The total number of shares of
Class A Common Stock which the Corporation shall have the authority to issue is
Four Million, Three Hundred Seventy-five Thousand (4,375,000). The total number
of shares of Class B Common Stock which the Corporation shall have the authority
to issue is Seven Hundred Eighty-Seven Thousand, Five Hundred (787,500). The
total number of shares of Class C Common Stock which the Corporation shall have
authority to issue is Two Million, One Hundred Fifty Thousand (2,150,000). The
Preferred Stock shall have a par value of $.001 per share, the Class A Common
Stock shall have a par value of $.001 per share, the Class B Common Stock shall
have a par value of $.001 per share and the Class C Common Stock shall have a
par value of $.001 per share.
B. The Preferred Stock shall be divided into series. The first
series shall consist of 8,000,000 shares and is designated "Series A Redeemable
Preferred Stock" (the "Series A Preferred Stock"). The second series shall
consist of 2,150,000 shares and is designated "Series B Convertible Preferred
Stock" (the "Series B Preferred Stock"). The remaining shares of Preferred Stock
may be issued from time to time in one or more series. The Board of Directors of
the Corporation is authorized, subject to limitations prescribed by law and the
provisions of this Article FOURTH, to provide for the issuance of all or any of
the remaining shares of Preferred Stock in one or more series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions thereof.
The Board of Directors is also expressly authorized to increase or decrease (but
not below the number of shares of such series then outstanding) the number of
shares of any series other than the Series A or Series B Preferred Stock
subsequent to the issue of shares of that series. In case the number of shares
of any such series shall be so decreased, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination as to the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, if any,
whether dividends shall be cumulative, and if so, from which date or
dates, and the relative rights of priority, if any, of payment of
dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such
voting rights;
(d) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the
Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment
of shares of that series; and
(h) Any other relative rights, preferences and limitations of
that series.
C. The following is a statement of the powers, designations,
preferences, privileges, rights, qualifications, limitations and restrictions in
respect to the Class A Common Stock, Class B Common Stock, Class C Common Stock,
the Series A Preferred Stock and the Series B Preferred Stock of the
Corporation:
1. Identical Rights of Class A, Class B and Class C Common Stock.
Except as otherwise provided in this Article FOURTH, all shares of Class A
Common Stock, Class B Common Stock and Class C Common Stock shall be identical
and shall entitle the holders thereof to the same rights and privileges.
2. Dividends; Other Distributions.
(a) The holders of shares of the Series A Preferred Stock shall
be entitled to receive dividends, out of any assets legally available
therefor, prior and in preference to any declaration or payment of any
dividend on the Series B Preferred Stock, Common Stock or other equity
securities of the Corporation, at the annual rate of twelve cents
($0.12) per share (as adjusted for any combinations, consolidations or
stock distributions or dividends with respect to such shares) payable,
only if and to the extent there exist cumulative earnings sufficient
to pay such dividend, quarterly in arrears on each March 31, June 30,
September 30 and December 31 of each year commencing March 31, 1996.
Such dividends shall accrue on each share from the date of filing this
Restated Certificate of Incorporation with the Secretary of State of
the State of Delaware (the "Original Issue Date") and shall accrue
from day to day, whether or not earned or declared. Such dividends
shall be cumulative so that if such dividends in respect of any
previous or current quarterly dividend period, at the annual rate
specified above, shall not have been paid or declared and a sum
sufficient for the payment thereof set apart, the deficiency shall
first be fully paid before any dividend or other distribution shall be
paid on or declared and set apart for the Series B Preferred Stock,
the Common Stock or any other equity securities of the Corporation.
(b) The holders of shares of Series B Preferred Stock shall not
be entitled to receive dividends on such shares.
(c) No dividends or distributions may be declared and paid upon
shares of Common Stock in any fiscal year of the Corporation so long
as any Series A Preferred Stock or Series B Preferred Stock remains
outstanding. When and as dividends are declared on the Common Stock,
whether payable in cash, in property or in securities of the
Corporation, the holders of the Common Stock shall be entitled to
share equally, share for share, in such dividends, except that if
dividends are declared which are payable in shares of Common Stock,
dividends shall be declared which are payable at the same rate on all
classes of stock, but such dividends shall be payable only in shares
of Class A Common Stock to
holders of Class A Common Stock, shall be payable only
in shares of Class B Common Stock to holders of Class B
Common Stock and shall be payable only in shares of
Class C Common Stock to holders of Class C Common
Stock.
(d) If the Corporation shall in any manner subdivide (by stock
split, stock dividend or otherwise) or combine (by reverse stock split
or otherwise) the outstanding shares of one class of Common Stock, the
outstanding shares of the other class of Common Stock shall be
proportionately subdivided or combined.
3. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
distributions to the shareholders of the Corporation shall be made in the
following manner:
(a) The holders of the Series A Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of
any of the assets or surplus funds of the Corporation to the holders
of the Series B Preferred Stock or the Common Stock, by reason of
their ownership of such stock, (i) the amount of $1.00 per share (the
"Series A Original Cost") for each share of Series A Preferred Stock
then held by them, adjusted for any combinations, consolidations,
stock splits, or stock distributions or dividends with respect to such
shares, plus (ii) an amount equal to the accrued but unpaid dividends
whether or not earned or declared, on such share of Series A Preferred
Stock (such sum being referred to herein as the "Series A Liquidation
Value"). The assets and funds thus distributed among the holders of
the Series A Preferred Stock shall be distributed among the holders of
the Series A Preferred Stock in proportion to the full Series A
Liquidation Value each such holder is otherwise entitled to receive in
accordance with the preceding sentence.
(b) If, upon the completion of the distributions contemplated by
Section C.3(a) of this Article FOURTH, assets and funds remain
available for distribution by the Corporation, the holders of the
Series B Preferred Stock and Class C Common Stock shall be entitled to
receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Class
A and Class B Common Stock, by reason of their ownership of such
stock, (i) the amount of $1.00 per share (the "Series B and Class C
Liquidation Value") for each share of Series B Preferred Stock and
Class C Common Stock then held by them, adjusted for any combinations,
consolidations, stock splits, or stock distributions or dividends with
respect to such shares. The assets and funds thus distributed among
the holders of the Series B Preferred Stock and Class C Common Stock
shall be distributed among the holders of the Series B Preferred Stock
and Class C Common Stock in proportion to the full Series B and Class
C Liquidation Value each such holder is otherwise entitled to receive
in accordance with the preceding sentence.
(c) If, upon the completion of the distributions contemplated by
Sections C.3(a) and (b) of this Article FOURTH, assets and funds
remain available for distribution by the Corporation, the entire
remaining assets and funds of the Corporation legally available for
distribution, if any, shall be distributed among the holders of the
Series B Preferred Stock and the Common Stock in proportion to the
number of shares of the Series B Preferred Stock and of the Common
Stock then held by them such that each share of Series B Preferred
Stock and each share of Common Stock shall be entitled to a ratable
distribution of such assets and funds.
(d) For purposes of this Section C.3, unless
otherwise approved by the holders of at least 66-2/3% of the then
outstanding Series A Preferred Stock voting as a class, (i) any
acquisition of the Corporation by means of merger of the Corporation
with or into any other corporation or other entity or person or other
form of corporate reorganization in which the Corporation shall not be
the continuing or surviving entity of such merger or reorganization
(other than a mere reincorporation transaction) or a transaction in
which the Corporation is the surviving entity but the shares of the
Corporation's capital stock outstanding immediately prior to the
transaction are exchanged or converted by virtue of the transaction
into other property, whether in the form of securities, cash or
otherwise, or (ii) a sale of all or substantially all of the assets of
the Corporation shall be treated as a liquidation, dissolution or
winding up of the Corporation and shall entitle the holders of Series
A Preferred Stock, the Series B Preferred Stock and the Class C Common
Stock to receive at closing, in cash, securities or other property
(valued as provided in Section C.3(e)) in amounts as specified in
Sections C.3(a) and (b) of this Article FOURTH.
(e) Whenever the distribution provided for in this Section C.3
shall be payable in securities or property other than cash, the "fair
value" of the assets or property to be distributed in such event shall
be determined in good faith by the Board of Directors of the
Corporation.
4. Voting Rights.
(a) General Voting Rights. Except as otherwise provided herein
and in Section C.7 of this Article FOURTH, and except as otherwise
required by law, (i) the holder of each share of Class A Common Stock
and Class C Common Stock issued and outstanding shall have one vote
per share, and (ii) the holder of each share of Series B Preferred
Stock shall be entitled to the number of votes as is equal to the
number of shares of Class C Common Stock into which such holder's
shares of Series B Preferred Stock could be converted at the record
date for determination of the shareholders entitled to vote on such
matters, or, if no such record date is established, at the date such
vote is taken or any written consent of stockholders is solicited, and
shall have voting rights and powers equal to the voting rights and
powers of the Class C Common Stock (except as otherwise expressly
required by law), such votes to be counted together with all other
shares of stock of the Corporation having general voting power and not
separately as a class. Except as expressly provided herein, the Class
B Common Stock and the Series A Preferred Stock shall be non-voting.
Holders of Common Stock, Series A Preferred Stock and Series B
Preferred Stock shall be entitled to notice of any stockholders,
meeting in accordance with the By-laws of the Corporation. Fractional
votes by the holders of Series B Preferred Stock, as the case may be,
shall not, however, be permitted, and any fractional voting rights
resulting from the above formula (after aggregating all shares into
which shares of Series B Preferred Stock held by each holder could be
converted) shall be rounded to the nearest lower whole number.
(b) Special Voting Rights. No amendment to, or modification or
waiver of, any provision of this Certificate of Incorporation or the
By-Laws of the Corporation that (i) alters or changes the powers,
preferences or rights of the shares of Class B Common Stock or (ii)
modifies the provisions of Section C.5(b)(iii) of this Article FOURTH
as to shares of Class A Common Stock shall be effective without the
vote as a separate class of the holders of at least 66-2/3% of the
shares of the Class B Common Stock.
(c) Meeting Procedures. At every meeting of the
holders of the Class A and Class C Common Stock, such holders shall
vote together as a class. At every meeting of the holders of the Class
A, Class B and Class C Common Stock at which the holders of Class B
Common Stock are entitled to vote on any matter, such holders shall,
except as otherwise provided in subdivision (b), vote together as a
single class.
(d) Board Voting Matters. The Board of Directors shall consist
of seven (7) members. The holders of Series A Preferred Stock, as a
class, shall be entitled to elect two (2) members of the Board of
Directors. The holders of the Series B Preferred Stock and Class C
Common Stock, voting together as a class, shall be entitled to elect
four (4) members of the Board of Directors. The holders of the Class A
Common Stock as a class, shall be entitled to elect the remaining
member of the Board of Directors.
(e) Board Vacancy Procedures. In the case of any vacancy in the
office of a director occurring among the directors elected by the
holders of the Series A Preferred Stock, Series B Preferred Stock
and/or Class C Common Stock and Class A Common Stock, as the case may
be, pursuant to Section C.4(d) of this Article FOURTH, the Corporation
shall, promptly, but in any event within five (5) days after the
creation of such vacancy, call a special meeting of stockholders for
the purpose of filling any vacancy created in the Board, in accordance
with the By-Laws of the Corporation. The Corporation shall immediately
thereafter give the stockholders of the Corporation notice of such
special meeting. At such special meeting, the stockholders entitled to
elect the director(s) as to which the vacancy relates shall be
entitled to elect a director to fill each such vacancy for the
unexpired term of such Board seat, and such director or directors
shall serve until the next annual meeting of stockholders or until his
successor or successors shall have been duly elected and shall
qualify. Any director who shall have been elected by the holders of
the Series A Preferred Stock, Series B Preferred Stock and/or Class C
Common Stock or Class A Common Stock, as the case may be, or any
director so elected as provided in the preceding sentence hereof, may
be removed during the aforesaid term of office, whether with or
without cause, only by the affirmative vote of the holders of a
majority of the Series A Preferred Stock, Series B Preferred Stock
and/or Class C Common Stock or Class A Common Stock, as the case may
be, that elected such director.
(f) So long as any shares of the Series A Preferred Stock
remain outstanding, in the event of (i) a failure of the Corporation
to redeem shares of Series A Preferred Stock as required pursuant to
Section C.6 of this Article FOURTH; (ii) a failure of the Corporation
to pay dividends on the Series A Preferred Stock as provided in
Section C.2 of this Article FOURTH and such failure continues such
that the Corporation shall have accrued and unpaid dividends in
respect of the Series A Preferred Stock in excess of $2,500,000; or
(iii) the Corporation or any subsidiary of the Corporation shall
default in the payment of any of the Corporation's (or such
subsidiary's) indebtedness for borrowed money (including capitalized
leases) in an amount in excess of $10,000, and such default shall
continue unwaived or uncured for a period of 180 days or more (the
"Events of Default"), then the holders of the Series A Preferred
Stock, as a class, shall (immediately upon the giving of written
notice to the Corporation by the holders of a majority of the then
outstanding shares of Series A Preferred Stock) be entitled to elect
the smallest number of directors that shall constitute a majority of
the authorized number of directors of the Corporation, and the holders
of the Class A Common Stock, Class C Common Stock and Series B
Preferred Stock, as a class, voting together as a single class, shall
be entitled to elect the remaining
members of the Board of Directors in accordance with the procedures
set forth in Section C.4(g). Upon the election by the holders of the
Series A Preferred Stock, as a class, of the directors they are
entitled to elect as provided in the immediately preceding sentence,
the terms of office of all persons who were theretofore directors of
the Corporation shall forthwith terminate, whether or not the holders
of the Class A Common Stock, Class C Common Stock and Series B
Preferred Stock, voting together as a single class, shall then have
elected the remaining directors of the Corporation. If, after the
election of a new Board of Directors pursuant to this Section C.4(f),
the Events of Default are cured (which for purposes of clause (ii) of
this subparagraph (f) shall mean that accrued and unpaid dividends on
the Series A Preferred Stock in excess of $500,000 shall have been
paid to the holders thereof and for purposes of clause (iii) of this
subparagraph (f) shall mean that no default in the payment of any of
the Corporation's (or such subsidiary's) indebtedness for borrowed
money shall exist), then the holders of the Series A Preferred Stock
shall be divested of the special voting rights specified in this
section, and the voting procedures set forth in Section C.4(d) of this
Article FOURTH shall immediately, without any further action, apply.
However, the special voting rights of this section shall again accrue
to the holders of the shares of the Series A Preferred Stock, as a
class, in case of any later occurrence of an Event of Default. Upon
the termination of any such special voting rights as hereinabove
provided, the Board of Directors shall promptly call a special meeting
of the stockholders at which all directors will be elected in
accordance with the provisions of Section C.4(d) of this Article
FOURTH, and the terms of office of all persons who are then directors
of the Corporation shall terminate immediately upon the election of
their successors.
(g) Whenever under the provisions of Section C.4(f) hereof, the
right shall have accrued to the holders of the Series A Preferred
Stock, as a class, to elect a majority of the Corporation's directors,
the Board of Directors shall, within ten (10) days after delivery to
the Corporation at its principal office of a request to such effect by
the holders of a majority of the then outstanding shares of the Series
A Preferred Stock, call a special meeting of the stockholders for the
election of directors, to be held upon not less than ten (10) nor more
than twenty (20) days' notice to such holders. If such notice of
meeting is not given within the ten (10) days required above, the
holders of Series A Preferred Stock requesting such meeting may also
call such meeting and for such purposes shall have access to the stock
books and records of the Corporation. At any meeting so called or at
any other meeting held for the election of directors while the holders
of shares of Series A Preferred Stock shall have the voting power
provided in Section C.4(f), the holders of a majority of the shares of
Series A Preferred Stock present in person or by proxy or voting by
written consent, shall be sufficient to constitute a quorum for the
election of directors as herein provided. In the case of any vacancy
in the office of a director occurring among the directors elected by
the holders of Series A Preferred Stock pursuant to Section C.4(f),
the remaining directors so elected by that class may by affirmative
vote of a majority thereof (or the remaining director so elected if
there be but one) elect a successor or successors to hold office for
the unexpired term of the director or directors whose place or places
shall be vacant, provided that if there are no remaining directors so
elected by that class, the vacancies may be filled by the affirmative
vote of the holders of a majority of the shares of Series A Preferred
Stock given either at a special meeting of such stockholders duly
called for that purpose or pursuant to a written consent of
stockholders. Any directors who shall have been elected by the holders
of Series A Preferred Stock or by any directors so elected as provided
in the next preceding sentence hereof may be removed during the
aforesaid term of office, either with or without cause, by, and only
by, the affirmative vote of the holders of a majority of the shares of
the Series A Preferred Stock who elected such director or directors,
given either at a special meeting of such stockholders duly called for
that purpose or pursuant to a written consent of stockholders, and any
vacancy thereby created may be filled by the holders of Series A
Preferred Stock represented at such meeting or pursuant to such
written consent.
5. Conversion.
(a) The holders of the Series B Preferred Stock and Class C
Common Stock shall have conversion rights as follows:
(i) Right to Convert. (A) Each share of Series B Preferred Stock
shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of the
Corporation or any transfer agent for the Series B Preferred Stock,
into such number of fully paid and nonassessable shares of Class C
Common Stock as is determined by dividing the initial Series B
Conversion Price by the Series B Conversion Price then in effect. The
"initial Series B Conversion Price" for the Series B Preferred Stock
shall be $1.00. The initial Series B Conversion Price shall be subject
to adjustment as hereinafter provided. No amount shall be payable by a
shareholder in respect of the conversion of any share of Series B
Preferred Stock.
(ii) Automatic Conversion.
(A) Each share of Series B Preferred Stock shall be
converted into one or more share(s) of Class A Common Stock at
the then-effective Series B Conversion Price for such share of
Series B Preferred Stock, at the option of the Corporation,
immediately upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Securities
Act"), covering the offer and sale of shares of the Corporation's
Common Stock for the account of the Corporation and/or selling
stockholders to the public at a price per share of not less than
$5.00 per share (appropriately adjusted for any recapitalization,
stock split, reverse stock split, stock dividend or the like) and
resulting in aggregate net proceeds to the Corporation (after
deducting underwriters' discounts and expenses relating to the
issuance, including fees of the Corporation's counsel) of not
less than $10,000,000 (a "Qualified Offering") if and only if the
holders of the Series B Preferred Stock are first paid their
liquidation preference provided for in Section C.3(b) hereof.
(B) Each share of Class C Common Stock shall be converted
into one share of Class A Common Stock, at the option of the
Corporation, immediately upon the closing of a Qualified Offering
if and only if the holders of the Class C Common Stock are first
paid their liquidation preference provided for in Section C.3(b)
hereof.
(iii) Mechanics of Conversion. No fractional shares of Class A
Common Stock or Class C Common Stock shall be issued upon conversion
of Series B Preferred Stock. All shares of Class A Common Stock or
Class C Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series B
Preferred Stock by a holder thereof shall be aggregated for purposes
of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of
Class A Common Stock or Class C Common Stock, the Corporation shall,
in lieu of issuing any fractional shares to which the holder would be
otherwise entitled, pay cash equal to the fair market value of such
fractional share on the date of conversion, which fair market value
shall be determined in good faith by the Board of Directors. Before
any holder of Series B Preferred Stock shall convert into full shares
of Class A Common Stock or Class C Common Stock and to receive
certificates therefor, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation
or of any transfer agent for the Series B Preferred Stock, and shall
give written notice to the Corporation at such office that such holder
elects to convert the same. The Corporation shall, as soon as
practicable thereafter, issue and deliver at the office of the
Corporation or at such transfer agent's office to such holder of
Series B Preferred Stock, (i) a certificate or certificates for the
number of shares of Class A Common Stock or Class C Common Stock to
which such holder shall be entitled as aforesaid, and (ii) cash or a
check payable to the holder of such Series B Preferred Stock in the
amount of any cash amounts payable as the result of a conversion into
fractional shares of Class A Common Stock or Class C Common Stock.
Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of such surrender of the Series B
Preferred Stock to be converted, or, in the case of a conversion at
the option of the Corporation pursuant to Section C.5(a)(ii),
immediately prior to the closing of the Qualified Offering, and the
person or persons entitled to receive the Class A Common Stock or
Class C Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such Class A
Common Stock or Class C Common Stock on the date of such conversion.
If the conversion is in connection with a Qualified Offering the
conversion shall be conditioned upon the closing with the underwriter
of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Class A Common Stock issuable
upon such conversion of the Series B Preferred Stock shall not be
deemed to have converted such Series B Preferred Stock, until
immediately upon the closing of such sale of securities.
(iv) Adjustments to Conversion Price for Certain Issues.
(A) Adjustments for Subdivisions, Combinations or
Consolidation of Class A or Class C Common Stock. In the event
the Corporation at any time or from time to time after the
Original Issue Date shall declare or pay, without consideration,
any dividend on the Class A Common Stock or Class C Common Stock
payable in Class A Common Stock or Class C Common Stock or in any
right to acquire Class A Common Stock or Class C Common Stock for
no consideration, or shall effect a subdivision of the
outstanding shares of Class A Common Stock or Class C Common
Stock into a greater number of shares of Class A Common Stock or
Class C Common Stock (by stock split, reclassification or
otherwise than by a payment of a dividend in Class A Common Stock
or Class C Common Stock or in any right to acquire Class A Common
Stock or Class C Common Stock), or in the event the outstanding
Class A Common Stock or Class C Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Class A Common
Stock or Class C Common Stock, then the Series B Conversion Price
in effect immediately prior to such event shall, concurrently
with the effectiveness of such event, be proportionately
decreased or increased as appropriate. In the event that the
Corporation shall declare or pay, without consideration, any
dividend on the Class A Common Stock or Class C Common Stock
payable in any right to acquire Class A Common Stock or Class C
Common Stock for no consideration, then the Corporation shall be
deemed to have made a dividend payable in Class A Common Stock or
Class C Common Stock in an amount of shares equal to the maximum
number of shares issuable upon exercise of such rights to acquire
Class A Common Stock or Class C Common Stock.
(B) Adjustments for Reclassification, Exchange and
Substitution. If the Class A Common Stock or Class C Common Stock
issuable upon conversion of the Series B Preferred Stock shall be
changed into the same or a different number of shares of any
other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a
subdivision or combination of shares provided for above), the
Series B Conversion Price then in effect for each share of the
Series B Preferred Stock, shall, concurrently with the
effectiveness of such reorganization, reclassification or other
event, be proportionately adjusted such that the Series B
Preferred Stock shall be convertible into, in lieu of the number
of shares of Class A Common Stock or Class C Common Stock which
the holders would otherwise have been entitled to receive, that
number of shares of such other class or classes of stock or other
securities equivalent to the number of shares of Class A Common
Stock or Class C Common Stock that would have been subject to
receipt by the holders upon conversion of the Series B Preferred
Stock immediately before that change.
(v) No Impairment. The Corporation shall not, by amendment
of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the
Corporation but shall at all times in good faith assist in the
carrying out of all the provisions of this Section C.5 of this
Article FOURTH and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion
rights of the holders of the Series B Preferred Stock against
impairment.
(vi) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Series B Conversion Price
pursuant to this Section C.5 of this Article FOURTH, the
Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish
to each holder of shares of Series B Preferred Stock, a
certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series B Preferred Stock,
furnish or cause to be furnished to such holder a like
certificate setting forth (x) such adjustments and readjustments,
(y) the Series B Conversion Price at the time in effect, and (z)
the number of shares of Class A Common Stock or Class C Common
Stock and the amount, if any, of
other property which at the time would be received upon the
conversion of shares of Series B Preferred Stock.
(vii) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(A) to declare any dividend or distribution upon its
Class A Common Stock or Class C Common Stock, whether or not
a regular cash dividend or a dividend payable in shares of
Class A Common Stock or Class C Common Stock, and whether or
not out of earnings or earned surplus;
(B) to offer for subscription pro rata to the holders
of any class or series of its stock any additional shares of
stock of any class or series or other rights;
(C) to effect any reclassification or recapitalization
of its Class A Common Stock or Class C Common Stock
outstanding involving a change in the Class A Common Stock
or Class C Common Stock; or
(D) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially
all its property or business, or to liquidate, dissolve or
wind up or to enter into any other transaction contemplated
by Section C.3(d)(i) or (ii);
then, in connection with each such event, the Corporation
shall send to the holders of the Series A Preferred Stock
and Series B Preferred Stock:
(1) at least 20 days' prior written notice of the date
on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date
on which the holders of Class A Common Stock or Class C
Common Stock shall be entitled thereto) or for determining
rights to vote in respect of the matters referred to in (C)
and (D) above; and
(2) in the case of the matters referred to in (C) and
(D) above, in the event a record date is taken with respect
to any such matter, at least 20 days' prior written notice
of such record date or, if no such record date is taken, at
least 20 days' prior written notice of the date when such
matters shall take place (and specifying the date on which
the holders of Class A Common Stock or Class C Common Stock
shall be entitled to exchange their shares of Class A Common
Stock or Class C Common Stock for securities or other
property deliverable upon the occurrence of ouch event).
Each such written notice shall be delivered personally or
sent by first class mail, postage prepaid, addressed to the
holders of the Series A Preferred Stock and/or Series B
Preferred Stock, as the case may be, at the address for each
such holder as shown on the books of the Corporation.
(viii) Issue Taxes. The Corporation shall pay any and all
issue and other takes that may be payable in respect of any issue
or delivery of shares of Class A Common Stock on conversion of
Series B Preferred Stock pursuant hereto; provided, however, that
the Corporation shall not
be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such
conversion.
