Exhibit 10.1
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CASH AMERICA INTERNATIONAL, INC.
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NOTE AGREEMENT
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DATED AS OF AUGUST 12, 2002
$42,500,000 7.20% SENIOR NOTES DUE AUGUST 12, 2009
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TABLE OF CONTENTS
ARTICLE 1. PURCHASE AND SALE OF NOTES.........................................................................1
Section 1.01 Authorization of Notes.........................................................................1
Section 1.02 Sale and Purchase of Notes.....................................................................1
Section 1.03 The Closing....................................................................................1
ARTICLE 2. DEFINITIONS AND INTERPRETATIONS....................................................................2
Section 2.01 Definitions....................................................................................2
Section 2.02 Interpretation................................................................................16
ARTICLE 3. CONDITIONS OF CLOSING.............................................................................18
Section 3.01 Representations and Warranties................................................................18
Section 3.02 Performance; No Default.......................................................................18
Section 3.03 Compliance Certificate........................................................................18
Section 3.04 Opinions of Counsel...........................................................................19
Section 3.05 Resolutions, Etc..............................................................................19
Section 3.06 Purchase Permitted by Applicable Laws, Etc....................................................19
Section 3.07 Payment of Closing Fees.......................................................................19
Section 3.08 Private Placement Number......................................................................19
Section 3.09 Notes.........................................................................................20
Section 3.10 Guaranty; Subrogation and Contribution Agreement..............................................20
Section 3.11 Other Loan Documents..........................................................................20
Section 3.12 Proceedings...................................................................................20
ARTICLE 4. USE OF PROCEEDS...................................................................................20
Section 4.01 Use of Proceeds...............................................................................20
Section 4.02 Margin Regulations............................................................................20
ARTICLE 5. PREPAYMENTS.......................................................................................21
Section 5.01 Required Prepayments of the Notes.............................................................21
Section 5.02 Optional Prepayments of the Notes.............................................................21
Section 5.03 Notice of Optional Prepayments; Officers' Certificate.........................................21
Section 5.04 Allocation of Partial Prepayments.............................................................22
Section 5.05 Maturity; Surrender, Etc......................................................................22
Section 5.06 Retirement of Notes...........................................................................22
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................................................23
Section 6.01 Subsidiaries..................................................................................23
Section 6.02 Organization, Qualification, Authorization, Etc...............................................23
Section 6.03 Disclosure Documents..........................................................................23
Section 6.04 Changes, Etc..................................................................................24
Section 6.05 Tax Returns and Payments......................................................................25
Section 6.06 Indebtedness; Solvency........................................................................25
Section 6.07 Permits.......................................................................................25
Section 6.08 Material Contracts............................................................................26
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Section 6.09 Title to Property, Etc........................................................................26
Section 6.10 Condition of Property.........................................................................26
Section 6.11 Compliance with Applicable Laws, Permits and Contracts........................................27
Section 6.12 Litigation, Etc...............................................................................27
Section 6.13 ERISA.........................................................................................27
Section 6.14 No Governmental Consents Required for Overall Transaction.....................................28
Section 6.15 Offering of Notes.............................................................................28
Section 6.16 Use of Proceeds...............................................................................28
Section 6.17 Foreign Assets Control Regulations, Etc.......................................................28
Section 6.18 Status Under Certain Federal Statutes.........................................................29
Section 6.19 Environmental Matters.........................................................................29
Section 6.20 Books and Records.............................................................................31
Section 6.21 Fiscal Year...................................................................................32
Section 6.22 Brokerage.....................................................................................32
Section 6.23 Labor Matters.................................................................................32
Section 6.24 Patents, Trademarks, Etc......................................................................32
Section 6.25 Chief Executive Office........................................................................32
Section 6.26 Permitted Investments.........................................................................32
Section 6.27 Liens.........................................................................................33
Section 6.28 Full Disclosure...............................................................................33
ARTICLE 7. PURCHASE FOR INVESTMENT; SOURCE OF FUNDS..........................................................33
Section 7.01 Representations of the Purchasers.............................................................33
ARTICLE 8. AFFIRMATIVE COVENANTS.............................................................................35
Section 8.01 Financial Statements, Reports and Documents...................................................35
Section 8.02 Payment of Principal, Interest and Premium....................................................37
Section 8.03 Payment of Taxes, Claims and Indebtedness.....................................................37
Section 8.04 Maintenance of Existence and Rights; Conduct of Business......................................38
Section 8.05 Compliance with Loan Documents................................................................38
Section 8.06 Compliance with Contracts and Permits.........................................................38