(ix) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Class A Common Stock and
Class C Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series B Preferred Stock, such
number of its shares of Class A Common Stock and Class C Common
Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series B Preferred
Stock; and if at any time the number of authorized but unissued
shares of Class A Common Stock or Class C Common Stock shall not
be sufficient to effect the conversion of all of the then
outstanding shares of the Series B Preferred Stock, the
Corporation shall take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized
but unissued shares of Class A Common Stock or Class C Common
Stock to such number of shares as shall be sufficient for such
purpose, including, without limitation, utilizing its best
efforts to obtain the requisite stockholder approval of any
necessary amendment to the Certificate of Incorporation.
(b) The holders of Class A and Class B Common Stock shall have
conversion rights as follows:
(i) Mandatory Conversion of Class B Common Stock Upon
Certain Transfers. Immediately upon the transfer of any shares of
Class B Common Stock to any Person other than an Insurance
Company Affiliate of the holder of such shares, such shares
shall, automatically and without any action on the part of the
holder thereof, be converted into the same number of shares of
Class A Common Stock as the number of shares of Class B Common
Stock so being transferred. Upon the surrender for registration
of transfer of any certificates which prior to the transfer
thereof represented shares of Class B Common Stock, (A) the
Corporation shall issue one or more new certificates, in such
denominations as may be requested, for the same aggregate number
of shares of Class A Common Stock represented by the certificates
so surrendered, and registered as the holder thereof may request,
and (B) the rights of the holder of such shares of Class B Common
Stock shall cease with respect to the number of shares so
transferred and the person or persons in whose name or names the
certificates for shares of Class A Common Stock are to be issued
upon such transfer shall be deemed to have become the holders of
record of the shares of Class A Common Stock represented thereby.
(ii) Mandatory Conversion of Class B Common Stock upon
Registration and Sale of Securities. Immediately upon the sale of
shares of Common Stock pursuant to an effective registration
statement filed under Section 5 of the Securities Act, each share
of Class B Common Stock sold pursuant to such registration
statement shall, automatically and without any action on the part
of the holder thereof, be converted into a share of Class A
Common Stock. Upon the surrender for registration of transfer of
any certificate or certificates which prior to the registered
sale thereof represented shares of Class B Common Stock, (A) the
Corporation shall issue one or more new certificates, in such
denominations as may be requested, for the same aggregate number
of shares of Class A Common Stock represented by the
certificates so surrendered, and registered as the purchaser of
such shares of Class B Common Stock may request and (B) the
rights of the holder of such shares of Class B Common Stock shall
cease with respect to the number of shares so sold and the person
or persons in whose name or names the certificates for share of
Class A Common Stock are to be issued upon such sale shall be
deemed to have become the holder or holders of record of the
shares of Class A Common Stock represented thereby.
(iii) Mandatory Conversion of Class A Common Stock Upon
Certain Transfers. Immediately upon the transfer of any shares of
Class A Common Stock to any person who is a holder of Class B
Common Stock, such shares of Class A Common Stock shall,
automatically and without any action on the part of the holder
thereof, be converted into the same number of shares of Class B
Common Stock as the number of shares of Class A Common Stock so
being transferred. Upon the surrender for registration of
transfer of any certificates which prior to the transfer thereof
represented shares of Class A Common Stock, (A) the Corporation
shall issue one or more new certificates, in such denominations
as may be requested, for the same aggregate number of shares of
Class A Common Stock represented by the certificates so
surrendered, and registered as the purchaser of such shares may
request and (B) the rights of the holder of such shares of Class
A Common Stock shall cease with respect to the number of shares
so sold and the person or persons in whose name or names the
certificates for shares of Class B Common Stock are to be issued
upon such sale shall be deemed to have become the holder or
holders of record of the shares of Class B Common Stock
represented thereby.
(iv) Reservation of Shares, Validity, etc. The Corporation
shall at all times reserve and keep available out of its
authorized but unissued shares of Class A Common Stock, or its
treasury shares, solely for the purpose of issue upon the
conversion of the Class B Common Stock as provided in this
Section C.5(b), such number of shares of Class A Common Stock as
are then issuable upon the conversion of all outstanding shares
of Class B Common Stock. The Corporation shall at all times
reserve and keep available out of its authorized but unissued
shares of Class B Common Stock, or its treasury shares, solely
for the purpose of issue upon the conversion of the Class A
Common Stock as provided in this Section C.5(b), such number of
shares Class B Common Stock as are then issuable upon the
conversion of all outstanding shares of Class A Common Stock. The
Corporation covenants that all shares of Class A Common Stock and
Class B Common Stock which are issuable upon conversion shall,
when issued, be duly and validly issued, fully paid and
nonassessable and free of all liens and charges. The Corporation
shall take all such action as may be necessary to assure that all
such shares of Class A Common Stock or Class B Common Stock may
be so issued without violation of any law or any regulation, rule
or other requirement of any governmental authority applicable to
the Corporation or any requirement of any securities exchange
upon which shares of Class A Common Stock or Class B Common Stock
may be listed. The Corporation shall not take any action which
would affect the number of shares of Class A Common Stock or
Class B Common Stock outstanding or issuable for any purposes
unless immediately following such action the Corporation would
have authorized but unissued shares of Class A Common Stock and
Class B Common Stock, or treasury shares, not then reserved or
required to
be reserved for any purpose other than the purpose of issue upon
conversion of Class B Common Stock or Class A Common Stock, as
the case may be, sufficient to meet the reservation requirements
of the first two sentences of this subdivision (v).
(v) Registration and Listing. If any shares of Class A
Common Stock or Class B Common Stock required to be reserved for
purposes of conversion hereunder require, before such shares may
be issued upon conversion, registration with or approval of any
governmental authority under any federal or state law (other than
any registration under the Securities Act or any state securities
law required by reason of any transfer involved in such
conversion), or listing on any domestic securities exchange, the
Corporation shall, at its expense and as promptly as possible,
use its best efforts to cause such shares to be duly registered
or approved or listed, as the case may be.
(vi) Charges. The issue of certificates for shares of Class
A Common Stock upon conversion of shares of Class B Common Stock
and certificates for shares of Class B Common Stock upon
conversion of shares of Class A Common Stock shall be made
without charge to the holders of such shares for any issue tax in
respect thereof or other costs incurred by the Corporation in
connection with such conversion and the related issue of shares
of Class A Common Stock and or Class B Common Stock, as the case
may be; provided that the Corporation shall not be required to
pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of any certificate in a name
other than that of the holder of the Class B Common Stock
converted or the holder of the Class A Common Stock converted, as
the case may be.
(vii) Definitions. As used in this Section C.5(b), the
following terms shall have the following meanings:
Affiliate of a Person means another Person that directly, or
indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person and
shall include any portfolio or investment fund of which such
Person is the sole investment advisor. The term "control" means
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract
or otherwise.
Insurance Company Affiliate of a Person means an Affiliate
of such Person that is an insurance company subject to regulation
as such under the insurance laws of the jurisdiction of its
organization or in which it conducts business.
Person means an individual, a partnership, an association, a
joint venture, a corporation, a business, a trust, an
unincorporated organization or a government or any department,
agency or subdivision thereof.
6. Redemption.
(a) The Corporation shall redeem, from any source of funds
legally available therefor, all of the outstanding Series A Preferred
Stock, on December 31, 2003 (the "Series A Redemption Date"). The
Corporation shall effect such redemption by paying in cash in exchange
for the shares of Series A Preferred Stock to be redeemed a sum equal
to the Series A Original Cost (as adjusted for any stock dividends,
combinations or
splits with respect to such shares) plus all
accumulated but unpaid dividends on such shares (the "Series A
Redemption Price").
(b) At least 15 but no more than 30 days prior to the Series A
Redemption Date written notice shall be mailed, first class postage
prepaid, to each holder of record (at the close of business on the
business day next preceding the day on which notice is given) of the
Series A Preferred Stock to be redeemed, at the address last shown on
the records of the Corporation for such holder, notifying such holder
of the redemption to be effected, specifying the number of shares to
be redeemed from such holder, the Series A Redemption Date, the Series
A Redemption Price, the place at which payment may be obtained and
calling upon such holder to surrender to the Corporation, in the
manner and at the place designated his certificate or certificates
representing the shares to be redeemed (the "Redemption Notice").
Except as provided in Section C.6(c), on or after the Series A
Redemption Date, each holder of Series A Preferred Stock to be
redeemed shall surrender to this Corporation the certificate or
certificates representing such shares, in the manner and at the place
designated in the Redemption Notice, and thereupon the Series A
Redemption Price of such shares shall be payable to the order of the
person whose name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be cancelled. In
the event less than all the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(c) From and after the Series A Redemption Date, unless there
shall have been a default in payment of the Series A Redemption Price,
all rights of the holders of shares of Series A Preferred Stock
designated for redemption in the Redemption Notice as holders of
Series A Preferred Stock (except the right to receive the Series A
Redemption Price without interest upon surrender of their certificate
or certificates) shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever.
If the funds of the Corporation legally available for redemption of
shares of Series A Preferred Stock on the Series A Redemption Date are
insufficient to redeem the total number of shares of Series A
Preferred Stock to be redeemed on such date, those funds which are
legally available will be used to redeem the maximum possible number
of such shares ratably among the holders of such shares to be redeemed
based upon their holdings of Series A Preferred Stock. The shares of
Series A Preferred Stock not redeemed shall remain outstanding and
entitled to all the rights and preferences provided herein. At any
time thereafter when additional funds of the Corporation are legally
available for the redemption of shares of Series A Preferred Stock
such funds will immediately be used to redeem the balance of the
shares which the Corporation has become obliged to redeem on the
Series A Redemption Date, but which it has not redeemed.
(d) On or prior to the Series A Redemption Date, the Corporation
shall deposit the Series A Redemption Price of all shares of Series A
Preferred Stock designated for redemption in the Redemption Notice and
not yet redeemed with a bank or trust corporation having aggregate
capital and surplus in excess of $100,000,000 as a trust fund for the
benefit of the respective holders of the shares designated for
redemption and not yet redeemed, with irrevocable instructions and
authority to the bank or trust corporation to pay the Series A
Redemption Price for such shares to their respective holders on or
after the Series A Redemption Date upon receipt of notification
from the Corporation that such ▇▇▇▇▇▇ has surrendered his share
certificate to the Corporation pursuant to Section C.6(b) above. As of
the Series A Redemption Date, the deposit shall constitute full
payment of the shares to their holders, and from and after the Series
A Redemption Date the shares so called for redemption shall be
redeemed and shall be deemed to be no longer outstanding, and the
holders thereof shall cease to be stockholders with respect to such
shares and shall have no rights with respect thereto except the rights
to receive from the bank or trust corporation payment of the Series A
Redemption Price of the shares, without interest, upon surrender of
their certificates therefor.
7. Protective Provisions. In addition to any other rights provided
by law, so long as any shares of Series A Preferred Stock shall be
outstanding, the Corporation shall not, without first obtaining the
affirmative vote or written consent of the holders of not less than (a)
66.67% of such outstanding shares of Series A Preferred Stock with respect
to clauses (ii), (iv), (vi), (vii), (viii) and (ix) below and (b) 50.1% of
such outstanding shares of Series A Preferred Stock with respect to clauses
(i), (iii), (v), (x), (xi) and (xii) below:
(i) pay or declare any dividend on the Corporation's Common
Stock, Series B Preferred Stock or any other equity securities
(including options or warrants) of the Corporation (other than the
Series A Preferred Stock) or redeem, purchase or otherwise acquire for
value (or pay into or set aside for a sinking fund for such purpose)
any share or shares of the Corporation's Common Stock, Series B
Preferred Stock or any other equity securities of the Corporation, or
apply any of the Corporation's assets to the redemption, retirement,
purchase or acquisition, directly or indirectly, through subsidiaries
or otherwise, of any of the Corporation's Common Stock, Series B
Preferred Stock, or other equity securities of the Corporation, except
for (x) redemptions of Series A Preferred Stock as provided in Section
C.6 hereof, and (y) repurchases of Common Stock pursuant to that
certain Investors' Rights Agreement dated as of the Original Issue
Date among the Corporation, and the other parties thereto (the
"Investors' Rights Agreement");
(ii) authorize, approve or consummate any transaction or series
of transactions contemplated by Section C.3(d) of this Article FOURTH
with respect to the Corporation or any subsidiary of the Corporation;
(iii) make any loan, advance or capital contribution to, or
investment in, or permit or cause any subsidiary of the Corporation to
make any loan, advance or capital contribution to, or investment in
any of the officers, directors, employees, providers, consultants,
agents or other representatives of the Corporation, other than (A)
travel or salary advances in the ordinary course of business in a
manner consistent with past practice, and (B) loans evidenced by
promissory notes in connection with the purchase of Common Stock under
employment or restrictive stock purchase agreements entered into by
the Corporation or the Investors' Rights Agreement;
(iv) incur or assume or permit to exist or permit or cause any
subsidiary of the Corporation to incur or assume or permit to exist
any indebtedness for borrowed money (including capitalized leases)
other than amounts owing under (A) that certain Secured Credit
Agreement dated as of December 21, 1995 by and between General
Manufactured Housing, Inc. ("Subsidiary") and First Source Financial
LLP, (B) that certain Note and Warrant Purchase Agreement dated as of
December 21, 1995 by and between the Corporation, Subsidiary and The
Equitable Life Assurance Society of the United States and (C) that
certain Securities Purchase Agreement dated as
of December 21, 1995 between and among the Corporation, Subsidiary,
RFE Investment Partners V L.P., Sterling Commercial Capital, Inc. and
the State Treasurer of the State of Michigan, as custodian in excess
of $2,600,000 in the aggregate, or issue any debt securities or
assume, guarantee, endorse (other than in the ordinary course of
business consistent with past practice) or otherwise as an
accommodation become responsible for, liabilities of any other person;
(v) purchase, hold or own, or permit or cause any subsidiary of
the Corporation to purchase, hold or own any capital stock, evidence
of indebtedness or other security of any subsidiary of the Corporation
or other corporation, partnership, or other entity, unless such
corporation, partnership or other entity is a wholly-owned subsidiary
of the Corporation.
(vi) permit or cause the Corporation or any subsidiary of the
Corporation to engage in any new line of business outside the
construction, manufacture, assembling, purchasing and selling all
types of manufactured buildings, structures and homes;
(vii) authorize or issue shares of any equity securities of the
Corporation, including any preferred stock, options or warrants to
purchase any such equity security;
(viii) amend or repeal any provision of, add any provision to,
or waive any provision (including any of these protective provisions)
of the Corporation's Certificate of Incorporation or By-laws, or alter
or change the rights, preferences, privileges or powers of, or the
restrictions provided for the benefit of, the Series A Preferred Stock
or cause or permit any subsidiary of the Corporation to do the same;
(ix) make any acquisition of, or loan, advance or capital
contribution to, or investment or permit any subsidiary of the
Corporation to make any acquisition of, or loan, advance or capital
contribution to, or investment in any business entity, which,
individually or together with any related series of such transactions,
exceeds $1,000,000;
(x) make or permit or cause any subsidiary of the Corporation to
make any capital expenditures in any one fiscal year in excess of the
sum of (A) $500,000 plus (B) the difference between $500,000 and any
unexpended amounts from prior years;
(xi) enter into any contract or transaction with an affiliate of
the Corporation (or cause or permit any subsidiary of the Corporation
to do the same) that does not deal at arm's length with the
Corporation or which exceeds $25,000 in amount; or
(xii) reclassify any shares of Common Stock or any other shares
of the Corporation into shares having any preference or priority as to
dividends or assets superior to or on a parity with any such
preference or priority of the Series A Preferred Stock.
In the event that the Corporation shall propose at any time to take
any action specified in this Section C.7, then the Corporation shall send
to the holders of the Series A Preferred Stock at least 5 days prior
written notice of the date on which the vote of the holders of the Series A
Preferred Stock shall be taken with respect to such matter.
8. Increasing Common Stock. The number of authorized shares of
Common Stock may be increased or decreased (but not below the number of
shares of Common Stock then outstanding) by an affirmative vote of the
holders of a majority of the stock of the Corporation entitled to vote
thereon.
9. No Reissuance of Series A Preferred Stock or Series B Preferred
Stock. No shares of Series A Preferred Stock or Series B Preferred Stock
acquired by the Corporation by reason of redemption, purchase, conversion
or otherwise shall be reissued, and any such shares shall be cancelled,
retired, and eliminated from the shares which the Corporation shall be
authorized to issue; provided, however, that any such redeemed or purchased
shares of Preferred Stock shall be eliminated from the shares which the
Corporation shall be authorized to issue only upon the filing with the
Secretary of State of the State of Delaware of a certificate of amendment
of this Restated Certificate of Incorporation in compliance with the
General Corporation Law of the State of Delaware.
FIFTH: No director of the Corporation shall be personally liable to
the Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director; provided, however, that the foregoing
clause shall not apply to any liability of a director (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of Title
8 of the G.C.L. or (iv) for any transaction from which the director derived
an improper personal benefit. If the G.C.L. is amended to authorize
corporate action further eliminating or limiting the personal liability of
Directors, then the liability of a Director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the G.C.L. as so
amended. The provisions of this Article FIFTH are not intended to, and
shall not, limit, supersede or modify any other defense available to a
Director under applicable law. Any repeal or modification of this Article
FIFTH by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing immediately
prior to the time of such repeal or modification.
SIXTH: In accordance with the provisions of Section 103(d) of the
G.C.L., the Restated Certificate of Incorporation set forth above shall
become effective upon its filing date.
IN WITNESS WHEREOF, the President of the Corporation has executed, and
the Secretary of the Corporation has attested to, this Restated Certificate of
Incorporation this 20th day of December, 1995.
GMH HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
ATTEST:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Secretary
EXHIBIT E
Form of Stockholder's Agreement
____________________________________
GMH HOLDINGS, INC.
STOCKHOLDERS' AGREEMENT
_____________________________________
TABLE OF CONTENTS
Section Page
1. Definitions. . . . . . . . . . . . . . . . . . . . . 2
2. Representations of the Stockholders; Indemnity . . . 9
3. Restrictions on Transfers of Securities. . . . . . . 11
(a) General Restrictions. . . . . . . . . . . . . . 11
(b) Restrictions on Stockholder Groups. . . . . . . 12
4. Permitted Transfers of Securities. . . . . . . . . . 13
(a) A Stockholder Transfers . . . . . . . . . . . . 13
(b) B Stockholder Transfers . . . . . . . . . . . . 15
5. Transfers to the Corporation . . . . . . . . . . . . 17
6. Offer of Securities. . . . . . . . . . . . . . . . . 18
7. Transfers with Respect to Employee Stockholders. . . 20
8. Closing of Transfers . . . . . . . . . . . . . . . . 22
9. Come Along . . . . . . . . . . . . . . . . . . . . . 23
(a) Come Along. . . . . . . . . . . . . . . . . . . 23
(b) Warrants. . . . . . . . . . . . . . . . . . . . 25
10. Election of Directors and Other Voting Requirements. 25
(a) Voting for Directors. . . . . . . . . . . . . . 25
(b) Nominations . . . . . . . . . . . . . . . . . . 27
(c) Vacancies . . . . . . . . . . . . . . . . . . . 26
(d) Removal of Directors. . . . . . . . . . . . . . 26
(e) Written Consent . . . . . . . . . . . . . . . . 26
(f) Directors Expenses. . . . . . . . . . . . . . . 27
(g) Special Election Matters. . . . . . . . . . . . 27
(h) Committees of the Board . . . . . . . . . . . . 28
(i) GMH Board . . . . . . . . . . . . . . . . . . . 28
(j) Equitable's Rights. . . . . . . . . . . . . . . 28
11. Special Voting Requirements. . . . . . . . . . . . . 29
(a) Required Stockholder Approval While
Series A Preferred Share are Outstanding. . . . 29
(b) Required Stockholder Approval After
Series A Preferred Shares are Redeemed. . . . . 32
12. Share and Warrant Certificates . . . . . . . . . . . 33
(a) Restrictive Endorsement . . . . . . . . . . . . 33
(b) Replacement Certificates. . . . . . . . . . . . 34
13. No Default . . . . . . . . . . . . . . . . . . . . . 35
14. Preemptive Rights. . . . . . . . . . . . . . . . . . 35
15. Registration Rights . . . . . . . . . . . . . . . . . 37
16. Miscellaneous. . . . . . . . . . . . . . . . . . . . 37
(a) Notices . . . . . . . . . . . . . . . . . . . . 37
(b) Termination; Amendment. . . . . . . . . . . . . 38
(c) Waiver. . . . . . . . . . . . . . . . . . . . . 39
(d) Counterparts. . . . . . . . . . . . . . . . . . 39
(e) Governing Law . . . . . . . . . . . . . . . . . 39
(f) Benefit and Binding Effect. . . . . . . . . . . 39
(g) Further Assurances. . . . . . . . . . . . . . . 40
(h) Specific Performance. . . . . . . . . . . . . . 40
(i) Voting Percentages. . . . . . . . . . . . . . . 41
Exhibit A Schedule of Stockholders
Exhibit B Registration Rights
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT dated as of December 21, 1995, by and
among GMH Holdings, Inc., a Delaware corporation (the "Company"), and each
other party executing this Agreement or a counterpart hereof (hereinafter
referred to collectively as "Stockholders" and individually as a
"Stockholder").
W I T N E S S E T H:
WHEREAS, the Company is authorized to issue an aggregate of 4,375,000
shares of Class A Common Stock, par value $.001 per share (the "Class A
Common Shares"), of which 1,656,250 Class A Common Shares are currently
issued and outstanding, 787,500 shares of Class B Common Stock, par value
$.001 per share (the "Class B Common Shares"), none of which Class B Common
Shares are currently issued and outstanding, 2,150,000 shares of Class C
Common Stock, par value $.001 per share (the "Class C Common Shares" and
together with the Class A Common Shares and the Class B Common Shares, the
"Common Shares"), none of which Class C Common Shares are currently issued
and outstanding, 8,000,000 shares of Series A Redeemable Preferred Stock,
par value $.001 per share (the "Series A Preferred Shares"), all of which
Series A Preferred Shares are currently issued and outstanding, and
2,150,000 shares of Series B Convertible Preferred Stock, par value, $.001
per share (the "Series B Preferred Shares"), all of which Series B
Preferred Shares are currently issued and outstanding (the Class A Common
Shares, Class B Common Shares, Class C Common Shares, Series A Preferred
Shares and Series B Preferred Shares are collectively referred to as the
"Shares"); and
WHEREAS, each Stockholder is the record and beneficial owner of the
number of Class A Common Shares, Class B Common Shares, Class C Common
Shares, Series A Preferred Shares and Series B Preferred Shares appearing
opposite his or its name on Exhibit A attached hereto, free and clear of
all options, liens, encumbrances or charges of any kind, except this
Agreement; and
WHEREAS, the Company has issued to The Equitable Life Assurance
Society of the United States and to certain principals of Larkspur Capital
Corporation warrants dated the date hereof to purchase an aggregate of
568,750 Class A Common Shares or Class B Common Shares at a price of $.01
per share (the "Warrants"); and
WHEREAS, the parties deem it in the best interests of the Company to
provide for continuity in the control and operation of the Company and to
restrict the transfer of the Shares (including the Common Shares issuable
upon conversion of the Series B Preferred Shares or upon exercise of the
Warrants), as herein provided;
NOW, THEREFORE, in consideration of the agreements and mutual
covenants contained herein, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, terms defined in the preamble and
recitals hereto shall have the respective meanings specified therein, and
the following terms shall have the following meanings:
"A Stockholder" shall mean (i) any Stockholder that is designated
one of the Group A Stockholders in Exhibit A to this Agreement and (ii) any
Person who acquires Securities after the date hereof and is designated as
an A Stockholder in accordance with the provisions of this Agreement.
"Act" shall mean the Securities Act of 1933, as amended.
"Affiliate", as applied to any Person, means any other person,
directly or indirectly controlling, controlled by, or under common control
with that Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled
by" and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through
the ownership of voting securities or by contract or otherwise, and in all
events, GMH shall be deemed to be an Affiliate of the Company.
"B Stockholder" shall mean (i) any Stockholder that is designated
one of the Group B Stockholders in Exhibit A to this Agreement and (ii) any
Person who acquires Securities after the date hereof and is designated as a
B Stockholder in accordance with the provisions of this Agreement.
"Bulldog" shall mean Bulldog Holdings LLC, a New York limited
liability company.
"Business Day" shall mean any day other than a Saturday or a
Sunday or a day on which commercial banking institutions in the City of New
York are authorized to close.
"Cause" shall mean, with respect to any Employee Stockholder, any
of the following: (a) any deliberate or intentional act or omission by the
Employee Stockholder with the intent of causing damage to the Company's or
GMH's relationships with its lenders, suppliers or customers; (b) any
fraud, misappropriation or embezzlement by the Employee Stockholder
involving properties, assets or funds of the Company or of GMH; (c) a
conviction of the Employee Stockholder, or plea of nolo contendere by the
Employee Stockholder, to any crime or offense involving monies or other
property of the Company or GMH or any other felony or criminal act
involving moral turpitude; (d) any usurpation by the Employee Stockholder
of a corporate opportunity of the Company or GMH or the Employee
Stockholder's willful and continual neglect of or willful and continual
failure to perform any of his material duties, responsibilities or
obligations as an employee of the Company or GMH, but only after notice of
such usurpation, neglect or failure is delivered to the Employee
Stockholder and the Employee Stockholder fails or refuses to remedy such
usurpation, neglect or failure to the reasonable satisfaction of the Board
of Directors of the Company or GMH, as applicable, within thirty (30) days
after the receipt of such notice; provided, that any act or omission taken
by the Employee Stockholder in good faith and in the reasonable belief that
such action or omission was in the best interests of the Company or GMH
shall not constitute "Cause"; or (e) the violation by the Employee
Stockholder of Section 7 of his Employment Agreement or of any other non-
competition agreement or covenant binding upon the Employee Stockholder.
"Certificate of Incorporation" shall mean the Company's
Certificate of Incorporation, as amended or restated from time to time.
"Co-Sale Transfer" shall mean any sale by any Stockholder of such
number of the Voting Shares held by such Stockholder in a bona fide, arms-
length transaction to any Person who is not then either a party to this
Agreement or a Related Transferee of such Stockholder, as the case may be,
which results in such Person owning in excess of 10% of the then issued and
outstanding Voting Shares.
"Employee Stockholder" shall mean any of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, as Trustee, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
"Equitable" shall mean The Equitable Life Assurance Society of
the United States, a New York insurance company.
"Fundamental Change" shall have the meaning set forth in Section
11(b) hereof.
"GMH" shall mean, prior to the Merger, GMH Acquisition Corp., a
Delaware corporation, and after the Merger, General Manufactured Housing,
Inc., a Georgia corporation.
"Group A Offerees" shall mean Bulldog, RFE, Michigan and
Sterling.
"Investors Rights Agreement" shall mean that certain Investors
Rights Agreement dated as of the date hereof between and among the RFE
Group, Bulldog, Equitable and the Company.
"Merger" shall mean the merger of GMH Acquisition Corp. with and
into General Manufactured Housing, Inc., with General Manufactured Housing,
Inc. as the surviving corporation.
"Michigan" shall mean the State Treasurer of the State of
Michigan, Custodian of the Michigan Public School Employees' Retirement
System, State Employees Retirement System, Michigan State Police Retirement
System and the Michigan Judges' Retirement System.
"Non-Selling Stockholder Group" shall mean the following Employee
Stockholders: ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
"Person" shall mean a natural person, corporation, limited
partnership, general partnership, joint stock company, limited liability
company, limited liability partnership, joint venture, association,
company, trust, bank, trust company, and trust, business trust or other
organization, whether or not a legal entity, or a government or agency or
any political subdivision thereof.
"Put Date" shall mean the date which is the eighth (8th)
anniversary of the date hereof.
"Put Rights" shall mean the rights granted by the Company to the
RFE Group and Equitable pursuant to Section 1.1 of the Investors Rights
Agreement.
"Related Transferees" shall mean, (i) with respect to each
Stockholder who is a natural person, such Stockholder's spouse, any lineal
descendant (whether by birth or adoption), and trusts for the benefit of
his spouse or lineal descendants (whether by birth or adoption), and, upon
the death, disability or incompetence of such Stockholder, his estate or
personal representative and (ii) with respect to any Stockholder who is not
a natural person, the Affiliates of such Stockholder, any partner of any
Stockholder which is a partnership and any successor trustee of any
Stockholder which is a trustee.
"RFE" shall mean RFE Investment Partners V, L.P., a Delaware
limited partnership.
"RFE Group" shall mean RFE, Michigan and Sterling.
"Securities" shall mean and include (i) all Class A Common
Shares, Class B Common Shares, Class C Common Shares, Series A Preferred
Shares, Series B Preferred Shares and Warrants owned, of record or
beneficially, by any Stockholder, (ii) all Class A Common Shares, Class B
Common Shares, Class C Common Shares, Series A Preferred Shares, Series B
Preferred Shares and Warrants hereafter acquired, directly or indirectly,
by any Stockholder, including the Common Shares issuable upon conversion of
the Series B Preferred Shares or upon exercise of any Warrant, and (iii)
all other Securities of the Company acquired by any Stockholder by way of
dividend or upon an increase, reduction, substitution or reclassification
of stock of the Company or upon any reorganization of the Company.
"Securities Acts" shall mean any applicable statute, rule,
regulation or administrative or regulatory requirement applicable to the
transfer of securities of the Company,
including the Act, and the rules and regulations promulgated thereunder,
and all applicable state securities or "blue sky" laws.
"Selling Stockholder Group" shall mean the following Employee
Stockholders: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, as Trustee, ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Sterling" shall mean Sterling Commercial Capital, Inc., a New
York corporation.
"Stockholder Group" shall mean, with respect to any Stockholder,
such Stockholder, each of his or its Related Transferees and each of their
respective successor Related Transferees.
"transfer" shall mean any sale, assignment, transfer, pledge,
hypothecation, mortgage, charge, lien, encumbrance, gift, bequest,
transmission or other disposition of Securities, provided that the
encumbrances contemplated by, and transfers of Securities pursuant to the
terms and provisions of Section 4 hereof shall not be deemed to be
"transfers".
"Voting Shares" shall mean the Series B Preferred Shares, the
Class A Common Shares, the Class B Common Shares issuable upon exercise of
the Warrant issued to Equitable (notwithstanding that the Class B Common
Shares are non-voting) and the Class C Common Shares, including (a) any
Class C Common Shares issued upon conversion of the Series B Shares or (b)
Class A Common Shares or Class B Common Shares issued upon exercise of the
Warrants.
"Warrants" shall have the meaning set forth in the recitals
hereto.
2. Representations of the Stockholders; Indemnity.
(a) Each Stockholder other than Michigan and Equitable,
severally represents and warrants as follows:
(i) this Agreement constitutes the valid and legally
binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms, subject to (A) laws of
general application relating to bankruptcy, insolvency, and the relief
of debtors, and (B) rules of law governing specific performance,
injunctive relief or other equitable remedies;
(ii) the execution, delivery and performance of this
Agreement by such Stockholder does not (A) violate or result in a
breach of or constitute a default under any of the organizational or
constituent documents of any Stockholder which is not a natural
Person, or any contract, agreement, indenture, mortgage, pledge, note,
bond, license, permit or other instrument or obligation to which such
Stockholder is a party or by which it or any of its assets are bound
or affected or (B) require any permit, consent, approval or
authorization of, or designation, declaration or filing with, any
governmental authority or any other person or entity, except for those
which have already been obtained; and
(iii) such Stockholder, if not a natural person, has all
requisite power and authority to enter into and perform its
obligations under this Agreement in accordance with its terms.
(b) Each Stockholder, other than Michigan and Equitable, agrees
to indemnify and hold harmless the other Stockholders and the Company and
its directors, employees, affiliates and agents from and against any and
all damages, losses, costs and expenses (including reasonable attorneys'
fees) which any of them may incur by reason of the failure of such
Stockholder to fulfill any of the terms or conditions of this Agreement, or
by reason of any breach of the representations and warranties made by such
Stockholder in this Agreement.
3. Restrictions on Transfers of Securities.
(a) General Restrictions. During the term of this Agreement,
none of the Securities may be the subject of a transfer unless:
(i) such transfer shall be made in accordance with the
provisions of this Agreement and Exhibit B hereto, relating to the
Stockholders' rights to register their Common Shares or Warrants under
the Securities Acts;
(ii) the proposed transferee shall deliver to the Company a
written acknowledgment that the Securities to be transferred are
subject to this Agreement and that the proposed transferee and his or
its successors in interest agree to be and are bound hereby and
thereby to the same extent and in the same manner as the transferor of
such Securities; provided, that from and after the Put Date, the
restrictions contained in this Agreement shall cease to apply to any
Shares which are covered by the Put Rights; and
(iii) such transfer shall be made in compliance with the
Securities Acts, and prior to any such transfer, the Stockholder
proposing to transfer Securities shall give the Company (A) notice
describing the manner and circumstances of the proposed transfer and
(B) if reasonably requested by the Company, a written opinion of legal
counsel reasonably satisfactory to the Company and its counsel, in
form and substance reasonably satisfactory to the Company and its
counsel, to the effect that the proposed transfer of Securities will
be in compliance with the Securities Acts; provided, however, that for
transactions made pursuant to Rule 144 under the Act, an opinion of
counsel shall only be required if reasonably requested by the Company
and which shall be to the effect that the proposed transfer of
Securities may be effected without registration under the Act; and
provided, further, that no such opinion of counsel shall be necessary
for a transfer by a Stockholder which is (1) a partnership to its
partners or retired partners in accordance with partnership interests,
(2) an individual to a Related Transferee or trust for the benefit of
such individual or Related Transferee or (3) a trustee for the benefit
of others to a successor trustee.
Upon the transfer of Securities in accordance with this Agreement, the
transferee of such Securities shall be deemed a "Stockholder" hereunder.
Any attempted transfer of Securities other than in accordance with this
Agreement and the Registration Rights Agreement shall be null and void, and
the Company shall not recognize any such attempted transfer nor reflect in
its records any change in ownership of Securities pursuant thereto, nor
issue any certificate or other evidence of ownership of Securities in
connection therewith.
(b) Restrictions on Stockholder Groups. Any Securities
transferred upon satisfaction of the conditions contained in this Agreement
shall be held subject to the terms of this Agreement and the holder thereof
shall be deemed a Stockholder for purposes of this Agreement, as follows:
(i) Any Securities transferred to, or any Securities held
by, any one of the A Stockholders shall be held by such A Stockholder
subject to the provisions hereof governing Securities held by A
Stockholders.
(ii) Any Securities transferred to, or any Securities held
by any one of the B Stockholders shall be held by such B Stockholder
subject to the provisions hereof governing Securities held by B
Stockholders.
(iii) Any Securities transferred to any Person that is not a
Stockholder prior to such transfer shall, unless otherwise provided
herein, be held by such Person subject to the provisions hereof
governing Securities held by the Stockholder that transferred Shares
to such Person.
4. Permitted Transfers of Shares. Notwithstanding the
provisions of Section 3(a) hereof, during the term of this Agreement, any
Stockholder may transfer any or all of his or its respective Securities,
subject to the restrictions contained in Section 3 hereof and upon
compliance with the following terms and conditions:
(a) A Stockholder Transfers. Subject to the provisions of
Section 11(a)(xiii), any A Stockholder may transfer any or all of his, her
or its Securities as follows:
(i) to any Related Transferee of the A Stockholder making
such transfer, provided that any Securities transferred to such
Related Transferee shall be held by such Related Transferee subject to
the provisions hereof governing A Stockholders;
(ii) to the Company in accordance with the procedures
described in Section 5 hereof;
(iii) Bulldog may transfer its Securities to the RFE Group
in accordance with the option granted to the RFE Group pursuant to
Section 2 of the Investors Rights Agreement;
(iv) Equitable may transfer its Securities to a Person (A)
for whom Alliance Corporate Finance Group Incorporated is the sole
investment advisor and (B) in connection with such Person becoming the
holder of any of the Senior Subordinated Notes of GMH originally
issued to Equitable; or
(v) to any Person, including any Stockholder (other than
the Persons described in (i), (ii), (iii) and (iv) above), provided
that (A) such Securities are first offered for sale to the Group A
Offerees (excluding any member of the Group A Offerees who is the
transferor), pro rata in accordance with the procedures described in
Section 6 hereof, (B) if the Group A Offerees do not agree to purchase
all of such Securities offered for sale, the remainder of such
Securities are next offered to all other A Stockholders, pro rata in
accordance with the procedures described in Section 6 hereof, (C) if
the Group A Offerees and such other A Stockholders do not agree to
purchase all of such Securities offered for sale, the remainder of
such Securities are next offered for sale to all B Stockholders, pro
rata in accordance with the procedures described in Section 6 hereof
and (D) if any such transfer involves a Co-Sale Transfer, it shall be
made in accordance with the procedures described in Section 9 hereof;
and provided, further, that from and after the Put Date, the
provisions of this Section 4(a)(iv) shall cease to apply to any
transfer of Voting Shares held by any A Stockholder which are subject
to the Put Rights.
(b) B Stockholder Transfers. Subject to the provisions of
Section 11(a)(xiii), any B Stockholder may transfer any or all of his, her
or its Securities as follows:
(i) INTENTIONALLY DELETED
(ii) to any other B Stockholder; provided, that, (A) such
Securities are first offered for sale to the members of the Selling
Stockholder Group, pro rata in accordance with the procedures
described in Section 6 hereof and (B) if the members of the Selling
Stockholder Group do not agree to purchase all of such Securities
offered for sale, the remainder of such Securities are next offered
for sale to the members of the Non-Selling Stockholder Group, pro rata
in accordance with the procedures described in Section 6 hereof;
(iii) to the members of the Selling Stockholder Group in
accordance with the provisions of Section 7(a);
(iv) to any Related Transferee of the B Stockholder making
such transfer, provided that any Securities transferred to such
Related Transferee shall be held by such Related Transferee subject to
the provisions governing B Stockholders;
(v) to the Company in accordance with the procedures
described in Section 5 hereof; or
(vi) to any Person, including a Stockholder (other than the
Persons described in (i), (ii), (iii), (iv) and (v) above), provided
that (A) such Securities are first offered for sale to the Group A
Offerees, pro rata in accordance with the procedures described in
Section 6 hereof (except that if a member of the Non-Selling
Stockholder Group is the transferor, such Securities shall first be
offered for sale to the members of the Selling Stockholder Group, pro
rata in accordance with the procedures described in Section 6 hereof,
and if the members of the Selling Stockholder Group do not agree to
purchase all of such Securities offered for sale, the remainder of
such Securities are then offered for sale to the Group A Offerees),
(B) if the Group A Offerees do not agree to purchase all of such
Securities offered for sale, the remainder of such Securities are next
offered for sale to all other B Stockholders, pro rata in accordance
with the procedures described in Section 6 hereof, (C) if the Group A
Offerees and such other B Stockholders do not agree to purchase all of
such Securities offered for sale, the remainder of such Securities are
next offered for sale to all A Stockholders (other than the Group A
Offerees), pro rata in accordance with the procedures described in
Section 6 hereof and (D) if such transfer involves a Co-Sale Transfer,
it shall be made in accordance with the procedures described in
Section 9 hereof.
5. Transfers to the Corporation. Any Stockholder may transfer
any or all of his or its Securities to the Company, on such terms and
conditions as the Stockholder and the Corporation may agree; provided,
however, that except for (a) any redemption of the Series A Preferred
Shares in accordance with the Certificate of Incorporation or (b) any
repurchase of Voting Shares pursuant to the Put Rights, the Company shall
not repurchase or redeem any Securities without the written consent of the
Stockholders required pursuant to the provisions of Sections 11(a) or (b)
hereof, as applicable. Any Securities purchased or redeemed by the Company
shall be retired and not be reissued. If the Company is legally or
contractually restricted from purchasing all of such Securities, the
Company shall, at such time, purchase the portion of the Securities which
it is legally or contractually permitted to purchase, and shall purchase
the balance of the Securities as soon thereafter as it is legally or
contractually able to do so.
6. Offer of Securities. Whenever any Stockholder is required to
offer Securities for sale to other Stockholders pursuant to Section 4
hereof, the following procedures shall apply:
(a) The Stockholder proposing to make such a transfer (the
"Transferor") shall deliver a written notice of the proposed transfer (the
"Transfer Notice") to the Company and to each of the other Stockholders
entitled to receive an offer to purchase under the provisions of this
Agreement. The Transfer Notice shall contain a description of the proposed
transaction and the terms thereof, including the number of Securities to be
transferred, the name of each Person to whom or in favor of whom the
proposed transfer shall be made (the "Transferee"), and a description of
the consideration to be received by the Transferor upon transfer of the
Securities which must be cash.
(b) At the same time as the delivery of the Transfer Notice, the
Transferor shall deliver a written offer to sell to each of the other
Stockholders entitled to receive such an offer under other provisions of
this Agreement, a pro rata (in accordance with the percentage of Voting
Shares then held by the other Stockholders) portion of the Securities
offered for sale by the Transferor, as required under other provisions of
this Agreement. Such offer to sell shall contain the same terms and
conditions and shall be for the same consideration as described in the
Transfer Notice.
(c) For a period of twenty-five (25) days after the offer
described in (b) above is sent to Stockholders, each such Stockholder may,
by written notice to the Transferor and to the Company, accept in whole or
in part the offer to sell Securities. Such acceptance shall specify the
amount of Securities to be purchased by such Stockholder and a proposed
date for closing
such purchase, which date shall not exceed sixty (60) days from the date
the offer described in (b) above is sent to Stockholders. If any
Stockholder does not accept the offer to purchase all of the Securities
offered by the Transferor, the Transferor shall make one or more additional
offers of the remainder of such Securities to Stockholders who have agreed
to purchase all of the Securities previously offered to them by the
Transferor. Such additional offer or offers shall be made for a period of
ten (10) days to each of such Stockholders in the same ratio that the
amount of Voting Shares which such Stockholder has agreed to purchase bears
to the total amount of Voting Shares which all Stockholders to whom such
additional offer or offers are made have agreed to purchase.
(d) In the event that the other Stockholders do not agree to
purchase all of the Securities offered for sale by the Transferor, the
Transferor shall have the right at his or its election:
(i) to proceed with the sale of such Securities as other
Stockholders have agreed to purchase;
(ii) to cancel all of the offers to other Stockholders and
not sell; or
(iii) to cancel all of the offers to other Stockholders and
make a bona fide sale or other transfer of the Securities to the
Transferee named in the Transfer Notice, but only in strict accordance
with the terms and for the consideration stated in the Transfer Notice
and within ninety (90) days of the last offer to Stockholders
hereunder.
7. Transfers with Respect to Employee Stockholders.
(a) If any member of the Non-Selling Stockholder Group
voluntarily ceases to serve as an employee or officer of the Company or GMH
without the consent of the Company or GMH, as applicable, or his employment
is terminated for any reason other than death or disability, in each case,
on or prior to the third anniversary of the date of this Agreement, all
Securities held by such Stockholder and his Related Transferees, if any,
shall, immediately upon such termination of employment, be transferred to
the members of the Selling Stockholder Group (pro rata in accordance with
the percentage of Voting Shares then held by the members of the Selling
Stockholder Group) for a purchase price equal to the total number of Shares
so transferred multiplied by the par value of such Shares.
(b) If (i) the employment of any member of the Non-Selling
Stockholder Group with the Company or GMH terminates by reason of death or
disability or (ii) after the third anniversary of the date of this
Agreement but prior to the earlier of (A) the fifth anniversary of the date
of this Agreement or (B) the date upon which a Co-Sale Transfer occurs, any
member of the Non-Selling Stockholder Group voluntarily ceases to serve as
an employee or officer of the Company or GMH without the consent of the
Company or GMH, as applicable, or his employment with the Company or GMH is
terminated for any reason other than death or disability, then such Person
shall immediately surrender to the Corporation all Shares held by him and
his Related Transferees, if any, in exchange for an equal number of Class B
Common Shares.
(c) If prior to the earlier of (i) the fifth anniversary of the
date of this Agreement or (ii) the date upon which a Co-Sale Transfer
occurs, any member of the Selling Stockholder Group voluntarily ceases to
serve as an executive officer of the Company or GMH or his employment with
the Company or GMH is terminated for Cause, then such Person shall
immediately surrender to the Corporation all Shares held by him and his
Related Transferees, if any, (and who, in the case of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
shall mean his Related Transferees, if any, who have acquired Securities by
transfer from him after the date hereof), in exchange for an equal number
of Class B Common Shares.
(d) Immediately upon the occurrence of any event set forth in
paragraphs (b) or (c) above which requires the exchange
of Class A Common Shares for certificates of Class B Common Shares, the
rights of the holder of such Class A Common Shares shall automatically
cease, and such Person shall be deemed to have become a holder of Class B
Common Shares.
8. Closing of Transfers. The closing for all purchases and
sales of Securities provided for in this Agreement hereof shall be held at
the offices of the Company. If any Stockholder (or a Related Transferee)
who has become obligated to purchase or sell Securities hereunder is
deceased on the closing date for such purchase or sale and such deceased
person's personal representative shall not have been appointed and
qualified by such date, then the closing shall be postponed until the 10th
day after the appointment and qualification of such personal
representative. If the closing date of such purchase or sale falls on a
Saturday, Sunday or legal holiday, then the closing shall be held on the
next succeeding business day. The purchase price for the Securities shall
be paid at the closing by certified check or by cashier's or official bank
check. At the closing, the seller(s) shall deliver to the purchaser(s) the
certificate or certificates representing the Securities to be sold, duly
endorsed in blank and bearing the necessary documentary stamps. Any
Stockholder (or his personal representative or any Related Transferee of
such Stockholder) which transfers Securities shall (a) do all things and
execute and deliver all such papers as may be necessary or reasonably
requested by the Company in order to consummate such transfer, (b) pay to
the Company such amounts as may be required for any applicable stock
transfer taxes and (c) pay to the Company any expenses incurred by the
Company in connection with such transfer (including reasonable attorneys
fees). In the event that a Stockholder (or, his personal representative or
any Related Transferee of such Stockholder) having become obligated to sell
Securities hereunder shall fail to deliver such Securities in accordance
with the terms of this Agreement, the purchasers may, at their option, in
addition to all other remedies they may have, send to the sellers by
personal delivery or registered mail, return receipt requested, the
purchase price of such Securities as is hereinabove specified. Thereupon,
the Company shall (i) cancel on its books the certificate or certificates
representing the Securities to be sold, (ii) issue, in lieu thereof, a new
certificate or certificates in the name of the purchasers representing such
Securities, (iii) deliver such new certificate or certificates to the
Purchasers and (iv) give notice thereof to the sellers, and thereupon all
of the sellers' rights in and to such Securities shall terminate.
9. Come Along.
(a) Come Along. If any Stockholder proposes to transfer Voting
Shares in a Co-Sale Transfer (the "Selling Stockholder"), it shall give
notice of such proposed sale (the "Sale Notice") to the Company and the
other Stockholders (the "Other Stockholders"), which notice shall set forth
at least the name and address of the proposed transferee (the "Buyer") and
the price and terms of such proposed sale. Any of the Other Stockholders
shall then be entitled to give, within 20 days after the giving of such
Sale Notice, a counter-notice to the Company, the Selling Stockholder, and
to the Buyer at the address specified in the Sale Notice, that it elects to
have the Buyer choose to purchase the number of Voting Shares owned by such
Other Stockholder (and the Voting Shares of his, her or its Related
Transferees, if any) equal to (i) the number of Voting Shares held by such
Other Stockholder and his, her or its Related Transferees, if any,
multiplied by (ii) a fraction, the numerator of which is the number of
Voting Shares proposed to be acquired by the Buyer from the Selling
Stockholder and the denominator of which is the total number of Voting
Shares held by the Selling Stockholder (before giving effect to the
proposed sale to the Buyer), at the same price and upon the same terms and
conditions as contained in the Sale Notice. In the event any Other
Stockholder makes the aforesaid election, the Buyer shall purchase and such
Other Stockholder (and his, her or its Related Transferees, if any) shall
sell such number of Voting Shares owned (or deemed owned) by them at the
same price and upon the same terms and conditions as contained in the Sale
Notice; provided, that if the Buyer is not willing to purchase the total
number of Voting Shares held by the Selling Stockholder and the
Other Stockholders who have elected to participate in such sale, the Buyer
shall purchase that number of Voting Shares that it wishes to purchase (but
not less than the number set forth in the Sale Notice), and the Selling
Stockholder and the Other Stockholders shall each sell that number of
Voting Shares to the Buyer equal to the product of (x) the aggregate number
of Voting Shares to be purchased by the Buyer and (y) a fraction, the
numerator of which is the number of Voting Shares then owned by such
Stockholder, and the denominator of which is the aggregate number of Voting
Shares owned by the Selling Stockholder and the Other Stockholders who have
elected to participate in such sale.
(b) Warrants. For purposes of Section 9(a), any Stockholder
which holds Warrants and which, if such Warrants had been exercised, would
be permitted to sell the resulting Voting Shares under Section 9(a), shall
have the right to sell Warrants for the number of Voting Shares which,
together with the number of Voting Shares, if any, such Stockholder elects
to sell, equals the number of Voting Shares such Stockholder is permitted
to sell under Section 9(a), without any requirement that such Warrants be
exercised and converted to Voting Shares before a sale under Section 9(a).
The purchase price per Warrant shall be the purchase price per Voting Share
less the exercise price of the Warrant.
10. Election of Directors and other Voting
Requirements.
(a) Voting for Directors. During the term of this
Agreement, (i) there shall be seven directors of the Company and (ii) at
each meeting of the Stockholders of the Company for the election of
directors, the Stockholders shall vote all Voting Shares held by them for
the election of the seven persons nominated pursuant to Section 10(b).
(b) Nominations. During the term of this Agreement,
directors shall be nominated by the Stockholders as follows: the nominees
for directors shall be (i) the four persons nominated by ▇▇▇▇▇▇▇, (ii) the
two persons receiving a plurality of votes cast by all members of the RFE
Group, including one nominee designated by RFE and (iii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
(c) Vacancies. During the term of this Agreement, should a
vacancy in the Board of Directors be caused by death, resignation, removal
or any other reason, each of the Stockholders agrees to vote all Voting
Shares owned by such Stockholder for (i) the one person receiving a
plurality of votes cast by all B Stockholders at a meeting of B
Stockholders held to nominate directors, in the case of a vacancy caused by
the death, resignation, removal or other reason with respect to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ or (ii) the nominee selected by Bulldog or the RFE Group, as the case
may be, as provided in Section 10(b) hereof.
(d) Removal of Directors. If at any time any Stockholder
proposes to remove any director who was nominated by such Stockholder as
provided in Section 10(b) hereof, each Stockholder agrees to vote all of
the Voting Shares owned by such Stockholder for such removal if removal has
been approved by the persons who would be entitled to fill a vacancy
pursuant to Section 10(c) hereof.