Section 8.07 Inspection....................................................................................38
Section 8.08 Books and Records.............................................................................39
Section 8.09 Compliance with Legal Requirements............................................................39
Section 8.10 Insurance.....................................................................................39
Section 8.11 Authorizations and Approvals..................................................................40
Section 8.12 Maintenance of Properties.....................................................................40
Section 8.13 Ownership of Subsidiaries.....................................................................40
Section 8.14 Further Assurances............................................................................40
Section 8.15 New Bank Loan Agreement.......................................................................40
ARTICLE 9. NEGATIVE COVENANTS................................................................................41
Section 9.01 Consolidated Indebtedness for Money Borrowed..................................................41
Section 9.02 Consolidated Tangible Net Worth...............................................................41
Section 9.03 Current Assets to Current Liabilities Ratio...................................................41
Section 9.04 Current Assets to Total Indebtedness Ratio....................................................41
Section 9.05 Inventory Turnover............................................................................41
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Section 9.06 Fixed Charge Coverage.........................................................................42
Section 9.07 Restricted Payments...........................................................................42
Section 9.08 Limitation on Indebtedness....................................................................43
Section 9.09 Assurances....................................................................................45
Section 9.10 Negative Pledge...............................................................................45
Section 9.11 Limitation on Investments.....................................................................45
Section 9.12 Alteration of Contracts, Etc..................................................................46
Section 9.13 Transactions with Affiliates..................................................................47
Section 9.14 Limitation on Sale or Issuance of Subsidiary Stock............................................47
Section 9.15 Limitation on Sale of Properties..............................................................47
Section 9.16 Dissolution; Liquidation; Merger; Consolidation...............................................47
Section 9.17 Change of Name, Fiscal Year and Method of Accounting..........................................48
Section 9.18 Lines of Business.............................................................................48
Section 9.19 Amendment of Organizational Documents.........................................................49
Section 9.20 Limitation on Acquisition of New Subsidiaries.................................................49
Section 9.21 ERISA.........................................................................................50
Section 9.22 No Inconsistent Agreements....................................................................51
Section 9.23 Incorporation of More Restrictive Covenants...................................................51
ARTICLE 10. EVENTS OF DEFAULT.................................................................................52
Section 10.01 Events of Default..........................................................................52
Section 10.02 Other Remedies.............................................................................55
ARTICLE 11. MISCELLANEOUS.....................................................................................55
Section 11.01 Note Payments..............................................................................55
Section 11.02 Expenses...................................................................................56
Section 11.03 Consent to Waivers and Amendments..........................................................57
Section 11.04 Solicitation of Holders....................................................................57
Section 11.05 Form, Registration, Transfer and Exchange of Notes; Lost Notes.............................57
Section 11.06 Persons Deemed Owners......................................................................58
Section 11.07 Reliance on and Survival of Representations and Warranties.................................58
Section 11.08 Successors and Assigns.....................................................................59
Section 11.09 Notices....................................................................................59
Section 11.10 Substitution of Purchasers.................................................................59
Section 11.11 Satisfaction Requirement...................................................................59
Section 11.12 Independence of Covenants..................................................................60
Section 11.13 Remedies Cumulative........................................................................60
Section 11.14 Reproduction of Documents..................................................................60
Section 11.15 Notes as Securities........................................................................60
Section 11.16 Severability of Provisions.................................................................60
Section 11.17 Interest...................................................................................61
Section 11.18 Representations, Etc. Cumulative...........................................................62
Section 11.19 Submission to Jurisdiction.................................................................62
Section 11.20 Governing Law..............................................................................62
Section 11.21 Indemnification............................................................................63
Section 11.22 Survival of Indemnities, Etc...............................................................63
Section 11.23 Judgment Currency..........................................................................64
Section 11.24 Liabilities of Holders.....................................................................64
Section 11.25 Taxes......................................................................................64
Section 11.26 Counterparts...............................................................................65
Section 11.27 Entire Agreement...........................................................................65
Schedules and Exhibits
Schedule I - Purchaser Information
Schedule II - List of Subsidiaries
Schedule III - List of Jurisdictions Where Company is Qualified to Do
Business as a Foreign Corporation
Schedule IV - Permitted Liens
Schedule V - Material Contracts
Schedule VI - Description of Company Financials
Schedule VII - Description of Projections
Schedule VIII - Indebtedness
Schedule IX - Labor Contracts
Schedule X - Tradenames
Schedule XI - Investments
Schedule XII - Transferee Representations
Schedule XIII - Outstanding Indebtedness for Money Borrowed
Exhibit A - Form of Note
Exhibit B - Form of Company Counsel Opinion
Exhibit C - Form of General Counsel Opinion
Exhibit D - Form of Purchasers' Counsel Opinion
Exhibit E - Form of Guaranty
Exhibit F - Form of Subrogation and Contribution Agreement
Exhibit G - Form of New Bank Loan Agreement
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NOTE AGREEMENT
CASH AMERICA INTERNATIONAL, INC.