(e) Written Consent. Notwithstanding any reference herein
to votes cast at a meeting of the Stockholders, directors may be chosen for
nomination by the Stockholders acting by written consent without a meeting
and directors may be elected by the Stockholders acting by written consent
without a meeting to the extent permitted by law, by the certificate of
incorporation and the by-laws of the Company; provided, however, that
nothing in this Section 10(e) shall authorize the nomination, election or
removal of directors other than in accordance with the provisions of this
Section 10.
(f) Directors Expenses. Each director of the Company (and
any observer pursuant to Section 10(j)) shall be reimbursed for his actual
out of pocket expenses incurred in attending each meeting of the Board of
Directors or any committee thereof. In addition, if any of the directors
nominated by the RFE Group pursuant to Section 10(b)(ii) is a person with
outside
operating experience and not otherwise affiliated with any member of the
RFE Group, the Company will pay such director reasonable directors fees.
(g) Special Election Matters. Notwithstanding anything
contained in this Section 10 to the contrary, if an Event of Default, as
defined in the Certificate of Incorporation has occurred and not been
cured, the Stockholders shall (to the limited extent, if at all, necessary
to accomplish the following) vote all Voting Shares held by them at the
time to accomplish the nomination and election of that number of nominees
of the holders of the Series A Preferred Shares as constitute the smallest
number of directors which shall constitute a majority of the Company's
Board of Directors (including, but not limited to, voting to remove members
of the Board of Directors serving prior to such election).
(h) Committees of the Board. The Board of Directors of each
of the Company and GMH shall establish an Audit Committee and a
Compensation Committee in accordance with the By-laws of the Company and
GMH and so long as the RFE Group owns at least 10% of the issued and
outstanding Voting Shares, such committees shall include a representative
of the RFE Group.
(i) GMH Board. Each of the Stockholders and the Company
hereby agrees to take such action as may be required so that the Board of
Directors of GMH is at all time identical to the Board of Directors of the
Company.
(j) Equitable's Rights. So long as Equitable continues to
own at least 70% of the initial purchase percentage of the Warrants issued
to it, Equitable will have (i) the ability to have a representative attend
meetings of the Board of Directors of each of the Company and GMH as an
observer, (ii) the right to receive all materials sent to such Boards of
Directors by the Company or GMH, as applicable, (iii) the right to inspect
the Company's and GMH's books and records and, upon reasonable notice,
visit the Company and GMH and (iv) consult with management of the Company
and GMH. Holders of the Warrants issued to Equitable shall receive monthly
unaudited financial statements and annually, a copy of management's budget
for the succeeding year, each at the same time as such financial statements
and budget are delivered to the Company's and GMH's lenders.
11. Special Voting Requirements.
(a) Required Stockholder Approval While Series A Preferred
Shares are Outstanding. At any time during the term of this Agreement that
Series A Preferred Shares are outstanding, the approval by the affirmative
vote or written consent of the Stockholders holding not less than (x) 66-
2/3 of all of the issued and outstanding Series A Preferred Shares with
respect to paragraphs (ii), (iv), (vi), (vii), (viii) or (ix) below and (y)
50.1% of the issued and outstanding Series A Preferred Shares with respect
to paragraphs (i), (iii), (v), (x), (xi), (xii) and (xiii) below shall be
required to authorize any of the following:
(i) the payment or declaration of any dividend on the
Common Shares, Series B Preferred Shares or any other equity
securities (including options or warrants) of the Company (other than
the Series A Preferred Shares) or the redemption, purchase or other
acquisition for value (or the payment into or setting aside for a
sinking fund for such purpose) any of the Common Shares, Series B
Preferred Shares or any other equity securities of the Company, or the
application of any of the Company's assets to the redemption,
retirement, purchase or acquisition, directly or indirectly, through
subsidiaries or otherwise, of any of the Common Shares, Series B
Preferred Shares or other equity securities of the Company, except for
(A) redemptions of Series A Preferred Shares as provided in accordance
with the provisions of the Certificate of Incorporation, and (B)
repurchases of Common Shares pursuant to the Investors' Rights
Agreement;
(ii) (A) any acquisition of the Company by means of a merger
of the Company with or into any other
corporation or other entity or person or other form of corporate
reorganization in which the Company shall not be the continuing or
surviving entity of such merger or reorganization (other than a mere
reincorporation transaction) or a transaction in which the Company is
the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the transaction are exchanged or
converted by virtue of the transaction into other property, whether in
the form of securities, cash or otherwise or (B) a sale of all or
substantially all of the assets of the Company, or in either case, any
such action with respect to any subsidiary of the Company;
(iii) the making of any loan, advance or capital
contribution to, or investment in, or permitting or causing any
subsidiary of the Company to make any loan, advance or capital
contribution to, or investment in any of the officers, directors,
employees, providers, consultants, agents or other representatives of
the Company, other than (A) travel or salary advances in the ordinary
course of business in a manner consistent with past practice, and (B)
loans evidenced by promissory notes in connection with the purchase of
Common Shares under employment or restrictive stock purchase
agreements or the Investors' Rights Agreement;
(iv) any incurrence or assumption or permitting to exist of
or permitting or causing any subsidiary of the Company to incur or
assume or permit to exist any indebtedness for borrowed money
(including capitalized leases) other than the indebtedness owing to
(A) First Source Financial LLP pursuant to the terms of the Secured
Credit Agreement dated as of the date hereof by and between First
Source Financial LLP and GMH, (B) Equitable pursuant to the terms of
the Note and Warrant Purchase Agreement dated as of the date hereof by
and between Equitable, the Company and GMH, and (C) the RFE Group
pursuant to the terms of the Securities Purchase Agreement dated as of
the date hereof between and among the RFE Group, the Company and GMH
in excess of $2,600,000 in the aggregate, or the issuance of any debt
securities or the assumption, guarantee, endorsement (other than in
the ordinary course of business consistent with past practice) or
otherwise as an accommodation becoming responsible for, liabilities of
any other Person;
(v) any purchase, holding or owning, or permitting or
causing any subsidiary of the Company to purchase, hold or own any
capital stock, evidence of indebtedness or other security of any
subsidiary of the Company or other corporation, partnership or other
entity, unless such corporation, partnership or other entity is a
wholly owned subsidiary of the Company;
(vi) permitting or causing the Company, or any subsidiary
of the Company, to engage in any new line of business outside the
construction, manufacture, assembling, purchasing and selling all
types of manufactured buildings, structures and homes;
(vii) any authorization or issuance of any equity
securities of the Company, including any preferred stock, options or
warrants to purchase any such equity security;
(viii) any amendment or repeal of any provision of, the
addition of any provision to, or the waiver of any provision of the
Company's Certificate of Incorporation or By-Laws, or any alteration
or change in the rights, preferences, privileges or powers of, or the
restrictions provided for the benefit of, the Series A Preferred
Shares, or causing or permitting any subsidiary of the Company to do
the same;
(ix) the making of any acquisition of, or loan, advance or
capital contribution to, or investment in or permitting any subsidiary
of the Company to make any acquisition of, or loan, advance or capital
contribution to, or investment in any business entity, which,
individually or
together with any related series of such transactions, exceeds
$1,000,000;
(x) the making of or permitting or causing any subsidiary
of the Company to make any capital expenditures in any one fiscal year
in excess of the sum of (A) $500,000 plus (B) the difference between
$500,000 and any unexpended amounts from prior years;
(xi) the entering into of any contract or transaction with
an Affiliate of the Company that does not deal at arm's length with
the Company or which exceeds $25,000 in amount, or causing or
permitting any subsidiary of the Company to do the same;
(xii) the reclassification of any shares of Common Stock or
any other shares of the Company into shares having any preference or
priority as to dividends or assets superior to or on a parity with any
such preference or priority of the Series A Preferred Stock; or
(xiii) the transfer of (A) any Shares of the Company held
by any of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or
Bulldog, (B) any membership interests in Bulldog held by SIHI-GMH LLC
or (C) any membership interest in SIHI-GMH LLC held by either ▇▇▇▇ ▇.
▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in each case in excess of 10% of the Shares
or membership interests originally held by them, in any transaction or
series of transactions, except for (I) transfers to Related
Transferees (or Persons who would be Related Transferees of SIHI-GMH
LLC, ▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ if they were parties to this
Agreement) and (II) transfers by Bulldog to the RFE Group pursuant to
the Investors Rights Agreement in any transaction or series of
transactions.
(b) Required Stockholder Approval After Series A Preferred
Shares are Redeemed. At any time during the term of this Agreement that
there are no Series A Preferred Shares outstanding, the approval by the
affirmative vote or written consent of the Stockholders holding not less
than 70% of all of the issued and outstanding Voting Shares shall be
required to authorize any of the following:
(i) the repurchase or redemption of any of the Shares;
(ii) any amendment of the Certificate of Incorporation or By-
Laws of the Company or any consent by the Company to any amendment of the
Certificate of Incorporation or By-Laws of GMH;
(iii) any authorization of or any issuance of any authorized but
unissued capital stock of the Company, except the issuance of Securities
upon the exercise of the Warrants or upon conversion of any Series B
Preferred Shares;
(iv) any sale of the Company's entire interest in GMH;
(v) the sale, lease or exchange of all or substantially all of
the Company's assets or any consent by the Company to any sale, lease or
exchange by GMH of all or substantially all of the assets of GMH;
(vi) any merger or consolidation of the Company or GMH with or
into any other corporation;
(vii) the dissolution of the Company or GMH;
(viii) the adoption of a plan of liquidation of the Company or
GMH;
(ix) any action by the Company to commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it or GMH, or
seeking to adjudicate it or GMH a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding up, liquidation,
dissolution, composition or other relief with respect to it or
GMH or its or GMH's debts, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or GMH or for all or
any substantial part of its or GMH's assets, or making a general assignment
for the benefit of its or GMH's creditors;
(x) any recapitalization of the Company or GMH; or
(xi) except as provided in the Registration Rights Agreement, any
public offering of securities of the Company or any consent by the Company
to GMH authorizing any public offering of securities of GMH.
(c) Any of the actions described in Section 11(b) above are
herein referred to as a "Fundamental Change".
(d) For purposes of Section 11(a), as to any matter set forth
therein which requires the approval or consent of the Stockholders holding
not less than 66-2/3% of all of the issued and outstanding Series A
Preferred Shares, such matter shall be deemed approved or consented to
unless the Company shall have received written notice from the requisite
percentage of holders of Series A Preferred Shares that they do not approve
or consent to such matter within ten (10) Business Days after the holders
of the Series A Preferred Shares have received a written request from the
Company asking for such approval or consent.
12. Share and Warrant Certificates.
(a) Restrictive Endorsement. Each certificate representing
Securities now or hereafter held by a Stockholder shall be stamped with
legends in substantially the following form:
"THE SHARES [WARRANTS] REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT DATED AS OF
DECEMBER __, 1995, COPIES OF WHICH ARE
AVAILABLE AT THE OFFICE OF THE COMPANY
AND MAY BE INSPECTED BY ANY PROSPECTIVE
TRANSFEREE OF THE SHARES [WARRANTS]
REPRESENTED HEREBY ON REQUEST. SUCH
STOCKHOLDERS' AGREEMENT PROVIDES, AMONG
OTHER THINGS, FOR CERTAIN RESTRICTIONS
ON THE SALE, ASSIGNMENT, TRANSFER,
PLEDGE, HYPOTHECATION, MORTGAGE, CHARGE,
LIEN, ENCUMBRANCE, GIFT, BEQUEST,
TRANSMISSION OR OTHER DISPOSITION OF THE
SHARES [WARRANTS] REPRESENTED BY THIS
CERTIFICATE."
THE SALE AND ISSUANCE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAW OF ANY STATE OR
OTHER JURISDICTION. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE DISTRIBUTION THEREOF. THESE
SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, OR TRANSFERRED UNLESS (I) A
REGISTRATION STATEMENT UNDER THE ACT IS
IN EFFECT AS TO THESE SECURITIES AND
SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS
IN COMPLIANCE WITH APPLICABLE SECURITIES
LAW OF ANY STATE OR OTHER JURISDICTION
OR (II) THERE IS AN OPINION OF COUNSEL
OR OTHER EVIDENCE, SATISFACTORY TO THE
CORPORATION, THAT AN EXEMPTION THEREFROM
IS AVAILABLE AND THAT SUCH OFFER, SALE,
PLEDGE, OR TRANSFER IS IN COMPLIANCE
WITH APPLICABLE SECURITIES LAW OF ANY
STATE OR OTHER JURISDICTION.
Each Stockholder agrees that he or it will deliver all certificates
for Securities owned by him or it to the Company for
the purpose of affixing such legend thereto.
(b) Replacement Certificates. Upon presentation of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate representing Securities and indemnity
agreement reasonably satisfactory to the Company, and upon reimbursement to
the Company of all its reasonable expenses incident thereto, and upon
surrender of such certificate or instrument, if mutilated, to the Company,
each Stockholder agrees to use his or its best efforts to cause the Company
deliver a new certificate of like tenor in lieu of such lost, stolen,
destroyed or mutilated certificate.
13. No Default. Notwithstanding anything to the contrary
contained in this agreement, none of the Stockholders shall take any action
hereunder which would cause the Company or any of its subsidiaries or
Affiliates to breach any material agreement to which the Company, such
subsidiary or Affiliate is a party.
14. Preemptive Rights.
(a) In the event that the Company should determine to (i)
authorize and issue any shares of its capital stock or other equity
securities (other than securities issued (A) pursuant to the conversion of
the Series B Shares, (B) pursuant to the exercise of the Warrants, (C)
pursuant to the acquisition of another corporation by the Company or issued
in connection with any merger, consolidation, combination, purchase of all
or substantially all of the assets or other reorganization which has been
approved by the Board of Directors of the Company and the Stockholders in
accordance with the provisions of this Agreement, (D) pursuant to any
rights or agreements, including without limitation convertible securities,
provided that the rights established by this Section 14 apply with respect
to the initial sale or grant by the Company of such rights or agreements
(other than the rights or agreements described in clause (F) below), (E) in
connection with any stock split, stock dividend or recapitalization of the
Company, (F) to employees, consultants, officers or directors of the
Company pursuant to any stock option, stock purchase or stock bonus plan,
agreement or arrangement for the primary purpose of soliciting or retaining
such employees, consultants, officers or directors services and which are
outstanding on the date hereof or are hereafter approved by the Board of
Directors and the Stockholders in accordance with the terms of this
Agreement, and (G) in a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act,
covering the offer and sale of securities for the account of the Company
and/or selling shareholders to the public) or (ii) to reissue any treasury
shares previously acquired by the Company, then the Company shall notify
each Stockholder holding Voting Shares and each Warrant holder of such
proposed offering and the price thereof, and for a period of 30 days after
such notice, each such Stockholder and Warrant holder may purchase a pro
rata (in accordance with the percentage of Voting Shares then held by such
Stockholder and Warrant holder) amount of the shares being offered by
delivery of the purchase price therefor to the Company. If any Stockholder
or Warrant holder does not accept the offer to purchase all of his or its
pro rata share of the shares being offered, the Company shall make one or
more additional offers of the remainder of such shares to Stockholders or
Warrant holders who have agreed to purchase all of the shares previously
offered. Such additional offer or offers shall be made for a period of 10
days to each of such Stockholders and Warrant holders in the same ratio
that the amount of shares which such Stockholder or Warrant holder has
agreed to purchase bears to the total amount of shares which all
Stockholders and Warrant holders to which such additional offer or offers
are made have agreed to purchase. Any shares not so purchased may be sold
by the Company to a third party who agrees to be bound by the terms of this
Agreement and who shall become a Stockholder hereunder.
(b) For purposes of any calculation of the number of shares
of Voting Shares held or outstanding under this Section 14, the conversion
of all securities convertible into or exchangeable for Voting Shares and
the exercise of all outstanding rights, options and warrants to acquire
Voting Shares
shall be assumed.
15. Registration Rights. The Stockholders shall have the
registration rights set forth on Exhibit B hereto.
16. Miscellaneous.
(a) Notices. Wherever this Agreement provides for notice to
any party (except as expressly provided to the contrary), it shall be given
in writing by messenger, electronic transmission, telegraph, telex or
postage prepaid, registered or recorded delivery, air mail letter sent to
the address set forth under each Stockholder's name at the foot of this
Agreement, or to such other address as the party affected may hereafter
designate in writing to the Company and all other Stockholders; together
with a copy to the Company at the address set forth at the foot of this
Agreement. Any such notice shall be effective when received by the party to
whom addressed; provided that if given or made by postage prepaid,
registered or recorded delivery, airmail letter or by telegraph or telex,
it shall be deemed to have been received at the earlier of (i) when
actually received or (ii) five (5) business days after the same was posted
or sent (and in proving such it shall be sufficient to prove that the
envelope containing the same was properly addressed and posted as aforesaid
or sent), and provided that if given or made by telegraph or telex, it
shall be deemed to have been received at the time of dispatch.
(b) Termination; Amendment. This Agreement (i) may be terminated
or amended at any time by the written consent of the Company and the
holders of seventy percent (70%) of the Voting Shares and notice of such to
the Company and all Stockholders, provided that no amendment that adversely
affects the interest of any Stockholder shall be effective against such
Stockholder absent such Stockholder's prior written consent, and (ii) shall
be terminated (A) upon the consummation of (1) a registered public offering
of the Common Shares or (2) a Fundamental Change of the type described in
Section 11(b)(iv), (vi), (vii), (viii) or (ix) of this Agreement or (B) ten
years from the date hereof, unless, at anytime within two years prior to
any date upon which termination would occur under this clause (B), all of
the parties extend its duration for an additional period, not to exceed ten
years.
(c) Waiver. No failure or delay on the part of the Stockholders
or any of them in exercising any right, power or privilege hereunder, and
no course of dealing between the Stockholders or any of them shall operate
as a waiver thereof nor shall any single or partial exercise of any right,
power or privilege hereunder preclude the simultaneous or later exercise of
any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or
remedies which the Stockholders or any of them would otherwise have. No
notice to or demand in any case shall entitle the recipient thereof to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Stockholders or any of them to
take any other or further action in any circumstances without notice or
demand.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
(e) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware.
(f) Benefit and Binding Effect. Except as expressly contemplated
herein, this Agreement may not be assigned or transferred. This Agreement
shall be binding upon and shall inure to the benefit of the Company and
each of the Stockholders and their respective executors, administrators and
personal representatives and heirs and their permitted successors and
assigns hereunder and shall be binding upon their successors and assigns.
In the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts thereof shall nevertheless continue to
be valid and enforceable as though
the invalid portions were not a part hereof.
(g) Further Assurances. Each party hereto agrees to use its best
efforts to take, and to use its best efforts to cause the Company to take, any
action which may be reasonably requested by any other party hereto in order to
effectuate or implement the provisions of this Agreement; provided that no party
shall be required to take any requested action or cause the Company to take any
requested action not specifically required under this Agreement if such
requested action might adversely affect the interest of such party or the
Company.
(h) Specific Performance. Due to the fact that the Securities cannot
be readily purchased or sold in the open market, and that legal remedies may be
inadequate to enforce this Agreement, the parties will be irreparably damaged in
the event that this Agreement is not specifically enforced. In the event of a
breach or threatened breach of the terms, covenants and/or conditions of this
Agreement by any of the parties hereto, the other parties shall, in addition to
all other remedies, be entitled to a temporary or permanent mandatory
injunction, or any appropriate decree of specific performance, without any bond
or security being required and without being required to show any actual damage
or that monetary damages would not provide an adequate remedy.
(i) Voting Percentages. Whenever any provision in this Agreement
provides for a specified percentage of Voting Shares to authorize or approve any
action, such percentage shall be calculated as if all Warrants had been
exercised and all shares convertible into Voting Shares had been converted. In
addition, each member of the RFE Group hereby grants to Bulldog the right to
vote 29.1667% of the Series B Preferred Shares and/or Class C Common Shares held
by it as if it were the record and beneficial owner thereof; provided, however,
that the rights granted to Bulldog under this sub-paragraph (i) shall not affect
the calculation of the number of Voting Shares owned by any member of the RFE
Group for purposes of any other provision of this Agreement; and provided,
further, that if Bulldog distributes the Series B Preferred Shares or Class C
Common Shares owned by it, the voting rights granted in this sub-paragraph (i)
shall cease to apply.
IN WITNESS WHEREOF, the parties hereto have signed
this Agreement as of the day and year first above written.
GMH HOLDINGS INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
A STOCKHOLDERS:
BULLDOG HOLDINGS LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
RFE INVESTMENT PARTNERS, V, L.P.
By: RFE Associates V, L.P., general
partner
By: ____________________________
Name:
Title: General Partner
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
STERLING COMMERCIAL CAPITAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Executive Vice-
President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
STATE TREASURER OF THE STATE OF
MICHIGAN, CUSTODIAN OF THE MICHIGAN
PUBLIC SCHOOL EMPLOYEES' RETIREMENT
SYSTEM, STATE EMPLOYEES RETIREMENT
SYSTEM, MICHIGAN STATE POLICE
RETIREMENT SYSTEM, AND MICHIGAN
JUDGES' RETIREMENT SYSTEM
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
____________________________
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Administrator
Alternate Investments Division
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THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: ____________________________
Name:
Title:
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B STOCKHOLDERS:
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Waycross, GA 32503
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Waycross, GA 32503
EXHIBIT A
SCHEDULE OF STOCKHOLDERS
STOCKHOLDER NUMBER OF SHARES GROUP
SERIES A SERIES B CLASS A CLASS B CLASS C
PREFERRED PREFERRED COMMON COMMON COMMON WARRANTS
Bulldog Holdings LLC 1,400,000 A
RFE Investments
Partners V, L.P. 4,690,351 439,720 714,546 A
State Treasurer of
the State of
Michigan, Custodian 3,076,922 288,462 468,750 A
Sterling Commercial
Capital, Inc. 232,727 21,818 35,454 A
The Equitable Life
Assurance Society of
the United States 350,000 A
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 54,687 A
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 54,687 A
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 54,688 A
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 54,688 A
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 92,749 B
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
as Trustee 71,167 B
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ 71,167 B
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 71,167 B
▇▇▇▇▇▇ ▇▇▇▇▇▇ 28,000 B
▇▇▇▇▇ ▇▇▇▇▇▇▇ 28,000 B
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 21,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 14,000 B
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇,▇▇▇ B
▇▇▇▇▇ ▇▇▇▇▇ 13,125 B
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 13,125 B
_________ _________ _________ ________ ______ ________
TOTAL 8,000,000 2,150,000 1,656,250 0 0 568,750
EXHIBIT B
REGISTRATION RIGHTS
REGISTRATION RIGHTS
1. Definitions. Capitalized terms used without definition in this
Exhibit B shall have the meanings set forth in the Stockholders' Agreement to
which this Exhibit B is attached. The following terms shall have the following
respective meanings:
Commission: the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act or the Exchange Act,
whichever is the relevant statute for the particular purpose.
Equitable Initiating Holders: any holder or holders of more than
50% of the Warrants.
Exchange Act: the Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time of determination.
Initiating Holders: each of (a) The Equitable Initiating Holders
and (b) the RFE Initiating Holders, together with their successors and permitted
assigns.
IPO: the issuance by the Company in a Public Offering under the
Act of a number of shares of Common Stock such that, after giving effect to such
Public Offering, there shall be outstanding pursuant to one or more such Public
Offerings shares of Common Stock equal to at least 20% of the capital stock of
the Company on a fully-diluted basis.
Other Securities: any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 3 of the Warrant Agreement or otherwise.
Public Offering: any offering of Common Stock or Other
Securities, or any securities issued or issuable with respect to any Common
Stock or Other Securities by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise, in each case to the public pursuant to an
effective registration statement under the Act.
Registrable Securities: (a) any shares of Common Stock issued and
outstanding as of the date hereof, (b) the Warrants, (c) any shares of Common
Stock or Other Securities issued or issuable upon exercise of the Warrants or
upon conversion of the Series B Preferred Shares and (d) any securities issued
or issuable with respect to any Common Stock or Other Securities referred to in
subdivision (c) by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (x) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (y) they
shall have been sold as permitted under Rule 144 (or any successor provision)
under the Securities Act, or (z) they shall have ceased to be outstanding.
Registration Expenses: all expenses incident to the Company's
performance of or compliance with the provisions of this Exhibit B, including,
without limitation, all registration, filing and NASD fees, all fees and
expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, the
reasonable fees and disbursements of a single counsel and single firm of
accountants retained by the holders of the Registrable Securities being
registered, premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable Securities
being registered and any fees and disbursements of underwriters customarily paid
by issuers or sellers of securities, but excluding underwriting discounts,
commissions, transfer taxes and any other compensation paid to underwriters or
other agents or brokers to effect the sale, if any, provided that, in any case
where Registration Expenses are not to be borne by the Company, such expenses
shall not include salaries of Company personnel or general overhead expenses of
the Company, auditing fees, premiums or other expenses relating to liability
insurance required by underwriters of the Company, or other expenses for the
preparation of financial statements or other data normally prepared by the
Company in the ordinary course of its business or which the Company would have
incurred in any event.
Requesting Holder: the meaning in paragraph 7.
RFE Initiating Holders: RFE and Michigan.
Warrant Agreement: the Common Stock Purchase Warrant expiring
December 21, 2002 issued by the Company.
Warrants: the meaning specified in the opening paragraph of the
Warrant Agreement.
2. Registration on Request.
(a) Request. At any time and from time to time after the 180th
day following the consummation of an IPO, upon the written request of one or
more Initiating Holders, requesting that the Company effect the registration
under the Securities Act of all or part of such Initiating Holders' Registrable
Securities and specifying the intended method of disposition thereof, the
Company will promptly give written notice of such requested registration to all
holders of outstanding Registrable Securities, and thereupon will use its best
efforts to effect its registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holder or Holders for disposition
in accordance with the intended method of disposition stated in such
request; and
(ii) all other Registrable Securities the Holders of which have
made written requests to the Company for registration thereof within 20
Business Days after the giving of such written notice by the Company (which
request shall specify the intended method of disposition thereof),
all to the extent required to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered; provided that the Company shall not be required to effect the
registration pursuant to this Section 2 of any Warrants (but shall be required
to
effect the registration of Registrable Securities described in clauses (b) and
(c) of the definition of Registrable Securities), and provided, further, that
any holder of Registrable Securities to be included in any such registration,
may, by written notice to the Company within 10 Business Days after its receipt
of a copy of a notice from the managing underwriter delivered pursuant to
paragraph (g) below, withdraw such request and, on receipt of such notice of the
withdrawal of such request from holders comprising at least a majority of the
holders of Registrable Securities to be included in such registration, the
Company may elect not to effect such registration. Subject to paragraph (g)
below, the Company may include in such registration other securities for sale
for its own account or for the account of any other Person.
(b) Number of Registrations. The Company shall not be required
to effect more than two registrations for the RFE Initiating Holders and two
registrations for the Equitable Initiating Holders pursuant to this Section 2,
provided that such registrations, taken together, shall permit the disposition
of at least 80% of the Registrable Securities which the Company has been so
requested to register, and provided, further, that if two such registrations
shall not permit the disposition of at least 80% of such Registrable Securities,
the Company shall be required to effect additional registrations pursuant to
this Section 2 until they have permitted the disposition of at least 80% of such
Registrable Securities.
(c) Registration Statement Form. Registrations under this
Section 2 shall be on such appropriate registration form of the Commission (i)
as shall be selected by the Company and as shall be acceptable to at least a
majority of the holders of Registrable Securities to be included in such
registration and (ii) as shall permit the disposition of the Registrable
Securities which the Company has been requested to register under this Section 2
in accordance with the intended method or methods of disposition specified in
the request for their registration. The Company may, if permitted by law, effect
any registration requested under this Section 2 by the filing of a registration
statement on Form S-3 (or any successor or similar short form registration
statement) unless the holders holding at least a majority (by number of shares)
of the Registrable Securities as to which such registration relates (and, if
such registration involves an underwritten Public Offering of such Registrable
Securities, the managing underwriter of such Public Offering) shall notify the
Company in writing that, in the judgment of such holders (and, if applicable,
such managing underwriter), the use of a more detailed form specified in such
notice is of material importance to the success of the Public Offering of such
Registrable Securities, in which case such registration shall be effected on the
form so specified. Upon the request of at least a majority of the holders of
Registrable Securities, registration under this Section 2 shall be by means of a
shelf registration pursuant to Rule 415 under the Securities Act (but only if
the Company is then eligible to use Form S-2 or S-3 (or any successor forms)).
(d) Expenses. The Company will pay all Registration Expenses in
connection with the first two registrations for each of the RFE Initiating
Holders and the Equitable Initiating Holders effected pursuant to this Section
2, and, if such registrations, taken together, shall not permit the disposition
of at least 80% of the Registrable Securities which the Company has been
requested to register under this Section 2, the Company will pay all
Registration Expenses in connection with each additional registration pursuant
to this Section 2 until such registrations, taken together, shall have permitted
the disposition of at least 80% of such Registrable Securities.
(e) Selection of Underwriters. If, in the discretion of the
holders of a majority (by number of shares) of the Registrable Securities, any
offering pursuant to this Section 2 shall constitute an underwritten offering,
the underwriter or underwriters thereof shall be selected, after consultation
with such holders, by the Company and shall be acceptable to the holders of at
least a majority of the holders of Registrable Securities to be included in such
offering, who shall not unreasonably withhold their acceptance of such
underwriter or
underwriters.
(f) Effective Registration Statement. A registration requested
pursuant to this Section 2 will not be deemed to have been effected and a demand
shall not be deemed to have been made (i) unless it has become effective, (ii)
if the registration does not remain effective for a period of at least 120 days
(or, with respect to any registration statement filed pursuant to Rule 415 under
the Securities Act, for a period of at least 2 years) or, if earlier, until all
the Registrable Securities requested to be registered in connection therewith
were sold, (iii) if, after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court, or (iv) if the conditions
to closing specified in the purchase agreement or underwriting agreement entered
into in connection with such registration are not satisfied other than by reason
of some act or omission by such Initiating Holders.
(g) Priority in Requested Registrations. If a requested
registration pursuant to this Section 2 involves an underwritten offering, and
the managing underwriter shall advise the Company in writing (with a copy to
each holder of Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Securities)
exceeds the number which can be sold in such offering, the Company will include
in any such registration to the extent of the number which the Company is so
advised can be sold in such offering (i) first, Registrable Securities requested
to be included in such registration by the holder or holders of Registrable
Securities who are Initiating Holders, pro rata among such holders on the basis
of the number of Registrable Securities requested to be included by such
holders, and (ii) second, other securities of the Company proposed to be
included in such registration, in accordance with the priorities, if any, then
existing among the Company and the holders of such other securities.
3. Incidental Registration.
(a) Right to Include Registrable Securities. Notwithstanding any
limitation contained in Section 2, if the Company at any time proposes to
register any of its securities under the Securities Act (other than by a
registration on Form S-4 or S-8 or any successor or similar forms), whether or
not for sale for its own account, in a manner which would permit registration of
Registrable Securities for sale to the public under the Securities Act, each
such time, it will give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section 3. Upon the written request of any such holder made within 20 days after
receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the holders thereof, to the extent
requisite to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be registered, by
inclusion of such Registrable Securities in the registration statement which
covers the securities which the Company proposes to register, provided that (i)
the Company shall not be required to effect the registration pursuant to this
Section 3 of any Warrants (but shall be required to effect the registration of
Registrable Securities described in clauses (b) and (c) of the definition of
Registrable Securities) and (ii) if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (x) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holder or holders
of Registrable Securities entitled to request that such registration be effected
as a registration under Section 2, and (y) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities. No registration effected under this Section 3 shall relieve the
Company of its obligation to effect any registration statement upon request
under Section 2. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 3.
(b) Priority in Incidental Registrations. If a registration
pursuant to this Section 3 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company will include in such
registration, to the extent of the number which the Company is so advised can be
sold in such offering, securities determined as follows:
(i) if such registration as initially proposed by the Company
was solely a primary registration of its securities, (x) first, the
securities proposed by the Company to be sold for its own account, (y)
second, any Registrable Securities requested to be included in such
registration, pro rata among the holders thereof requesting such
registration on the basis of the number of shares of Registrable Securities
requested to be included by such holders and (z) third, any other
securities of the Company proposed to be included in such registration, pro
rata among the holders thereof requesting such registration on the basis of
the number of shares of such securities requested to be included by such
holders; and
(ii) if such registration as initially proposed by the Company
was in whole or in part requested by holders of securities of the Company,
other than holders of Registrable Securities, pursuant to Section 2 hereof,
such securities held by the holders initiating such registration, any
Registrable Securities requested to be included in such registration, and
any other securities of the Company proposed to be included in such
registration, pro rata among the holders thereof requesting such
registration on the basis of the number of shares of such securities
requested to be included by such holders.
4. Registration Procedures. If and whenever (a) the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2 and 3 or (b) there
is a Requesting Holder in connection with any other proposed registration by the
Company under the Securities Act, the Company will as expeditiously as possible:
(i) prepare and file with the Commission the requisite
registration statement (including such audited financial statements as may
be required by the Securities Act or the rules and regulations promulgated
thereunder) to effect such registration and use its best efforts to cause
such registration statement to become effective, provided that before
filing such registration statement or any amendments thereto, the Company
will furnish to the counsel selected by the holders of Registrable
Securities whose Registrable Securities are to be included in such
registration copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel, and provided,
further, that the Company may discontinue any registration of its
securities which are not Registrable Securities at any time prior to the
effective date of the registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be
necessary to maintain the effectiveness of such registration statement and
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement until
the earlier of (A) such time as all of such securities have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement and (B) the
expiration of 120 days after such registration statement becomes effective,
except with respect to any such registration statement filed pursuant to
Rule 415 (or any successor Rule) under the Securities Act, in which case
such period shall be 2 years;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement and each Requesting Holder such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as each
seller thereof and each Requesting Holder shall reasonably request, to keep
such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the securities owned by
such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) furnish to each seller of Registrable Securities and each
Requesting Holder a signed counterpart, addressed to such seller (and the
underwriters, if any), of
(A) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten Public Offering, dated the date
of any closing under the underwriting agreement), reasonably
satisfactory in form and substance to such seller, and
(B) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten Public Offering, dated the date of any closing under the
underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten Public Offerings of securities and, in the case of the
accountants' letter, such other financial matters, as such seller (or the
underwriters, if any) may reasonably request;
(vii) immediately notify each seller of such Registrable
Securities, and (if requested by any such seller) confirm such advice in
writing, (A) when the prospectus or any prospectus supplement or post-
effective amendment has been filed, and, with respect to the registration
statement or any post-effective amendment, when the same has become
effective, (B) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose and (D) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose;
(viii) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement at the earliest
possible time;
(ix) immediately notify each holder of Registrable Securities
covered by such registration statement and each Requesting Holder, at any
time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and at the request of any such holder promptly
prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made;
(x) otherwise comply with all applicable rules and regulations
of the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the
first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which any such seller or any
Requesting Holder shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with the
require-ments of the Securities Act or of the rules or regulations
thereunder, having been furnished with a copy thereof at least five
business days prior to the filing thereof;
(xi) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement not later than the effective date of such registration statement;
(xii) cooperate with the sellers of such Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold, which securities shall not bear any
restrictive legends and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Securities to be in
such denominations and registered in such names as such sellers may request
at least two Business Days prior to any sale of Registrable Securities;
(xiii) use its best efforts (A) to cause all such
Registrable Securities covered by such registration statement to be listed
on a national securities exchange (if such Registrable Securities are not
already so listed) and on each additional national securities exchange on
which similar securities issued by the Company are then listed, if the
listing of such Registrable Securities is then permitted under the rules of
such exchange, or (B) to secure designation of all such Registrable
Securities covered by such registration statement as a NASDAQ "national
market system security" within the meaning of Rule llAa2-1 of the
Commission or, failing that, secure NASDAQ authorization for such
Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such
with respect to such Registrable Securities with the NASD;
(xiv) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the applicable registration statement; and
(xv) enter into such agreements and take such other actions as
the Requisite Holders shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
The Company may require each holder of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such holder and the distribution of such securities as the Company may from time
to time reasonably request in writing.
5. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to the registration requested under Section 2, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be satisfactory in substance and form to each such holder and the
underwriters and to contain such representations and warranties by the Company
and such other terms as are customarily contained in agreements of this type,
including, without limitation, indemnities to the effect and to the extent
provided in Section 8. The holders of Registrable Securities to be distributed
by such underwriters shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. No
holder of Registrable Securities shall be required (i) to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder and such holder's intended method of distribution and any other
representation required by law or (ii) to indemnify (or to contribute with
respect to an indemnifiable claim) the Company or any underwriters of the
Registrable Securities, except as set forth in Section 8.
(b) Incidental Underwritten Offerings. If the Company at any
time proposes to register any of its securities under the Securities Act as
contemplated by Section 3 and such securities are to be distributed by or
through one or more underwriters, the Company will, subject to the provisions of
Section 3(b), use its best efforts, if requested by any holder of Registrable
Securities, to arrange for such underwriters to include the Registrable
Securities to be offered and sold by such holder among the securities to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. No
holder of Registrable Securities shall be required (i) to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder and such holder's intended method of distribution and any other
representation required by law or (ii) to indemnify (or to contribute with
respect to an indemnifiable claim) the Company or any underwriters of the
Registrable Securities, except as set forth in Section 8.
(c) Holdback Agreements.
(i) Each holder of Registrable Securities agrees, if so required
by the managing underwriter, not to effect any public sale or distribution
of securities of the Company of the same class as the securities included
in such Registration Statement, during the seven days prior to the date on
which any underwritten registration pursuant to Section 2 or 3 has become
effective and the 90 days thereafter, except as part of such underwritten
registration or to the extent that such holder is prohibited by applicable
law from agreeing to withhold Registrable Securities from sale or is acting
in its capacity as a fiduciary or an investment adviser. Without limiting
the scope of the term "fiduciary," a holder shall be deemed to be acting as
a fiduciary or an investment adviser if its actions or the Registrable
Securities proposed to be sold are subject to ERISA, the Investment Company
Act of 1940 or the Investment Advisers Act of 1940 or if such Registrable
Securities are held in a separate account under applicable insurance law or
regulation.
(ii) The Company agrees (A) not to effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the seven
days prior to the date on which any underwritten registration pursuant to
Section 2 or 3 has become effective and the 90 days thereafter, except as
part of such underwritten registration and except pursuant to registrations
on Form S-4 or S-8 or any successor or similar forms thereto, and (B) to
cause each holder of its equity securities or of any securities convertible
into or exchangeable or exercisable for any of such securities, in each
case purchased from the Company at any time after the date of this
Agreement (other than in a Public Offering), to agree not to effect any
such public sale or distribution of such securities, during such period,
except as part of such underwritten registration.
6. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act,
the Company will give the holders of Registrable Securities to be registered
under such registration statement, their underwriters, if any, each Requesting
Holder and one firm of counsel and accountants on behalf of such Requesting
Holders, the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, and will give each of them such
access to its books and records and such opportunities to discuss the business
of the Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company agrees to
include in any such registration statement all information which any holder of
Registrable Securities being registered, upon advice of counsel, shall
reasonably request.
7. Rights of Requesting Holders. The Company will not file any
registration statement under the Securities Act, whether or not pursuant to
registration rights granted to other holders of its securities and whether or
not for sale for its own
account (other than by a registration on Form S-4, S-8 or any successor form
thereto), unless it shall first have given to each Person which holds any
Registrable Securities issued by the Company at least 30 days' prior written
notice thereof. Any such holder who shall so request within 30 days after such
notice (a "Requesting Holder") shall have the rights of a Requesting Holder
provided in Sections 4, 6 and 8. In addition, if any registration statement
refers to any Requesting Holder by name or otherwise as the holder of any
securities of the Company, then such holder shall have the right to require (a)
the insertion therein of language, in form and substance reasonably satisfactory
to such holder, to the effect, if true, that the holding by such holder of such
securities does not necessarily make such holder a "controlling person" of the
Company within the meaning of the Securities Act and is not to be construed as a
recommendation by such holder of the investment quality of the Company's debt or
equity securities covered thereby and that such holding does not imply that such
holder will assist in meeting any future financial requirements of the Company,
or (b) in the event that such reference to such holder by name or otherwise is
not required by the Securities Act or any rules and regulations promulgated
thereunder, the deletion of the reference to such holder.
8. Indemnification.
(a) The Company will, and hereby does, indemnify, to the extent
permitted by applicable law, each holder of Registrable Securities and its
Affiliates and their respective officers and directors, if any, and each Person,
if any, who controls such holder within the meaning of Section 15 of the
Securities Act, against all losses, claims, damages, liabilities (or proceedings
in respect thereof) and expenses (under the Securities Act or common law or
otherwise), joint or several, caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus (and as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses are caused by any untrue statement or alleged
untrue statement contained in or by any omission or alleged omission from
information furnished in writing to the Company by such holder expressly for use
therein. If the offering pursuant to any registration statement provided for
under this Agreement is made through underwriters, no action or failure to act
on the part of such underwriters (whether or not any such underwriter is an
Affiliate of any holder of Registrable Securities) shall affect the obligations
of the Company to indemnify any holder of Registrable Securities or any other
Person pursuant to the preceding sentence. If the offering pursuant to any
registration statement provided for under this Agreement is made through
underwriters, the Company agrees to enter into an underwriting agreement in
customary form with such underwriters, and the Company agrees to indemnify such
underwriters, their officers and directors, if any, and each Person, if any, who
controls such underwriters within the meaning of Section 15 of the Securities
Act to the same extent as hereinbefore provided with respect to the
indemnification of the holders of Registrable Securities; provided that the
Company shall not be required to indemnify any such underwriter, or any officer
or director of such underwriter or any Person who controls such underwriter
within the meaning of Section 15 of the Securities Act, to the extent that the
loss, claim, damage, liability (or proceedings in respect thereof) or expense
for which indemnification is claimed results from such underwriter's failure to
send or give a copy of the amended or supplemented final prospectus to the
Person asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or omission was
corrected in such amended or supplemented final prospectus prior to such written
confirmation and the underwriter was given notice of the availability of such
amended or supplemented final prospectus.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder will
indemnify, to the extent permitted by applicable law, the Company, its officers
and directors and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims,
damages, liabilities (or proceedings in respect thereof) and expenses (under the
Securities Act, common law or otherwise), caused by any untrue statement or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact required to be stated in the registration statement or
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein not misleading, but only to
the extent that such untrue statement is contained in or such omission is from
information so furnished in writing by such holder expressly for use therein;
provided that such holder's obligations hereunder shall be limited to an amount
equal to the net proceeds to such holder of the Registrable Securities sold
pursuant to such registration statement.
(c) Any Person entitled to indemnification under the provisions
of this Section 8 shall (i) give prompt notice to the indemnifying party of any
claim with respect to which it seeks indemnification (but the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 8, except to the extent that the indemnifying party is actually
prejudiced by such failure) and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, permit such
indemnifying party to assume the defense of such claim, with counsel reasonably
satisfactory to the indemnified party; and if such defense is so assumed, such
indemnifying party shall not enter into any settlement without the consent of
the indemnified party if such settlement attributes liability to the indemnified
party, and such indemnifying party shall not be subject to any liability for any
settlement made without its consent (which shall not be unreasonably withheld);
and any underwriting agreement entered into with respect to any registration
statement provided for under this Agreement shall so provide. In the event an
indemnifying party shall not be entitled, or elects not, to assume the defense
of a claim, such indemnifying party shall not be obligated to pay the fees and
expenses of more than one counsel or firm of counsel for all parties indemnified
by such indemnifying party in respect of such claim, unless in the reasonable
judgment of any such indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties in respect to
such claim. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of a participating holder of Registrable
Securities, its officers, directors or any Person, if any, who controls such
holder as aforesaid, and shall survive the transfer of such securities by such
holder.
(d) If the indemnification provided for in this Section 8 shall
for any reason be held by a court to be unavailable to an indemnified party
under Section 8(a) or (b) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, then, in lieu of the amount paid or
payable under Section 8(a) or (b), the indemnified party and the indemnifying
party under Section 8(a) or (b) shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating the same), (i) in such proportion as
is appropriate to reflect the relative fault of the Company and the prospective
sellers of Registrable Securities covered by the registration statement which
resulted in such loss, claim, damage or liability, or action or proceeding in
respect thereof, with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action or proceeding in respect
thereof, as well as any other relevant equitable considerations or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and such prospective sellers from the offering of the
securities covered by such registration statement, provided, that
for purposes of clauses (i) or (ii), the relative benefits received by the
prospective sellers shall be deemed not to exceed the amount of proceeds
received by such prospective sellers, and no holder of Registrable Securities
shall be required to contribute any amount in excess of the amount such holder
would have been required to pay to an indemnified party if the indemnity under
subsection (b) of this Section 8 was available. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Such sellers' obligations to contribute as
provided in this Section 8(d) are several in proportion to the relative value of
their respective Registrable Securities covered by such registration statement
and not joint. In addition, no Person shall be obligated to contribute hereunder
any amounts in payment for any settlement of any action or claim effected
without such Person's consent, which consent shall not be unreasonably withheld.
(e) Indemnification and contribution similar to that specified
in the preceding subdivisions of this Section 8 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation of any governmental authority other than
the Securities Act.
(f) An indemnifying party shall make payments of all amounts
required to be made pursuant to the foregoing provisions of this Section 8 to or
for the account of the indemnified party from time to time promptly upon receipt
of bills or invoices relating thereto or when otherwise due or payable, subject
to an undertaking by the Indemnified Party to repay all such amounts if a court
of competent jurisdiction determines that such Indemnified Party is not entitled
to indemnity or the benefits of contribution hereunder.
9. Adjustments Affecting Registrable Securities. The Company will
not effect or permit to occur any combination or subdivision of shares which
would adversely affect the ability of the holders of Registrable Securities to
include such Registrable Securities in any registration of its securities
contemplated by this Exhibit B or the marketability of such Registrable
Securities under any such registration.
10. Registration Rights to Others. The Company shall not, without the
prior written consent of the holders of a majority of Registrable Securities,
provide to any holder of any securities of the Company rights with respect to
the registration of such securities under the Act which are more favorable to
such holder than the terms and conditions provided in this Exhibit B to holders
of Registrable Securities. The Company shall provide to the holders of
Registrable Securities copies of any agreements which purport to grant rights
with respect to the registration of any of the Company's securities to any
holder or prospective holder thereof promptly upon executing the same.
11. Other Registration of Common Stock. If any shares of the Common
Stock required to be reserved for purposes of issuance upon exercise of the
Warrants in connection with their sale in a registration pursuant to Section 2
or 3 require registration with or approval of any governmental authority under
any federal or state law (other than the Securities Act) before such shares may
be issued upon such exercise, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered or approved, as the case may be.
12. Nominees for Beneficial Owners. For purposes of this Exhibit B,
in the event that any Registrable Securities are held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its election, be
treated as the holder of such Registrable Securities for purposes of any request
or other action by any holder or holders of Registrable Securities pursuant to
this Exhibit B or any determination of any number or percentage of shares of
Registrable Securities held by any holder or holders of Registrable Securities
contemplated by this Exhibit B. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
13. Rule 144 and Rule 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of Rule 144 and Rule 144A under the Securities Act, as such
Rules may be amended from time to time, or any similar rules or regulations
hereafter adopted by the Commission, including, without limitation, filing on a
timely basis all reports required to be filed pursuant to the Exchange Act.
14. Transfer; Assignment. Upon a transfer of Registrable Securities
by the holder thereof, the rights granted hereunder to the holders of
Registrable Securities may be transferred to such transferee.
15. Amendment. Notwithstanding the provisions of the Stockholders
Agreement to which this Exhibit B is attached, this Exhibit B may not be amended
or modified without the prior written consent of holders of more than 50% of the
Registrable Securities. Any approval, action or waiver of any provision
contained in this Exhibit B shall require the prior approval or consent of
holders of more than 50% of the Registrable Securities, and upon receiving such
approval or consent, such approval, action or waiver shall be binding upon all
holders of Registrable Securities; provided, that if any amendment is adverse to
any holder of Registrable Securities, the same must be approved by such holder.
EXHIBIT F
Form of Investor's Rights Agreement
GMH HOLDINGS, INC.
INVESTORS' RIGHTS AGREEMENT
December 21, 1995
TABLE OF CONTENTS
SECTION 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PUT/CALL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Put Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Repurchase Rights. . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BULLDOG OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Successors and Assigns; Assignment of Rights . . . . . . . . . 5
3.3 Entire Agreement; Amendment; Waiver. . . . . . . . . . . . . . 6
3.4 Notices, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Delays or Omissions. . . . . . . . . . . . . . . . . . . . . . 6
3.6 Rights; Separability . . . . . . . . . . . . . . . . . . . . . 6
3.7 Titles and Subtitles . . . . . . . . . . . . . . . . . . . . . 7
3.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . 7
3.10 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.11 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 7
GMH HOLDINGS, INC.
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement (this "Agreement") is made and entered
into as of the 21st day of December, 1995, by and among GMH HOLDINGS, INC., a
Delaware corporation (the "Company"), the persons identified on Exhibit A
attached hereto (the "Purchasers"), BULLDOG HOLDINGS LLC, a New York limited
liability company ("Bulldog") and THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES (the "Equitable").
WHEREAS, the Purchasers are parties to the Securities Purchase Agreement
dated as of the date hereof between the Company, General Manufactured Housing,
Inc. and the Purchasers (the "Series A Agreement"), certain of the Company's and
such Purchasers' obligations under which are conditioned upon the execution and
delivery by such Purchasers, Bulldog, Equitable and the Company of this
Agreement;
For purposes of Sections 1.1, 1.2(c) and 3 of this Agreement only,
Equitable shall be deemed to be a Purchaser.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereto agree as follows:
SECTION 1
PUT/CALL
1.1 Put Rights. (a) At any time, and from time to time, commencing
December 30, 2003, a Purchaser may, by notice to the Company and to the other
Purchasers (a "Put Notice") elect to require the Company (subject to the
conditions set forth below), to purchase (a "Put") all of the Common Stock and
Series B Shares owned by such Purchaser at a price equal to the Fair Market
Value (as defined below) determined as of the date of the Put Notice, and the
Company, subject to the conditions set forth below, shall thereupon become
obligated to purchase all of such Common Stock and Series B Shares at the Fair
Market Value. In the event that the Fair Market Value is less than the price at
which such Purchaser is willing to Put such Common Stock and Series B Shares,
then, within 30 days after the date of the determination of Fair Market Value,
the Purchaser may withdraw such Put Notice and the obligations of the Purchaser
and the Company pursuant to this Section 1.1 with respect to such Put shall be
terminated. During the thirty (30) day period following the delivery of any Put
Notice, each Purchaser shall have the right to exercise a Put on equal priority
with the Purchaser who delivered the Put Notice initiating such process with
respect to all Common Stock and Series B Shares owned by such Purchaser.
(b) The Company's obligations with respect to a Put(s) shall be
limited to the extent of its funds legally available for the purchase of capital
stock of the Company. In the event that the Company is so limited in its ability
to fulfill any Put, the Company will use its reasonable efforts to arrange
financing on commercially reasonable terms and conditions in an amount
sufficient to enable it to fulfill its obligations in respect of all Common
Stock and Series B Shares Put by Purchasers during the 30 day period following
delivery of the initiating Put Notice. If, notwithstanding such efforts, after a
period of 90 days following the determination of Fair Market Value as of the
date of the initiating Put Notice, the Company is unable to acquire for cash all
of the Common Stock and Series B Shares which have been Put, then the Company
shall issue to each Purchaser who has
Put Common Stock and Series B Shares a Promissory Note of the Company
in the original principal amount equal to the Fair Market Value of the
Common Stock and Series B Shares so Put which the Company is unable to
acquire for cash (prorating the cash to be paid and principal amount
of Promissory Notes to be delivered based upon the number of shares
(calculated on an as converted and/or as exercised basis) Put by each
Purchaser as compared to the total number of shares Put by all
Purchasers). Any such promissory note shall bear interest at the rate
per annum equal to the then prevailing rate for three year U.S.
Treasury obligations plus 500 basis points on the outstanding
principal amount thereof, shall be mandatorily prepayable out of
excess cash flow of the Company and its subsidiaries on a
consolidation basis, and shall mature on the third anniversary of the
Put Notice applicable thereto. Such Promissory Note shall contain such
subordination provisions as the Company's senior lenders shall
reasonably request. The Promissory Note shall be secured by a pledge
of the securities with respect to which the Put has been exercised.
The Promissory Note shall be substantially in the form of Exhibit I
attached to this Agreement. The securities pledged to secure the
Promissory Note shall be endorsed in blank, together with assignments
separate from certificates, which are undated and have been executed
by the Company, and shall be delivered to the Purchaser, together with
a pledge agreement executed by the Company in substantially the form
of Exhibit II attached to this Agreement and the Promissory Note, at
the Closing of such Put.
(c) The closing of any Put transaction shall take place on a
date (such date to be as soon as practicable after the Valuation has
been delivered) and at the offices of the Company. The Company, will
pay for the Common Stock and Series B Shares to be purchased pursuant
to a Put by wire transfer to the Purchaser to the extent provided
above, and, if required pursuant to subparagraph (b) above by delivery
of a Promissory Note duly executed by the Company. The Company, will
be entitled to receive customary representations and warranties from
the Purchaser regarding the sale of the Common Stock and Series B
Shares including a representation that the Purchaser has good and
marketable title to the Common Stock and Series B Shares to be
transferred free and clear of all liens, claims and other
encumbrances.
(d) As used herein, the following terms shall have the following
respective meanings:
Entity Fair Market Value shall mean the fair market value of
the Company and its Subsidiaries considered as one entity (as
established pursuant to a Valuation), in the event of a sale of
the Company and its Subsidiaries pursuant to an active marketing
process, less any indebtedness of the Company and its
Subsidiaries for borrowed money.
Fair Market Value of a share of Common Stock shall mean the
Entity Fair Market Value divided by the total number of issued
and outstanding shares of Common Stock of the Company on a fully
diluted basis (including the conversion of all securities
convertible into Common Stock and the exercise of all warrants
which are exercisable into Common Stock). Fair Market Value of a
Series B Share shall mean the Fair Market Value of a share of
Common Stock multiplied by the number of shares of Common Stock
into which such Series B Share is then convertible.
"Valuation" shall mean with respect to Entity Fair Market
Value, the agreement of the Company and the applicable
Purchaser(s), or if the Company and such Purchaser(s) are unable
to agree within 30 days after delivery of the Put Notice, the
opinion of an investment banking firm of national standing
designated by mutual agreement of the Company and the Purchaser.
The costs of conducting the Valuation shall be borne equally by
the applicable Purchaser and the Company.
1.2 Repurchase Rights. (a) At any time commencing December 30, 2004,
the Company may, by notice to the Purchasers
(a "Call Notice"), elect to purchase (a "Call") all of the Purchasers'
Common Stock and Series B Shares at a price equal to the Fair Market Value
thereof, determined as of the date of the Call Notice. The Call Notice will
set forth the time and place for the closing of the transaction.
(b) At any time commencing December 30, 2004, the Company may,
by a Call Notice to Equitable, elect to Call all of Equitable's Common
Stock at a price equal to the Fair Market Value thereof, determined as of
the date of the Call Notice. The Call Notice will set forth the time and
place for the closing of the transaction.
(c) The closing of the transactions contemplated by this Section
1.2 shall take place on the date and at the place designated by the Company
in the Call Notice which date shall not be more than 90 days after the
delivery of such notice. The Company will pay for the Common Stock and
Series B Shares to be purchased pursuant to a Call in cash by wire transfer
payable to the holder of such Common Stock and Series B Shares. The Company
will be entitled to receive customary representations and warranties from
each Purchaser regarding the sale of the Common Stock and Series B Shares,
including but not limited to the representation that the Purchaser has good
and marketable title to the Common Stock and Series B Shares to be
transferred free and clear of all liens, claims and other encumbrances.
SECTION 2
BULLDOG OPTION
2.1 Option. On each dividend payment date with respect to the Series
A Shares (and whether or not any dividend in respect of the Series A Shares
is earned or declared), in the event that there is an aggregate amount of
accrued and unpaid dividends in respect of the Series A Shares in excess of
$500,000, then Bulldog shall grant to each Purchaser an option to purchase
such Purchaser's pro rata share (as defined below) of that number of Series
B Shares (adjusted for any combinations, consolidations, stock splits, or
stock distributions or dividends with respect to such shares) (the "Option
Shares") owned by Bulldog as equals .21875 times the difference between (a)
the aggregate amount of accrued and unpaid dividends in respect of all
Series A Shares minus (b) the greater of (x) $500,000 and (y) the lowest
aggregate amount of accrued and unpaid dividends outstanding in respect of
all Series A Shares since the immediately preceding dividend payment date
(or, if Bulldog has converted some or all of the Series B Shares such that
it owns an insufficient number of Series B Shares to satisfy such option,
then such option shall be for such number of shares of Common Stock as such
number of Option Shares would then convert into at the then applicable
Series B Conversion Price); provided that the maximum number of Option
Shares as to which the Purchasers may be granted options hereunder shall be
that number of Option Shares as shall represent ten percent (10%) of the
Company's Common Stock on a fully-diluted basis. The option exercise price
per share with respect to any such option shall equal $2.2857 per share (as
adjusted for combinations, consolidations or stock distributions or
dividends with respect to such shares) and the term of each such option
shall be eight years from the date of grant of such option. Each option may
be exercised in whole or in part provided that options shall be exercised
in amounts no less than the lesser of (i) $10,000 in aggregate exercise
price and (ii) the total dollar amount in exercise price of all unexercised
options held by such optionee. If prior to exercise of any option granted
pursuant to this Section, the Company pays dividends in respect of the
Series A Shares such that the aggregate amount of accrued and unpaid
dividends in respect of all Series A Shares is less than $500,000, then
one-half of the unexercised options which are then held by such optionee
(but excluding any options which have previously been outstanding at any
time when the aggregate amount of accrued and unpaid dividends on all
Series A Shares is less than $500,000) shall expire and be of no further
force or effect. A Purchaser's pro rata share shall be that percentage
which expresses the ratio between the number of shares of Common Stock
owned by such Purchaser and the aggregate number of shares of Common Stock
owned by all such Purchasers.
SECTION 3
MISCELLANEOUS
3.1 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of Delaware, as applied to agreements among
Delaware residents entered into and to be performed entirely within
Delaware.
3.2 Successors and Assigns; Assignment of Rights. The rights and
benefits of a Purchaser hereunder (including such Purchaser's rights and
benefits under Section 1.1 hereof) may be assigned to a transferee or
assignee in connection with transfer or assignment of any Series A Shares
owned by such Purchaser (A) to any person or entity which is a majority-
owned subsidiary of a Purchaser or controls, is controlled by or under
common control with the Purchaser, (B) to any other person or entity
provided that (a) such transfer may otherwise be effected in accordance
with applicable securities laws, (b) such transferee or assignee acquires
at least 160,000 Series A Shares and (c) such assignee or transferee
executes a written instrument agreeing to be bound by the terms and
provisions of this Agreement, (C) to a constituent partner of a Purchaser,
a trust (including liquidating trusts for the benefit of such a partner or
partners) or the estate of such a constituent partner, and (D) to a
successor trustee of a Purchaser in its capacity as trustee. Any such
transfer or assignment permitted hereby shall inure to the benefit of, and
be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
3.3 Entire Agreement; Amendment; Waiver. This Agreement, the Series A
Agreement and the other agreements contemplated thereby constitute the full
and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written
instrument signed by the Company and the holders of at least sixty six and
2/3 percent (66-2/3%) of the Series A Shares and any such amendment,
waiver, discharge or termination shall be binding upon all the parties
hereto, but in no event shall the obligation of any party hereto be
materially increased, except upon the written consent of such party.
3.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United
States first-class mail, postage prepaid, sent by -facsimile or delivered
personally by hand or nationally recognized courier addressed (a) if to a
Purchaser, as indicated on the list of Purchasers attached hereto as
Exhibit A, or at such other address as such Purchaser or permitted assignee
shall have furnished to the Company in writing, (b) if to Bulldog to
Strategic Investments & Holdings, Inc., Cyclorama Building, ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇ ▇. ▇▇▇▇▇ or at such other
address as shall have furnished to the Company in writing, or (c) if to the
Company, at such address or facsimile number as the Company shall have
furnished to each Purchaser in writing. All such notices and other written
communications shall be effective on the date of mailing, facsimile
transfer or delivery.
3.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Purchaser (in any capacity hereunder), upon
any breach or default of the Company under this Agreement shall impair any
such right, power or remedy of such Purchaser nor shall it be construed to
be a waiver of any such breach or default, or an acquiescence therein, or
of or in any similar breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Purchaser
(in any capacity hereunder) of any breach or default under this Agreement
or any waiver on the part of any Purchaser of any provisions or conditions
of this Agreement must be made in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either
under this Agreement or by law or otherwise afforded to
any Purchaser, shall be cumulative and not alternative.
3.6 Rights; Separability. Unless otherwise expressly provided herein,
a Purchaser's rights hereunder are several rights, not rights jointly held
with any of the other Purchaser. In case any provision of the Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
3.7 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and
are not to be considered in construing or interpreting this Agreement.
3.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
3.9 No Third Party Beneficiaries. The covenants and agreements set
forth herein are for the sole and exclusive benefit of the parties hereto
and their respective successors and assigns and such covenants and
agreements shall not be construed as conferring, and are not intended to
confer, any rights or benefits upon any other persons.
3.10 Remedies. The parties to this Agreement acknowledge and agree
that a breach of any of the covenants of the Company, the Purchasers or
Bulldog set forth in this Agreement may not be compensable by payment of
money damages and, therefore, that the covenants of the foregoing parties
set forth in this Agreement may be enforced in equity by a decree requiring
specific performance. Without limiting the foregoing, if any disputes arise
concerning Section 1 hereof, the parties to this Agreement agree that an
injunction may be issued pending resolution of such controversy. Such
remedies shall be cumulative and non-exclusive and shall be in addition to
any other rights and remedies the parties may have under this Agreement.
Any transfer or acquisition of Restricted Securities in violation of this
Agreement shall be null and void ab initio.
3.11 Definitions. As used in this Agreement, the following definitions
shall apply:
"Common Stock" shall mean, collectively, the Company's Class A
Common Stock, par value $0.001 per share, the Company's Class C Common
Stock, par value $0.001 per share, including shares of Class C Common Stock
issued or issuable upon conversion of Series B Shares, and the Company's
Class B Common Stock, par value $0.001 per share, including shares of Class
A or Class B Common Stock issued or issuable upon exercise of the warrants
issued to Equitable on the date hereof.
"Series A Shares" shall mean the Company's Series A Redeemable
Preferred Stock, par value $0.001 per share.
"Series B Shares" shall mean the Company's Series B Convertible
Preferred Stock, par value $0.001 per share.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Investors'
Rights Agreement effective as of the day and year first above written.
THE COMPANY: GMH HOLDINGS, INC.
By:________________________________
Name:
Title:
BULLDOG: BULLDOG HOLDINGS LLC
By: SIHI-GMH LLC
Its Managing Member
By:________________________________
THE PURCHASERS: RFE INVESTMENT PARTNERS V, L.P.
By: RFE ASSOCIATES V, L.P.,
Its General Partner
By:________________________________
A General Partner
STERLING COMMERCIAL CAPITAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
Executive Vice President
State Treasurer of the State of
Michigan, Custodian of the Michigan
Public School Employees' Retirement
System, State Employees' Retirement
System, Michigan State Police
Retirement System, and Michigan
Judges Retirement System
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title:Administrator, Alternative
Investments Division
EQUITABLE: THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: ______________________________
Investment Officer
Exhibit A
SCHEDULE OF PURCHASERS
Purchaser's Name and Address
RFE Investment Partners V, L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
State Treasurer of the
State of Michigan, Custodian
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sterling Commercial Capital, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
INVESTORS' RIGHTS AGREEMENT
EXHIBIT I
PROMISSORY NOTE
FOR VALUE RECEIVED, GMH Holdings, Inc., a Delaware corporation
(hereinafter called the "Company"), with offices at
___________________________________ hereby promises to pay to the order of
________________________________ [name of person exercising Put], a
____________________________________________ ("Payee"), at its office at
_________________________________________ [address of Payee], or at such
other office as it designates in writing to the Company, the principal sum
of ______________________ Dollars ($___________), such payment to be in
such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts. The
principal amount of this Note shall be paid in three equal annual
installments (or in three installments as nearly equal as possible), one
year, two years, and three years from the initial issuance date of this
Note. This Note shall bear interest on the unpaid principal amount hereof
from time to time outstanding, payable every three months from the initial
issuance date of this Note, commencing on the third month from the initial
issuance date of this Note in like money on the principal sum unpaid
hereof, from the date hereof, and upon payment of principal in full, at a
rate per annum equal to [Three year Treasury rate plus 500 basis points]
per annum. Payments of principal and/or interest shall be made at the
office of Payee. Notwithstanding the provisions of this Note, if the rate
of interest payable hereunder is limited by law, the rate payable hereunder
shall be the maximum rate permitted by law. If, however, the Company pays
any interest in excess of the maximum rate of interest permitted by law,
any interest so paid which exceeds such maximum rate shall automatically be
considered a payment of principal and shall automatically be applied in
reduction of principal due on this Note to the extent of such excess.
This Note may be prepaid in whole or in part by the Company. In
addition, in the event that at the end of any fiscal year ending after the
date hereof there shall exist "Excess Cash Flow" (as defined below), then
within ten (10) days after the date upon which the Company's audited
consolidated financial statements with respect to such fiscal year become
available, the Company shall be required to pay to Payee, an amount equal
to all of such Excess Cash Flow. Notwithstanding anything to the contrary
contained in this Note, the Company shall (a) with respect to any mandatory
or permitted prepayment under this paragraph, prepay this Note and other
notes initially issued in the same year as this Note by reason of the
exercise of Put rights given to holders of certain securities of the
Company pursuant to repurchase rights granted in an Investors' Rights
Agreement dated as of December __, 1995 (the "Investors' Rights Agreement")
between the Company and the Purchasers named therein pro rata based on the
relative aggregate principal amounts thereof outstanding; and (b) prepay in
full Notes issued in early years by reason of the exercise of Put rights
given to holders of Company securities pursuant to the Investors' Rights
Agreement prior to prepayment of Notes issued in later years.
To secure payment of this Note and of any liability or liabilities of
the Company to the holder, due or to become due or that may hereafter be
contracted or existing, however acquired by the holder, the Company hereby
grants a security interest in and shall deliver to the holder appropriate
documentation, including a Pledge Agreement of even date herewith,
representing such security interest, securities of the Company which the
Company has delivered to the Payee pursuant to the exercise by the Payee of
the Put option contained in the Investors' Rights Agreement.
Reference to any other agreement referred to in this Note shall in no
way impair the negotiability of this Note or the absolute and unconditional
obligation of the Company to pay both principal and interest hereon as
provided herein.
In case of default in the payment of this Note or breach of the
obligations of the Company contained herein, the holder shall have all
rights given by the Uniform Commercial Code in the property, assets and
securities in which it has a security
interest. In addition, in the case of default in the payment of this Note
or a breach of the obligations of the Company contained herein, the unpaid
balance of the principal and interest due hereunder shall be immediately
due and payable without notice. The waiver (which may only be by a written
instrument) or the remedying of any default in a reasonable manner shall
not operate as a waiver of the default remedied or any prior or subsequent
default. If any amount payable hereunder is not paid when due in accordance
with the terms hereof, the Company shall pay the holder hereof all its
reasonable costs and expenses of collection, including but not limited to,
its reasonable attorneys' fees actually incurred.
Presentment for payment, demand, notice of dishonor, protest and
notice of protest are hereby waived.
This Note shall be governed and construed in accordance with the laws
of the State of New York applicable to contracts made and to be performed
wholly within such state.
For purposes of this Note, the following definitions shall apply.
"Consolidated Net Income" for any period, shall mean the consolidated
net income (or deficit) of the Company and its subsidiaries for such
period, determined in accordance with GAAP, excluding, however, any gains
or losses from the sale or other disposition of assets (other than sales of
inventory in the ordinary course of business) and any other non-cash
extraordinary or non-recurring gains or losses.
"Excess Cash Flow" for any period, shall mean an amount equal to the
sum of (i) Consolidated Net Income for such period, plus (ii) an amount
equal to the amount of depreciation expense, depletion expense, non-cash
amortization expense (including the amortization of goodwill), accrued non-
cash interest expense and all other non-cash charges deducted in arriving
at such net income
IN WITNESS WHEREOF, GMH Holdings, Inc. has caused this Note to be duly
executed and delivered in its corporate name by its officers duly
authorized on this ____ day of _______________, 199__.
GMH HOLDINGS, INC.
By:___________________________
Its:
ATTEST
_____________________________
Secretary
INVESTORS' RIGHTS AGREEMENT
EXHIBIT II
PLEDGE AGREEMENT
THIS AGREEMENT is made as of ________________, 199__, by and between
____________________________, and _______________________ corporation
("Pledgor") and [ ] ("Pledgee").
The following is a recital of facts of facts underlying this
Agreement:
Pledgor has sold Common Stock, par value $.001 par share ("Common
Stock") to Pledgee pursuant to a Securities Purchase Agreement dated as of
December __, 1995, by and between Pledgor, General Manufactured Housing,
Inc. and the Purchasers named therein (the "Purchase Agreement"). Pursuant
to an Investors' Rights Agreement dated as of December __, 1995 between
Pledgee, Pledgor, and certain other Purchasers named therein, (the
"Investors' Rights Agreement"), Pledgor granted to Pledgee the right to put
the Common Stock. Pledgee has exercised its put rights pursuant to the
Investors' Rights Agreement. In connection with the put, the Pledgor is
making payment by delivering a promissory note in the principal amount of
_________________________ Dollars ($ ) of even date herewith (the "Note").
In order to secure payment of the Note and all other sums due to Pledgee
pursuant to the terms of the Investors' Rights Agreement, Pledgor desires
to pledge to Pledgee its securities of the class and in the number being
repurchased as provided in Investors' Rights Agreement (the "Stock").
NOW, THEREFORE, the parties agree as follows:
1. Pledge. Pledgor pledges and herewith delivers to Pledgee as
security for payment of the Note and all other sums due to Pledgee pursuant
to the Investors' Rights Agreement, in accordance with their respective
terms, all the Stock and given Pledgee a continuing lien upon the Stock as
security therefor. If Pledgor comes into default under the terms of the
Note, and fails to cure such default within any grace period specifically
provided in the Note, Pledgor authorizes Pledgee to sell all or any portion
of the Stock at public or private sale by completing the endorsements
and/or assignments in blank and to apply the proceeds, after deducting all
expenses of collection and sale (including reasonable attorney fees) in
payment of any and all obligations of Pledgor evidenced by the Note.
Pledgee shall have all the rights and remedies provided under the Uniform
Commercial Code. Whenever any notice of sale is required to be given to
Pledgor, it shall be considered reasonable if such notice is given at least
(7) days prior to the date of such sale. Simultaneously with the execution
hereof, ▇▇▇▇▇▇▇ has delivered the Stock to Pledgee, endorsed in blank,
together with assignments separate from certificates, which are undated and
have been executed by ▇▇▇▇▇▇▇.
2. Release of Collateral. When the Note and all sums due to Pledgee
pursuant to the Investors' Rights Agreement are paid in full, Pledgee shall
deliver the certificate(s) representing the Stock and endorsements and/or
assignments separate from certificates to Pledgor.
3. Pledgee's Rights. So long as Pledgor is not in default under the
Note or terms of this Agreement, Pledgee shall not have the right to
receive any dividends payable with respect to the Stock and Pledgee shall
have no right to vote the Stock except as provided in the Purchase
Agreement. If, however, any stock dividends or distributions of stock or
other securities are made on account of the Stock, then Pledgor shall
promptly deliver such stock or securities to Pledgee, endorsed in blank,
together with assignments separate from certificates, which are undated and
have been executed by Pledgor, whereupon such stock or securities shall be
subject to the terms of this Agreement and shall be considered to be Stock
as that term is used herein. Upon the occurrence of any default under the
Note Pledge may exercise all voting rights incident to the Stock (which
term shall include any voting securities issued as a dividend and
distribution made thereon.)
4. Remedies Cumulative. Pledgee may pursue any and all remedies in
connection with the collateral pledged hereunder notwithstanding the
availability of other remedies, all such remedies shall be cumulative and
may be pursued simultaneously or independently.
5. Notices. Any notices required or desired to be given hereunder,
shall be in writing and shall be considered sufficiently given for all
purposes if delivered by hand or sent by registered or certified mail, to
the parties hereto at the address set forth below or such other address as
they may direct in writing by similar notice:
If to Pledgor:
[ ]
If to Pledgee:
[ ]
6. Miscellaneous. This Agreement is binding upon the parties hereto
and their successors and assigns. This Agreement may only be amended by a
writing signed by all of the parties hereto and may be waived only by a
writing signed by the party charged with such waiver. This Agreement may be
signed in more than one counterpart, each of which shall be considered to
be an original, but all of which shall constitute one and the same
Agreement. This Agreement is government by and shall be construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first set forth above.
"PLEDGOR"
[ ]
By:______________________________
"PLEDGEE"
[ ]
_________________________________
EXHIBIT G
Form of Subordination Agreement
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (this "Agreement") is entered into as of
December 21, 1995 among GENERAL MANUFACTURED HOUSING, INC., a Georgia
corporation and successor by merger to GMH Acquisition Corp., a Delaware
corporation ("Borrower"), GMH HOLDINGS, INC., a Delaware corporation
("Parent"), THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a
New York insurance company ("Senior Subordinated Lender"), RFE INVESTMENT
PARTNERS V, L.P., a Delaware limited partnership ("RFE"), STERLING
COMMERCIAL CAPITAL, INC., a New York corporation ("Sterling"), STATE
TREASURER OF THE STATE OF MICHIGAN, Custodian of the Michigan Public School
Employees' Retirement System, State Employees' Retirement System, Michigan
State Police Retirement System and Michigan Judges Retirement System (the
"State of Michigan") (RFE, Sterling and the State of Michigan hereinafter
are referred to collectively as "Junior Subordinated Lenders"), STRATEGIC
INVESTMENTS & HOLDINGS, INC., a Delaware corporation ("Strategic"), and
FIRST SOURCE FINANCIAL LLP, an Illinois registered limited liability
partnership ("Senior Lender").
R E C I T A L S
▇. ▇▇▇▇▇▇▇▇ and Senior Lender have entered into a Secured Credit
Agreement of even date herewith (as the same hereafter may be amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), subject to the terms and conditions of which Senior Lender
will make certain loans and other financial accommodations to Borrower.
▇. ▇▇▇▇▇▇▇▇ is indebted to Senior Subordinated Lender in the
principal amount of $17,243,295, which indebtedness is evidenced by a
certain senior subordinated note of even date herewith issued by Borrower
payable to Senior Subordinated Lender, a copy of which is attached hereto
as Exhibit A (the "Senior Subordinated Note").
C. Borrower is indebted to Junior Subordinated Lenders in the
aggregate principal amount of $5,000,000, which indebtedness is evidenced
by certain junior subordinated notes of even date herewith issued by
Borrower payable to Junior Subordinated Lenders, copies of which are
attached hereto as Exhibit B (the "Junior Subordinated Notes").
▇. ▇▇▇▇▇▇ owns 100% of the issued and outstanding capital stock of
Borrower.
E. Junior Subordinated Lenders collectively own 100% (8,000,000
shares) of the issued and outstanding Series A Preferred Stock of Parent
(the "Preferred Stock").
F. One of the conditions precedent to Senior Lender's obligations
under the Credit Agreement is that this Agreement shall have been executed
and delivered.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Recitals and Definitions.
1.1 Recitals. The Recitals set forth above are acknowledged by the
parties hereto to be true and correct and are incorporated herein by this
reference.
1.2 Definitions. All capitalized terms used but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the
Credit Agreement. As used herein, the following terms shall have the
following meanings:
Additional Principal Amount: with respect to each Principal
Payment Date, an amount equal to the quotient obtained by
dividing (a) the amount of any Permitted Increase by (b) the
number of Principal Payment Dates remaining after the effective
date of such Permitted Increase.
Applicable Period: with respect to the calculation of Total
Cash Sources or Non-Subordinated Fixed Charges as of (a) April
30, 1996, the three month period then ended, (b) July 31, 1996,
the six month period then ended and (c) any other Determination
Date, the nine month period then ended.
Articles: the Restated Certificate of Incorporation of
Parent as in effect on the date hereof.
Available Cash: as of any Determination Date, an amount
equal to the remainder of (a) the quotient obtained by dividing
(i) Total Cash Sources for the Applicable Period ending on such
Determination Date by (ii) 1.10 minus (b) Non-Subordinated Fixed
Charges for the Applicable Period ending on such Determination
Date minus (c) for any Determination Date which occurs on or
after July 31, 1996, all Subordinated Payments actually paid with
respect to the (i) first Fiscal Quarter of 1996, in the case of
the Determination Date which occurs on July 31, 1996 and (ii) in
the case of any other Determination Date, the last two Fiscal
Quarters ending during the Applicable Period ending on such
Determination Date (which Subordinated Payments correspond to the
calculation of Available Cash for the first two Determination
Dates of such Applicable Period).
Cash Overage: as of any Determination Date, an amount equal
to the remainder of (a) Total Cash Sources for the Applicable
Period ending on such Determination Date minus (b) Non-
Subordinated Fixed Charges for such Applicable Period minus (c)
the aggregate amount of all accrued and unpaid Senior
Subordinated Payments (including for the current period) minus
(d) 110% of the amount of the accreted discount on the Senior
Subordinated Notes with respect to such Applicable Period.
Determination Date: the last day of each January, April,
July and October.
Incentive Management Fees: the management fees payable by
Borrower to Strategic pursuant to Section 2.3(b) of the
Management Agreement, in an aggregate amount not to exceed (a)
$69,500 with respect to the last ten days of December, 1995 and
the first Fiscal Quarter of 1596 and (b) $62,500 with respect to
any other Fiscal Quarter.
Junior Subordinated Default: a default in the payment of the
Junior Subordinated Indebtedness or any other occurrence
permitting Junior Subordinated Lenders to accelerate the payment
of all or any portion of the Junior Subordinated Indebtedness.
Junior Subordinated Default Notice: a written notice from
Junior Subordinated Lenders to Borrower of the occurrence of a
Junior Subordinated Default.
Junior Subordinated Indebtedness: all of the obligations of
Borrower to Junior Subordinated Lenders under the Junior
Subordinated Instruments and all other amounts now or hereafter
owed by Borrower to Junior Subordinated Lenders other than the
Preferred Obligations.
Junior Subordinated Instruments: the Junior Subordinated
Notes, the Junior Subordinated Note Purchase Agreement and all
other documents and instruments evidencing or pertaining to any
portion of the Junior Subordinated Indebtedness.
Junior Subordinated Note Purchase Agreement: the Securities
Purchase Agreement of even date herewith among Borrower, Parent
and the Junior Subordinated Lenders.
Junior Subordinated Payments: quarterly cash payments of
interest on the Junior Subordinated Indebtedness (other than any
Junior Subordinated Indebtedness representing accrued and unpaid
interest added to the principal amount of the Junior Subordinated
Indebtedness) required by the Junior Subordinated Notes at a rate
not to exceed 13.00% per annum.
Lien: any lien, mortgage, security interest, financing
statement, pledge, hypothecation, assignment or judgment lien of
any kind or nature whatsoever, whether arising by contract,
operation of law, or otherwise.
Management Agreement: that certain Management Agreement of
even date herewith between Borrower and Strategic.
Non-Subordinated Fixed Charges: for any Applicable Period,
the sum of (a) all scheduled payments of interest on account of
the Senior Indebtedness for such Applicable Period, plus (b) all
Senior Principal Payments for such Applicable Period, plus (c)
without double counting, all income taxes accrued (but not less
than zero) by Borrower and Parent with respect to such Applicable
Period.
Preferred Dividends: quarterly cash dividends from Borrower
to Parent in an amount sufficient to enable Parent to pay the
Parent Preferred Dividends.
Parent Preferred Dividends: quarterly cash dividends on the
Preferred Stock required by the Articles in an amount not to
exceed $240,000 per quarter. Parent Preferred Dividends shall not
include any accrued and unpaid interest on any unpaid Parent
Preferred Dividends from prior quarters.
Permitted Increase: any and all increases in the Commitments
agreed to by ▇▇▇▇▇▇▇▇ and Senior Lender after the date hereof in
an aggregate amount not to exceed $2,600,000.
Preferred Dividend Instruments: the Articles and all other
documents and instruments evidencing or pertaining to the payment
of the Preferred Dividends or the Parent Preferred Dividends.
Preferred Obligations: all of the obligations of Borrower to
Parent and Parent to Junior Subordinated Lenders under the
Preferred Dividend Instruments and all other amounts now or
hereafter owed by Borrower to Parent and by Parent to Junior
Subordinated Lenders, in their capacity as owners of the
Preferred Stock.
Principal Payment Date: the last day of each Fiscal Quarter.
Proceeding: any insolvency, bankruptcy, receivership,
custodianship, liquidation, reorganization, assignment for the
benefit of creditors or other proceeding for the liquidation,
dissolution or other winding up of Borrower or its property.
Senior Indebtedness: the Liabilities, together with post-
petition interest thereon, whether or not allowed in any
Proceeding.
Senior Principal Payments: with respect to each Applicable
Period, the sum of the amounts set forth below opposite each
Principal Payment Date which occurs during such Applicable Period
plus the Additional Principal Amount, if any, applicable to each
such Principal Payment Date:
Principal Payment Date Amount
March 31, 1996 $ 350,000
June 30, 1996 $ 700,000
September 30, 1996 $1,050,000
December 31, 1996 $1,050,000
March 31, 1997 $1,075,000
June 30, 1997 $1,100,000
September 30, 1997 $1,125,000
December 31, 1997 $1,125,000
March 31, 1998 $1,687,500
June 30, 1998 $2,250,000
September 30, 1998 $2,812,500
December 31, 1998 $2,812,500
March 31, 1999 $3,250,000
June 30, 1999 $3,687,500
September 30, 1999 $4,125,000
December 31, 1999 $4,125,000
March 31, 2000 $4,250,000
June 30, 2000 $4,375,000
September 30, 2000 $4,500,000
December 31, 2000 $4,500,000
Senior Subordinated Default: a default in the payment of the
Senior Subordinated Indebtedness or any other occurrence
permitting Senior Subordinated Lender to accelerate the payment
of all or any portion of the Senior Subordinated Indebtedness.
Senior Subordinated Default Notice: a written notice from
Senior Subordinated Lender to Borrower of the occurrence of a
Senior Subordinated Default.
Senior Subordinated Indebtedness: all of the obligations of
Borrower to Senior Subordinated Lender under the Senior
Subordinated Instruments and all other amounts now or hereafter
owed by Borrower to Senior Subordinated Lender.
Senior Subordinated Instruments: the Senior Subordinated
Note, the Senior Subordinated Note
Purchase Agreement and all other documents and instruments
evidencing or pertaining to any portion of the Senior
Subordinated Indebtedness.
Senior Subordinated Note Purchase Agreement: the Note and
Warrant Purchase Agreement of even date herewith among Borrower,
Parent and Senior Subordinated Lender.
Senior Subordinated Payments: quarterly cash payments of
interest on the Senior Subordinated Indebtedness (other than any
Senior Subordinated Indebtedness representing accrued and unpaid
interest added to the principal amount of the Senior Subordinated
Indebtedness) required by the Senior Subordinated Note at a rate
not to exceed 10.87% per annum through March 31, 2001 and 14.50%
per annum thereafter, or, if the Liabilities have been paid in
full and the Commitments have been terminated, any other
applicable rate set forth in the Senior Subordinated Instruments.
Subordinated Holders: Senior Subordinated Lender, Junior
Subordinated Lenders, Parent and Strategic.
Subordinated Instruments: the Senior Subordinated
Instruments, the Junior Subordinated Instruments, the Preferred
Dividend Instruments and the Management Agreement.
Subordinated Obligations: the Senior Subordinated
Indebtedness, the Junior Subordinated Indebtedness, the Preferred
Obligations and the Incentive Management Fees.
Subordinated Payments: the Senior Subordinated Payments, the
Junior Subordinated Payments, the Preferred Dividends and the
Incentive Management Fees.
Total Cash Sources: for any Applicable Period, (a) the
amount which, in conformity with GAAP, would be set forth
opposite the caption "net income" (or any like caption) (plus, to
the extent subtracted from gross income in determining such net
income, any dividends paid or payable by Borrower) on an income
statement of Borrower for such Applicable Period, plus (b) the
amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on
such an income statement, plus (c) the amount (but not less than
zero) which, in conformity with GAAP, would be set forth opposite
the caption "income tax expense" (or any like caption) on such an
income statement, plus (d) the amount which, in conformity with
GAAP, would be set forth opposite the caption "depreciation and
amortization expenses" (or any like caption) on such an income
statement, plus (e) the amount accrued by Borrower related to
Incentive Management Fees during such Applicable Period in an
aggregate amount not to exceed (i) $62,500 for the Applicable
Period ending April 30, 1996, (ii) $125,000 for the Applicable
Period ending July 31, 1996 and (iii) $187,500 for any Applicable
Period thereafter, less (f) the amount which, in conformity with
GAAP, would be set forth opposite the caption "extraordinary pre-
tax gain" (or any like caption) on such an income statement, less
(g) capital expenditures (as determined in conformity with GAAP)
incurred during such Applicable Period.
2. Subordination of the Subordinated Obligations to Senior Indebtedness.
2.1 Subordination. The payment of any and all of the (a) Subordinated
Obligations is hereby expressly subordinated to the prior payment in full
of the Senior Indebtedness, (b) Junior Subordinated Indebtedness, Preferred
Dividends and Incentive Management Fees is hereby expressly subordinated to
the prior payment in full of the Senior Subordinated Indebtedness and
(c) Preferred Dividends and Incentive Management Fees is hereby expressly
subordinated to the prior payment in full of the Junior Subordinated
Indebtedness.
2.2 Restrictions on Payments. Notwithstanding any provision of the
Subordinated Instruments to the contrary and in addition to any other
limitations set forth herein or therein, no payment of principal, interest,
dividends, fees or any other amount due with respect to the Subordinated
Obligations shall be made, and no Subordinated Holder shall exercise any
right of set-off (other than a set-off by Senior Subordinated Lender of the
exercise price of the warrant issued to it by Parent on the Closing Date
against the Senior Subordinated Indebtedness provided the amount of such
set-off does not exceed $3,500 in the aggregate) or recoupment with respect
to any Subordinated Obligations, until all of the Senior Indebtedness is
paid in full, except that, subject to the proviso at the end of this
Section 2.2, (i) on April 1, 1996, Borrower may make and the applicable
Subordinated Holder may receive and retain all Subordinated Payments
accrued through March 31, 1996 and (ii) on the first Business Day after the
end of each Fiscal Quarter commencing with the Fiscal Quarter ending June
30, 1996 Borrower may make and the applicable Subordinated Holder may
receive and retain accrued and unpaid Subordinated Payments in an aggregate
amount not to exceed Available Cash as of the most recent Determination
Date in the following order of priority:
(a) first, all accrued and unpaid Senior Subordinated Payments;
(b) second, all accrued and unpaid Junior Subordinated Payments;
and
(c) third, all accrued and unpaid Preferred Dividends and
Incentive Management Fees, pro rata to the aggregate amount thereof
then outstanding;
provided, that in the event that due to the payment restrictions of this
Section 2.2 any Junior Subordinated Payments, Preferred Dividends or
Incentive Management Fees have accrued with respect to any prior Fiscal
Quarter and remain unpaid, no Junior Subordinated Payments, Preferred
Dividends and Incentive Management Fees shall be paid except to the extent
of any Cash Overage.
2.3 Proceedings. In the event of any Proceeding, (i) all Senior
Indebtedness first shall be paid in full in cash before any payment of or
with respect to the Subordinated Obligations shall be made; (ii) any
payment which, but for the terms hereof, otherwise would be payable or
deliverable in respect of the Subordinated Obligations shall be paid or
delivered directly to Senior Lender (to be held and/or applied by Senior
Lender in accordance with the terms of the Credit Agreement) until all
Senior Indebtedness is paid in full, and each Subordinated Holder
irrevocably authorizes, empowers and directs all receivers, trustees,
liquidators, custodians, conservators and others having authority in the
premises to effect all such payments and deliveries, and each Subordinated
Holder also irrevocably authorizes, empowers and directs Senior Lender to
demand, sue for, collect and receive every such payment or distribution
upon the failure of such Subordinated Holder to do so within a reasonable
period of time after requested to do so by Senior Lender; (iii) each
Subordinated Holder agrees to execute and deliver to Senior Lender or its
representative all such further instruments reasonably requested by Senior
▇▇▇▇▇▇ confirming the authorization referred to in the foregoing clause
(ii) and (iv) each Subordinated Holder agrees to execute, verify, deliver
and file any proofs of claim in respect of the Subordinated Obligations
reasonably requested by Senior Lender in connection with any such
proceeding at least 15 days prior to the bar date for filing such proofs of
claim and, upon the failure of such Subordinated Holder to do so, such
Subordinated Holder hereby irrevocably authorizes, empowers and appoints
Senior Lender its agent and attorney-in-fact to (A) execute, verify,
deliver and file such proofs of claim and (B) vote such proofs of claim in
any such proceeding if such Subordinated Holder fails to do so within a
reasonable time prior to the deadline for voting such proofs of claim.
Notwithstanding the provisions of this
Section 2.3, in the event of any Proceeding and if so ordered by a court of
competent jurisdiction, Subordinated Holders may receive securities
(including equity securities) of Borrower as reorganized, or securities of
Borrower or any other Person provided for by a plan of reorganization,
composition, arrangement, adjustment or readjustment of Borrower or of its
securities, the payment of which is subordinate, at least to the extent
provided in this Agreement with respect to the Subordinated Obligations, to
the payment of all Senior Indebtedness of Borrower at the time outstanding
and to the payment of all securities issued to Senior Lender in exchange
therefor.
2.4 Incorrect Payments. If any payment not permitted under subsection
2.2 is received by any Subordinated Holder on account of the Subordinated
Obligations before all Senior Indebtedness is paid in full, such payment
shall not be commingled with any asset of such Subordinated Holder, shall
be held in trust by such Subordinated Holder for the benefit of Senior
Lender and shall be paid over to Senior Lender, or its designated
representative, for application (in accordance with the Credit Agreement)
to the payment of the Senior Indebtedness then remaining unpaid, until all
of the Senior Indebtedness is paid in full.
2.5 Sale, Transfer. No Subordinated Holder shall sell, assign,
dispose of or otherwise transfer all or any portion of the Subordinated
Obligations unless, prior to the consummation of any such action, the
transferee thereof executes and delivers to Senior Lender an agreement
substantially identical to this Agreement, providing for the continued
subordination and forbearance of the Subordinated Obligations to the Senior
Indebtedness as provided herein and for the continued effectiveness of all
of the rights of Senior Lender arising under this Agreement.
Notwithstanding the failure to execute or deliver any such agreement, the
subordination effected hereby shall survive any sale, assignment,
disposition or other transfer of all or any portion of the Subordinated
Obligations, and the terms of this Agreement shall be binding upon the
successors and assigns of each Subordinated Holder, as provided in Section
10 below.
2.6 Legends. Until the Senior Indebtedness is paid in full, each of
the Subordinated Instruments at all times shall contain in a conspicuous
manner the following legend:
"The obligations evidenced hereby are subordinate in the manner
and to the extent set forth in that certain Subordination
Agreement (the "Subordination Agreement") dated as of December
20, 1995 among General Manufactured Housing, Inc. ("Borrower"),
GMH Holdings, Inc., The Equitable Life Assurance Society of the
United States, RFE Investment Partners V, L.P., Sterling
Commercial Capital, Inc., the State Treasurer of the State of
Michigan, as Custodian of the Michigan Public School Employees'
Retirement System, the Michigan State Employees' Retirement
System, the Michigan State Police Retirement System and the
Michigan Judges Retirement System, Strategic Investments &
Holdings, Inc. and First Source Financial LLP ("Senior Lender")
to the obligations (including interest) owed by Borrower to the
holders of all of the notes issued pursuant to that certain
Secured Credit Agreement dated as of December 20, 1995 between
Borrower and Senior Lender, as such Secured Credit Agreement has
been and hereafter may be supplemented and amended from time to
time; and each holder hereof, by its acceptance hereof, shall be
bound by the provisions of the Subordination Agreement.
2.7 Restriction on Action by each Subordinated Holder.
(a) Until the Senior Indebtedness is paid in full and notwithstanding
anything contained in the Subordinated Instruments, the Credit Agreement or
the other Related Documents to the contrary, no Subordinated Holder shall
agree to any amendment or modification of, or supplement to, the
Subordinated Instruments as in effect on the date hereof, the effect of
which is to (i) increase the amount of the Subordinated Obligations,
(ii) increase the rate of interest or dividends on or fees payable in
respect of any of the Subordinated Obligations, (iii) shorten the maturity
date of any of the Subordinated Obligations, (iv) accelerate the terms
under which the Subordinated Obligations are payable or (v) make the
covenants or events of default contained therein, taken as a whole,
materially more restrictive to Borrower or Parent.
(b) Until the Senior Indebtedness is paid in full, no Subordinated
Holder shall exercise any of the remedies with respect to the Subordinated
Obligations set forth in any of the Subordinated Instruments or that
otherwise may be available to such Subordinated Holder, either at law or in
equity, except that:
(1) in the event Senior Lender accelerates the Senior
Indebtedness, Senior Subordinated Lender may accelerate the Senior
Subordinated Indebtedness and Junior Subordinated Lenders may
accelerate the Junior Subordinated Indebtedness, and, in the event
Senior Subordinated Lender is entitled under clause (3) below to
accelerate and does accelerate the Senior Subordinated Indebtedness,
Junior Subordinated Lenders may accelerate the Junior Subordinated
Indebtedness;
(2) in the event of any Proceeding not initiated by any
Subordinated Holder, such Subordinated Holder may participate in such
Proceeding;
(3) in the event the aggregate amount of all accrued and unpaid
Senior Subordinated Payments exceeds $937,500, or in the event that
Senior Subordinated Lender receives less than $237,500 in the
aggregate on account of the Senior Subordinated Payments with respect
to any two successive Fiscal Quarters, then, provided Senior
Subordinated Lender, at any time after either such event occurs, gives
Senior Lender not less than 30 days' prior notice of its intent to
exercise such remedies, Senior Subordinated Lender may exercise any of
the remedies set forth in the Senior Subordinated Instruments;
(4) in the event the aggregate amount of all accrued and unpaid
Junior Subordinated Payments exceeds $650,000, then, provided provided
Junior Subordinated Lenders, at any time after such event occurs, give
Senior Lender not less than 120 days' prior notice of their intent to
exercise such remedies, Junior Subordinated Lenders may exercise any
of the remedies set forth in the Junior Subordinated Instruments;
(5) in the event Junior Subordinated Lenders give the notice
referred to in clause (4) above, Senior Subordinated Lender may
exercise any of the remedies set forth in the Senior Subordinated
Instruments provided Senior Subordinated Lender, at any time after the
Junior Subordinated Lenders give the notice referred to in clause (4)
above, gives Senior Lender not less than 60 days' prior notice of its
intent to exercise such remedies;
(6) Junior Subordinated Lenders may exercise their rights to
elect a majority of the Board of Directors of Parent pursuant to
Article C, Section 4(f) of the Articles and Section 10(g) of the
Stockholders Agreement;
(7) in the event any Subordinated Payment permitted to be made
under the terms of this Agreement is not made by Borrower, the
applicable Subordinated Holder may take action to collect the amount
of such Subordinated Payment provided such Subordinated Holder gives
Senior Lender not less than 15 days' prior notice of its intent to
take such action; and
(8) each Subordinated Holder may take action to enforce its
rights under the Articles, the Investors Rights Agreement and the
Stockholders Agreement other than any such rights pertaining to the
acceleration or payment of the Subordinated Obligations.
2.8 Amendments of Credit Agreement and Related Documents. Until the
Senior Indebtedness is paid in full and notwithstanding
anything contained in the Subordinated Instruments, the Credit Agreement or
the other Related Documents to the contrary, Senior Lender shall not agree
to any amendment or modification of, or supplement to, the Credit Agreement
or the Related Documents as in effect on the date hereof, the effect of
which is to (i) increase the Commitments (except for any Permitted
Increase), (ii) increase the rate of interest on or fees payable in respect
of any of the Senior Indebtedness, (iii) shorten the maturity date of any
of the Senior Indebtedness, (iv) accelerate the terms under which the
Senior Indebtedness (other than any Permitted Increase) is payable or (v)
make the covenants or events of default contained therein, taken as a
whole, materially more restrictive to Borrower or Parent.
3. Continued Effectiveness of this Agreement. The terms of this
Agreement, the subordination effected hereby, and the rights and the
obligations of each Subordinated Holder and Senior Lender arising
hereunder, shall not be affected, modified or impaired in any manner or to
any extent by: (a) any amendment or modification of or supplement to the
Credit Agreement, any of the other Related Documents or any of the
Subordinated Instruments; (b) the validity or enforceability of any of such
documents; or (c) any exercise or non-exercise of any right, power or
remedy under or in respect of the Senior Indebtedness or the Subordinated
Obligations or any of the instruments or documents referred to in clause
(a) above.
4. Representations and Warranties. Each party hereto hereby
represents and warrants that this Agreement, when executed and delivered,
will constitute the valid and legally binding obligation of such party
enforceable in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally
and by equitable principles.
5. Cumulative Rights, No Waivers. Each and every right, remedy and
power granted to Senior Lender hereunder shall be cumulative and in
addition to any other right, remedy or power specifically granted herein,
in the Credit Agreement or the other Related Documents, in the Subordinated
Instruments or now or hereafter existing in equity, at law, by virtue of
statute or otherwise, and may be exercised by Senior Lender, from time to
time, concurrently or independently and as often and in such order as
Senior Lender may deem expedient. Any failure or delay on the part of
Senior Lender in exercising any such right, remedy or power, or abandonment
or discontinuance of steps to enforce the same, shall not operate as a
waiver thereof or affect Senior Lender's right thereafter to exercise the
same, and any single or partial exercise of any such right, remedy or power
shall not preclude any other or further exercise thereof or the exercise of
any other right, remedy or power, and no such failure, delay, abandonment
or single or partial exercise of Senior ▇▇▇▇▇▇'s rights hereunder shall be
deemed to establish a custom or course of dealing or performance among the
parties hereto.
6. Modification. Any modification or waiver of any provision of this
Agreement, or any consent to any departure by any Subordinated Holder
therefrom, shall not be effective in any event unless the same is in
writing and signed by Senior ▇▇▇▇▇▇ and the Subordinated Holder against
whom enforcement of such modification, waiver or consent is sought, and
then such modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose given. Any notice to or
demand on any Subordinated Holder in any event not specifically required of
Senior Lender hereunder shall not entitle any Subordinated Holder to any
other or further notice or demand in the same, similar or other
circumstances unless specifically required hereunder.
7. Additional Documents and Actions. Each Subordinated Holder at any
time, and from time to time, after the execution and delivery of this
Agreement, upon the request of Senior Lender and at the expense of such
Subordinated Holder, promptly will execute and deliver such further
documents and do such further acts and things as Senior Lender reasonably
may request in order to effect fully the purposes of this Agreement.
8. Notices. All notices under this Agreement shall be in writing and
shall be (a) delivered in person, (b) sent by telecopy or (c) mailed,
postage prepaid, either by registered or certified mail, return receipt
requested, or by overnight express courier, addressed as follows:
To Borrower or Parent: c/o General Manufactured Housing,
Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Strategic Investments & Holdings,
Inc.
Cyclorama Building
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Senior Subordinated
Lender: c/o Alliance Corporate Finance
Group
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Junior Subordinated
Lenders: c/o RFE Investment Partners V, L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Alternative Investments Division
Bureau of Investments
Michigan Department of Treasury
P.O. Box 15128 (U.S. Mail)
Lansing, MI 48901 (U.S. Mail)
430 W. Allegan (Overnight Courier)
Lansing, MI 48922 (Overnight
Courier)
Attention: ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Finance and Development Division
Department of Attorney General
P.O. Box 30217 (U.S. Mail)
Lansing, MI 48909 (U.S. Mail)
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
(Overnight Courier)
Lansing, MI 48933 (Overnight
Courier)
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Strategic: Strategic Investments & Holdings,
Inc.
Cyclorama Building
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Senior Lender: c/o First Source Financial, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Contract Administration
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to any other address or telecopy number, as to any of the parties
hereto, as such party shall designate in a notice to the other parties
hereto. All notices sent pursuant to the terms of this Section 8 shall be
deemed received (i) if personally delivered, then on the Business Day of
delivery, (ii) if sent by telecopy, on the day sent if a Business Day or if
such day is not a Business Day, then on the next Business Day, (iii) if
sent by registered or certified mail, on the earlier of the third Business
Day following the day sent or when actually received or (iv) if sent by
overnight, express courier, on the next Business Day immediately following
the day sent. Any notice by telecopy shall be followed by delivery of a
copy of such notice on the next Business Day by overnight, express courier
or by personal delivery.
9. Severability. In the event that any provision of this Agreement
is deemed to be invalid by reason of the operation of any law or by reason
of the interpretation placed thereon by any court or governmental
authority, this Agreement shall be construed as not containing such
provision and the invalidity of such provision shall not affect the
validity of any other provisions hereof, and any and all other provisions
hereof which otherwise are lawful and valid shall remain in full force and
effect.
10. Successors and Assigns. This Agreement shall inure to the benefit
of the successors and assigns of Senior Lender and shall be binding upon
the successors and assigns of Borrower and each Subordinated Holder.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which taken together shall be one and the same instrument.
12. Defines Rights of Creditors. The provisions of this Agreement are
solely for the purpose of defining the relative rights of each Subordinated
Holder and Senior Lender and shall not be deemed to create any rights or
priorities in favor of any other Person, including, without limitation,
Borrower.
13. Conflict. In the event of any conflict between any term, covenant
or condition of this Agreement and any term, covenant or condition of any
of the Subordinated Instruments, the provisions of this Agreement shall
control and govern. For purposes of this Section 13, to the extent that any
provisions of any of the Subordinated Instruments provide rights, remedies
and benefits to Senior Lender that exceed the rights, remedies and benefits
provided to Senior Lender under this Agreement, such provisions of the
applicable Subordinated Instruments shall be deemed to supplement (and not
to conflict with) the provisions hereof.
14. Statement of Indebtedness to Subordinated Holders. Pursuant to
the Credit Agreement, Borrower is obligated to furnish to Senior Lender a
monthly Compliance Certificate containing, among other things, computations
of Available Cash and the Subordinated Payments owing from Borrower to each
Subordinated Holder. Borrower will furnish a copy of such computations to
each Subordinated Holder as and when furnished to Senior Lender. Senior
Lender may rely without further investigation upon such computations unless
the affected Subordinated Holder notifies Senior Lender of its objections
to such computations within 30 days after receipt.
15. Headings. The paragraph headings used in this Agreement are for
convenience only and shall not affect the interpretation of any of the
provisions hereof.
16. Termination. All obligations of Senior Lender under this
Agreement shall terminate upon the indefeasible payment in full of the
Senior Indebtedness. All obligations of all other parties under this
agreement shall terminate upon the indefeasible payment in full of the
Senior Subordinated Indebtedness.
17. Default Notices. Senior Subordinated Lender shall provide Senior
Lender with a copy of each Senior Subordinated Default Notice concurrently
with the sending thereof to Borrower, and promptly shall notify Senior
Lender in the event the Senior Subordinated Default which is the subject of
such Senior Subordinated Default Notice is cured or waived. Junior
Subordinated Lenders shall provide Senior Lender with a copy of each Junior
Subordinated Default Notice concurrently with the sending thereof to
Borrower, and promptly shall notify Senior Lender in the event the Junior
Subordinated Default which is the subject of such Junior Subordinated
Default Notice is cured or waived.
18. No Contest of Liens; No Security for Subordinated Obligations.
Each Subordinated ▇▇▇▇▇▇ agrees that it will not at any time contest the
validity, perfection, priority or enforceability of the Liens in the
Collateral granted to Senior Lender pursuant to the Credit Agreement and
the other Related Documents or accept or take any collateral security for
the Subordinated Obligations. The provisions of this Agreement shall apply
regardless of any invalidity, unenforceability or lack of perfection of the
Liens in the Collateral granted to Senior Lender pursuant to the Credit
Agreement and the other Related Documents.
19. SUBMISSION TO JURISDICTION. SENIOR LENDER MAY ENFORCE ANY CLAIM
ARISING OUT OF THIS AGREEMENT, THE CREDIT AGREEMENT OR THE RELATED
DOCUMENTS IN ANY STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION
AND LOCATED IN CHICAGO, ILLINOIS. FOR THE PURPOSE OF ANY ACTION OR
PROCEEDING INSTITUTED WITH RESPECT TO ANY SUCH CLAIM, BORROWER AND EACH
SUBORDINATED HOLDER OTHER THAN THE STATE OF MICHIGAN HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF SUCH COURTS. BORROWER AND PARENT EACH HEREBY
IRREVOCABLY DESIGNATE ▇▇▇▇▇▇▇▇-▇▇▇▇, WITH OFFICES ON THE DATE HEREOF AT ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, TO RECEIVE FOR
AND ON BEHALF OF SUCH PERSON SERVICE OF PROCESS IN ILLINOIS. EACH OTHER
SUBORDINATED HOLDER OTHER THAN THE STATE OF MICHIGAN AND SENIOR
SUBORDINATED ▇▇▇▇▇▇ ▇▇▇▇▇▇ IRREVOCABLY DESIGNATES THE PERSON WHOSE NAME AND
ADDRESS ARE SET FORTH ON EXHIBIT C TO RECEIVE FOR AND ON BEHALF OF SUCH
SUBORDINATED HOLDER SERVICE OF PROCESS IN ILLINOIS. ▇▇▇▇▇▇ SUBORDINATED
▇▇▇▇▇▇ ACKNOWLEDGES AND AGREES THAT IT HAS A PRESENCE IN THE STATE OF
ILLINOIS AND IS SUBJECT TO SERVICE OF PROCESS IN ILLINOIS. BORROWER AND
EACH SUBORDINATED HOLDER OTHER THAN THE STATE OF MICHIGAN FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF SAID COURTS BY
MAILING A COPY THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID, TO BORROWER OR
SUCH SUBORDINATED HOLDER AND AGREES THAT SUCH SERVICE, TO THE FULLEST
EXTENT PERMITTED BY LAW, (i) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT, ACTION OR PROCEEDING AND (ii)
SHALL BE TAKEN AND HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL
DELIVERY TO IT. NOTHING HEREIN CONTAINED SHALL AFFECT THE RIGHT OF SENIOR
LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR PRECLUDE
SENIOR LENDER FROM BRINGING AN ACTION OR PROCEEDING IN RESPECT HEREOF IN
ANY OTHER COUNTRY, STATE OR PLACE HAVING JURISDICTION OVER SUCH ACTION.
BORROWER AND EACH SUBORDINATED HOLDER OTHER THAN THE STATE OF MICHIGAN
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT LOCATED IN
CHICAGO, ILLINOIS AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
20. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
GENERAL MANUFACTURED HOUSING, INC.,
a Georgia corporation and successor
by merger to GMH Acquisition Corp.,
a Delaware corporal
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
______________________________
▇▇▇▇ ▇. ▇▇▇▇▇
President
GMH HOLDINGS, INC., a Delaware
corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
______________________________
▇▇▇▇ ▇. ▇▇▇▇▇
President
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES, a New
York insurance company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Investment Officer
RFE INVESTMENT PARTNERS V, L.P., a
Delaware limited partnership
By: RFE Associates V, L.P., a
Delaware limited partnership,
its sole general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
General Partner
STERLING COMMERCIAL CAPITAL, INC.,
a New York corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Executive Vice President
STATE TREASURER OF THE STATE OF
MICHIGAN, Custodian of the Michigan
Public School Employees' Retirement
System, State Employees' Retirement
System, Michigan State Police
Retirement System and Michigan
Judges Retirement System
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
_______________________________
▇▇▇▇ ▇. ▇▇▇▇
Administrator, Alternative
Investments Division
STRATEGIC INVESTMENTS & HOLDINGS,
INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇ ▇. ▇▇▇▇▇
President
FIRST SOURCE FINANCIAL LLP, an
Illinois registered limited
liability partnership
By: First Source Financial, Inc.,
a Delaware corporation, its
Agent/Manager
By: /s/ illegible
____________________________
Name:
Title:
EXHIBIT A
(See Attached)
GENERAL MANUFACTURED HOUSING, INC.
Senior Subordinated Note due December 21, 2002
PPN# 37029* AA 7
No. R-1 New York, N.Y.
$17,243,295 December 21, 1995
GENERAL MANUFACTURED HOUSING, INC., a Georgia corporation (the
"Company"), for value received, hereby promises to pay to THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES, or registered assigns, the
principal amount of $17,243,295 on December 21, 2002, with interest
(computed on the basis of a 360-day year of twelve 30-day months) on the
unpaid balance of such principal amount at the rate of (a) for the period
from the date hereof to and including March 31, 2001, 10.87% per annum, and
(b) 14.50% per annum thereafter, payable quarterly on each March 31, June
30, September 30 and December 31 after the date hereof, commencing March
31, 1996, until such unpaid balance shall become due and payable (whether
at maturity or at a date fixed for prepayment or by declaration or
otherwise), and with interest on any overdue principal (including any
overdue prepayment of principal) and premium, if any, and (to the extent
permitted by applicable law) on any overdue interest, at the rate of 2.00%
per annum plus the otherwise applicable rate until paid, payable quarterly
as aforesaid or, at the option of the holder hereof, on demand. Payments of
principal, premium, if any, and interest on this Note shall be made in
lawful money of the United States of America at the principal office of The
Chase Manhattan Bank, N.A., in the Borough of Manhattan, the City and State
of New York, or at such other office or agency in such Borough as the
Company shall have designated by written notice to the holder of this Note
as provided in the Note and Warrant Purchase Agreement referred to below.
This Note is one of the Company's Senior Subordinated Notes due
December 21, 2002 (the "Notes"), originally issued in the aggregate
principal amount of $17,243,295 pursuant to the Note and Warrant Purchase
Agreement, dated as of December 21, 1995, as from time to time amended,
between the Company and the institutional investor referred to therein. The
holder of this Note is entitled to the benefits of such Note and Warrant
Purchase Agreement and may enforce the agreements of the Company contained
therein and exercise the remedies provided for thereby or otherwise
available in respect thereof.
The obligations evidenced hereby are subordinate in the manner
and to the extent set forth in that certain Subordination Agreement, dated
as of December 21, 1995 (the "Subordination Agreement"), among the Company,
The Equitable Life Assurance Society of the United States., RFE Investment
Partners V, L.P., Sterling Commercial Capital, Inc., the State Treasurer of
the State of Michigan, as Custodian, and First Source Financial LLP (the
"Senior Lender"), to the obligations (including interest) owed by the
Company to the holders of all the Notes issued pursuant to that certain
Secured Credit Agreement, dated as of December 21, 1995, between the
Company and the Senior Lender, as such Secured Credit Agreement has been
and hereafter may be supplemented and amended from time to time; and each
holder hereof, by its acceptance hereof, agrees to be bound by the
provisions of the Subordination Agreement.
This Note is a registered Note and is transferable only upon
surrender of this Note for registration or transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed by the holder
hereof or his attorney duly authorized in writing. References in this Note
to a "holder" shall mean the person in whose name this Note is at the time
registered on the register kept by the Company as provided in such Note and
Warrant Purchase Agreement and the Company may treat such person as the
owner of this Note for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to the
contrary.
The Notes are subject to required and optional prepayment, in
whole or in part, in certain cases with a premium and in other cases
without a premium, all as specified in such Note and Warrant Purchase
Agreement.
In case an Event of Default, as defined in such Note and Warrant
Purchase Agreement, shall occur and be continuing, the unpaid balance of
the principal of this Note may become due and payable to the extent
provided in such Note and Warrant Purchase Agreement.
EXHIBIT B
(See Attached)
THIS JUNIOR SUBORDINATED NOTE IS SUBORDINATED PURSUANT TO THE
TERMS OF THAT CERTAIN SUBORDINATION AGREEMENT DATED THE DATE
HEREOF AMONG THE PAYEE, THE OTHER PURCHASERS WHO ARE PARTIES
TO THE AGREEMENT (AS DEFINED BELOW), THE MAKER, THE SENIOR
LENDER, THE SENIOR SUBORDINATED LENDER AND STRATEGIC
INVESTMENTS & HOLDINGS, INC. (ALL AS DEFINED BELOW).
GENERAL MANUFACTURED HOUSING, INC.
▇▇▇▇▇▇ SUBORDINATED NOTE DUE JUNE 30, 2003
$145,454.50
December 21, 1995
FOR VALUE RECEIVED, GENERAL MANUFACTURED HOUSING, INC. a Georgia
corporation with its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Maker"), hereby unconditionally promise(s) to
pay to the order of STERLING COMMERCIAL CAPITAL, INC. (the "Payee"), or
registered assigns at the office of the Payee located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other office as the holder
hereof may designate, in lawful money of the United States, the principal
sum of One Hundred Forty Five Thousand Four Hundred Fifty Four and 50/100
Dollars ($145,454.50), together with interest thereon as provided for
below.
This Note is one of a duly authorized issue of Junior subordinated
Notes of the Maker, limited in aggregate principal amount to Five Million
Dollars ($5,000,000.00) (the "Notes"), copies of which are available for
inspection at the Maker's principal office. The Notes have been sold
pursuant to a Securities Purchase Agreement dated as of the date hereof,
among the Maker and the Payees of the Notes (the "Agreement"), a copy of
which is available for inspection at the Maker's principal office. This
Note is subject and entitled to certain terms, conditions, covenants and
agreements contained in the Agreement. Reference to the Agreement and the
Subordination Agreement (as defined below) shall in no way impair the
negotiability hereof or the absolute and unconditional obligation of the
Maker to pay
both principal of and interest on this Note as provided herein.
1. Equal Rank. The Notes rank equally and ratably without priority over
one another. No payment, including any prepayment, shall be made hereunder
unless payment, including any prepayment, is made with respect to the other
Notes in an amount which bears the same ratio to the then unpaid balance on
such other Notes as the payment made hereon bears to the then unpaid
balance under this Note.
2. Interest. Interest shall accrue on the outstanding principal balance
hereof at a rate per annum equal to thirteen percent (13%) per annum,
payable (in the event and only to the extent that Maker has accumulated
earnings sufficient to pay such accrued interest) quarterly, on the first
day of December, March, June and September in each year and on the Maturity
Date (as defined below), commencing on March 31, 1996. Interest for the
period commencing with the date of this Note through March 31, 1996 shall
be payable on March 31, 1996.
If all or a portion of the principal amount of or interest on this
Note shall not be paid when due (whether or not such interest has been
earned as provided above and whether at stated maturity, by acceleration or
otherwise) such overdue amount shall bear interest at a rate per annum
which is 2% above the rate that would otherwise be applicable thereto.
Anything contained in this Note to the contrary notwithstanding, the
Payee does not intend to charge and the Maker shall not be required to pay
interest or other charges in excess of the maximum rate (if any) permitted
by applicable law (if any). Any payments in excess of such maximum shall be
refunded to the Maker or credited against principal.
3. Payment of Principal and Interest. The Maker shall pay the entire
unpaid principal hereof and any accrued and unpaid interest thereon in one
lump payment due on June 30, 2003. The term "Maturity Date" shall mean June
30, 2003.
4. Subordination. Anything in this Note to the contrary notwithstanding,
the indebtedness evidenced by this Note shall be subordinated to the prior
payment and satisfaction of all indebtedness of the Maker to (i) First
Source Financial LLP (the "Senior Lender") arising out of the Secured
Credit Agreement dated December 21, 1995 (the "Loan Agreement") between the
Senior Lender and the Maker, including any such additional indebtedness
permitted by the Subordination Agreement, and (ii) The Equitable Life
Assurance Society of the United States (the "Senior Subordinated Lender")
arising out of that certain Note and Warrant Purchase Agreement dated as of
December 21, 1995 (the "Note Agreement"), between the Maker and the Senior
Subordinated Lender (such indebtedness of the Maker to which this Note is
subordinated being hereinafter referred to as "Senior Indebtedness"), which
subordination shall be subject to the terms and conditions of that certain
Subordination Agreement dated as of the date hereof between the Maker, the
Senior Lender, the Senior Subordinated Lender, Strategic Investments &
Holdings, Inc. and the Payees of the Notes. Senior Indebtedness shall
include any replacement or refinancing thereof. This Note and the other
Notes shall be senior in right of payment to all other borrowed money
indebtedness of the Maker, except the Senior Indebtedness.
5. Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Maker, this Note shall be
entitled to a claim in liquidation after the payment in full of all Senior
Indebtedness of the Maker, but before participation by the holders of any
debt subordinate hereto or of any capital stock of the Maker. The amount of
the claim in liquidation shall equal the amount to which the Payee of this
Note would be entitled in the case of payment, whether or not this Note is
eligible for payment at the time of liquidation. If upon such liquidation,
dissolution, or winding up, the assets available for distribution among the
holders of the Notes shall be insufficient to permit the payment of the
full amounts of their claims in liquidation, then the entire assets of the
Maker to be distributed to the holders of the Notes shall be distributed
pro-rata among the holders of the Notes based upon
the amounts of their respective claims in liquidation.
6. Prepayment. Optional prepayment. The Maker may prepay the principal
hereof and all interest thereon in whole or in part at any time without
penalty or premium after ten (10) days' prior written notice to the holders
of the Notes; provided that any partial prepayment is in multiples of
$10,000. At the time of prepayment, all interest owing on the amount
prepaid to the date of payment must simultaneously be paid.
7. Expenses. The Maker shall pay the Payee, on demand, for all reasonable
costs and expenses, including, but not limited to, reasonable attorneys'
fees, incurred in the collection or enforcement of this Note.
8. Disclosure of Senior Indebtedness. The Maker shall notify the Payee of
this Note of the existence of any Senior Indebtedness, incurred from time
to time, or any written modification, extension, renewal or rollover
thereof or any default therein within five (5) days of the date it is
incurred or occurs. Such notice shall provide the Payee of this Note access
to all documents executed in connection therewith and all information with
respect thereto.
9. Default; Acceleration. The occurrence of any of the following shall
constitute an "Event of Default":
(a) The breach by the Maker of any of the terms or provisions
contained in this Note or any of the Notes, including without limitation
the failure to pay when due (whether at the date hereof or at a date fixed
for prepayment hereof or by acceleration hereof or otherwise) any
principal, interest, charges or other amounts hereunder or failure to
perform hereunder or under any of the Notes and such breach shall continue
unremedied for five business days; or
(b) If the Maker
(i) shall commence any case or proceeding or other action
relating to it under any bankruptcy, insolvency or other similar law or
seek reorganization, arrangement, readjustment of its debts, dissolution,
liquidation, winding-up, composition or any other relief under any
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other similar act or
law, of any jurisdiction, domestic or foreign, now or hereafter existing;
or
(ii) shall admit the material allegations of any petition or
pleading in connection with any such case or proceeding; or
(iii) makes an application for, or consents or acquiesces to,
the appointment of a receiver, conservator, trustee or similar officer for
the Maker or for all or a substantial part of the Maker's property; or
(iv) makes a general assignment for the benefit of creditors; or
(v) is unable or admits in writing its inability to pay its
debts as they mature; or
(c) Commencement of any case or proceeding or the taking of any other
action against the maker in bankruptcy, insolvency, or similar law or
seeking reorganization, arrangement, readjustment of its debts,
liquidation, dissolution, winding-up, composition or for any other relief
under any bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other similar act of
law or any jurisdiction, domestic or foreign, now or hereafter existing; or
the appointment of a receiver, conservator, trustee or similar officer for
the Maker or for all or a substantial part of the Maker's property; or the
issuance of a warrant of attachment, execution or similar process against
any substantial part of the property of the Maker; and the continuance of
any of such events for sixty (60) days undismissed, unbonded or
undischarged; or
(d) An event of default shall occur under (i) the Senior Loan
Agreement (as defined in the Securities Purchase Agreement) or related
documents, or (ii) any of the Senior Subordinated Note Instruments (as
defined in the Securities Purchase Agreement) or related documents, or
(iii) any other agreements relating to Senior Indebtedness or (iv) any of
the Notes; or
(e) The Maker shall fail to comply with any of its covenants
contained in the Agreement or the Investors Rights Agreement dated as of
the date hereof among the Maker, the Payees of the Notes and certain other
parties, and such failure continues unremedied for a period of thirty (30)
days after the Maker receives written notice from the Payee of such
default; or
(f) Any representation or warranty of the Maker in the Agreement or
in any other document or instrument delivered pursuant to the Agreement
shall prove to have been false in any material respect upon the date when
made; or
(g) Maker shall fail to pay at maturity, or within any applicable
period of grace, any obligation for borrowed money or credit received or in
respect of any indebtedness for borrowed money (other than the Senior
Indebtedness) or fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing borrowed money or credit received or in respect of any
indebtedness for borrowed money (other than the Senior Indebtedness) for
such period of time as would permit (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof; or
(h) There shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any final
judgment against maker that with other outstanding final judgments,
undischarged, against Maker exceeds in the aggregate $250,000; or
(i) The Maker shall be enjoined, restrained or in any way prevented
by the order of any court or any administrative or regulatory agency from
conducting any material part of its business; or
(j) The Agreement or the Investors' Rights Agreement shall cease, for
any reason, to be in full force and effect other than in accordance with
the terms thereof.
Upon the occurrence, and at any time during the continuance, of an
Event of Default, the Payee, at the Payee's option and without the need for
presentment, demand, protest, or other notice of any kind, may declare all
unpaid principal hereof and interest hereunder to be immediately due and
payable and same shall become immediately due and payable upon such
declaration; provided that in the event of any Event of Default specified
in clauses (b) and (c) above, all such amounts shall become immediately due
and payable automatically and without any requirement of notice from the
Payee.
10. Certain Waivers. The Maker and any endorser or guarantor hereof
(collectively, the "Obligors") and each of them (i) waive(s) presentment,
diligence, protest, demand, notice of demand, notice of acceptance or
reliance, notice of non-payment, notice of dishonor, notice of protest and
all other notices to parties in connection with the delivery, acceptance,
performance, default or enforcement of this Note, any endorsement or
guaranty of this Note, or any collateral or other security; (ii) consent(s)
to any and all delays, extensions, renewals or other modifications of this
Note, any related document or the debt(s) or collateral evidenced hereby or
thereby or any waivers of any term hereof or thereof, any release,
surrender, taking of additional, substitution, exchange, failure to
perfect, record, preserve, realize upon, or lawfully dispose of, or any
other impairment of, any collateral or other security, or any other failure
to act by the Payee or any other forbearance or indulgence shown by the
Payee, from time to time and in one or more instances (without notice to or
assent from any of the Obligors) and agree(s) that none of the foregoing
shall release,
discharge or otherwise impair any of their liabilities; (iii) agree(s) that
the full or partial release or discharge of any Obligor(s) shall not
release, discharge or otherwise impair the liabilities of any other
Obligor(s); and (iv) otherwise waive(s) any other defenses based on
suretyship or impairment of collateral.
11. Registration and Transfer of this Note. The Maker shall keep at its
principal executive office a register (herein sometimes referred to as the
"Note Register"), in which, but at its expense (other than transfer taxes,
if any), the Maker shall provide for the registration and transfer of the
Notes. The Payee of this Note, at such ▇▇▇▇▇'s option, may in person or by
duly authorized attorney surrender this Note for exchange at the principal
office of the Maker, to receive in exchange therefor a new Note or Notes,
as may be requested by such ▇▇▇▇▇, of the same series and in the same
aggregate unpaid principal amount as the aggregate unpaid principal amount
of the Note or Notes so surrendered; provided, however, that any transfer
tax relating to such transaction shall be paid by the Payee requesting the
exchange. Each such new Note shall be dated as of the date to which
interest has been paid on the unpaid principal amount of the Note or Notes
so surrendered and shall be in such principal amount and registered in such
name or names as such Payee may designate in writing.
12. Lost Documents. Upon receipt by the Maker of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Note or any Notes
exchanged for it, and (in case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Maker of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such
Note, if mutilated, the Maker will make and deliver in lieu of such Note a
new Note of the same series and of like tenor and unpaid principal amount
and dated as of the date to which interest has been paid on the unpaid
principal amount of the Note in lieu of which such new Note is made and
delivered.
13. Commercial Transaction; Jury Waiver. THE MAKER ACKNOWLEDGES THAT THE
TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION. THE
MAKER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY AND THE RIGHT
THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING UNDER OR OUT OF,
OR OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH, THIS NOTE AND/OR ANY
RELATED DOCUMENT. THE MAKER FURTHER ACKNOWLEDGES THAT IT HAS HAD AN
OPPORTUNITY TO REVIEW THIS NOTE AND THE OTHER FINANCING DOCUMENTS WITH ITS
COUNSEL AND THAT IT ON ITS OWN HAS MADE THE DETERMINATION TO EXECUTE THIS
NOTE AND ALL OTHER FINANCING DOCUMENTS TO WHICH IT IS A PARTY AFTER
CONSIDERATION OF ALL OF THE TERMS OF THIS NOTE AND SUCH OTHER DOCUMENTS
(INCLUDING THE INTEREST RATE) AND OF ALL OTHER FACTORS WHICH IT CONSIDERS
RELEVANT.
14. Binding Nature. This Note shall bind the Maker and the Maker's
successors and permitted assigns and shall inure to the benefit of the
Payee and the Payee's heirs, representatives, successors and permitted
assigns. This Note may only be transferred to a transferee of shares of
capital stock of GMH Holdings, Inc. which have been issued pursuant to the
Agreement. The term "Payee" as used herein shall include, in addition to
the initial Payee, any successors, endorsees, or other permitted assigns of
such Payee and shall also include any other holder of this Note.
15. Governing Law. This Note shall be governed by and construed and
interpreted in accordance with the laws of the State of Delaware, without
regard to its rules pertaining to conflicts of laws thereunder.
16. Miscellaneous. No delay or omission by the Payee in exercising any
right or remedy hereunder shall operate as a waiver of such right or remedy
or any other right or remedy; and a waiver on one occasion shall not be a
bar to or waiver of any right or remedy on any other occasion. All rights
and remedies of the Payee hereunder, any other applicable document and
under applicable law shall be cumulative and not in the alternative. No
provision of this Note may be waived or modified orally but only by a
writing (a) signed by the party against whom enforcement of such amendment,
waiver or other modification is
sought and (b) consented to in writing by holders of Notes representing
sixty six and 2/3 percent (66-2/3%) in principal amount of the Notes.
17. Notices. All notices, requests, consents and demands shall be made in
writing and shall be mailed first class postage prepaid, or delivered by
hand or by messenger to the Maker or to the Payee hereof at their
respective addresses set forth at the beginning of this Note or at such
other respective addresses as may be furnished in writing to each other.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note as
of the day and year first written above.
Maker:
GENERAL MANUFACTURED HOUSING, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
_________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President