As of August 12, 2002
To Each of the Persons Listed in
the Attached Schedule I (collectively, the "PURCHASERS")
Ladies and Gentlemen:
Cash America International, Inc. (the "COMPANY"), a Texas corporation,
hereby agrees with each of you as follows:
ARTICLE 1. PURCHASE AND SALE OF NOTES
Section 1.01 Authorization of Notes.
The Company will duly authorize the issue and sale of a series of its
senior notes designated "7.20% Senior Notes due August 12, 2009" and limited in
aggregate original principal amount to $42,500,000 (the "Notes"). The Notes will
(a) be issuable as registered notes, without coupons, in denominations permitted
by Section 11.05, (b) be dated the date of issue thereof, (c) mature August 12,
2009, (d) bear interest on the unpaid balance thereof from the date thereof to,
but excluding, the date the principal thereof shall have become due and payable
at the rate of 7.20% per annum, (e) bear interest on overdue principal, premium
and (to the extent permitted by law) interest at the Default Rate, (f) be
entitled to the benefits of the Guaranty and (g) be in the form of Exhibit A.
Section 1.02 Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement, the Company
agrees to sell to the Purchasers, and the Purchasers agree to purchase from the
Company, the Notes at 100% of the principal amount thereof. Such sale and
purchase is sometimes herein referred to as the "PRIVATE PLACEMENT."
Section 1.03 The Closing.
The closing of the Private Placement (the "CLOSING") shall take place
at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
on such Business Day as may be agreed upon by the Company and the Purchasers
(the "CLOSING DATE"). At the Closing, the Company will deliver the Notes in the
form of a single Note (or such greater number of Notes as the Purchasers may
request in denominations permitted by Section 11.05) payable to the Purchasers
or their registered assigns against payment of the purchase price therefor by
electronic funds transfer to Bank of America, N.A., for credit to such account
as the Company may designate in writing delivered to the Purchasers at least
three Business Days prior to the Closing Date for use in accordance with Section
4.01. By delivering payment on the Closing Date for the Notes, the Purchasers
shall be deemed to have confirmed as of the Closing Date that
the representations and warranties made by the Purchasers in Article 7 remain
accurate as of the Closing Date. If, at the Closing, the Company shall fail to
tender the Notes to the Purchasers as provided above, or any of the conditions
specified in Article 3 shall not have been fulfilled to the satisfaction of the
Purchasers, the Purchasers shall, at their election, be relieved of all further
obligations under this Agreement, without thereby waiving any other rights it
may have by reason of such failure or such nonfulfillment.
ARTICLE 2. DEFINITIONS AND INTERPRETATIONS
Section 2.01 Definitions.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the following terms shall have the
following respective meanings:
"AFFILIATE" means (a) when used with reference to any
corporation, any Person that, directly or indirectly, owns or controls
5% or more of any class of Voting Stock of such corporation or is a
director or officer of such corporation or is a Person in which such
corporation has a 5% or greater direct or indirect equity interest, (b)
when used with reference to any partnership, any Person that, directly
or indirectly, owns or controls 5% or more of either the capital or
profit interests of such partnership or is a partner or employee of
such partnership or is Person in which such partnership has 5% or
greater direct or indirect equity interest, (c) when used with
reference to any individual, any Person that is related to such
individual by blood or marriage or is a present or former ▇▇▇▇,
guardian, employer or employee of such individual or is a trust or
estate in which such individual owns a 5% or greater beneficial
interest or of which such individual serves as trustee, executor or in
any similar capacity and (d) when used with reference to a trust or an
estate, any Person that is a trustee, executor, administrator or
beneficiary thereof. Moreover, the term "Affiliate", when used with
reference to any Person, shall also mean any other Person that,
directly or indirectly, controls or is controlled by or is under common
control with such Person. As used in the preceding sentence, the term
"control" means the possession, directly or indirectly, of the power to
direct or to cause the direction of the management and policies of the
entity referred to, whether through ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controls" shall
have meanings correlative to the foregoing.
"AGREEMENT" means this
Note Agreement, as amended,
supplemented or modified from time to time.
"ANTI-TERRORISM ORDER" means United States Executive Order
13224, effective as of September 24, 2001, Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit,
or Support Terrorism (Exec. Order No. 13,224, 66 Fed. Reg. 49,079
(2001)).
"APPLICABLE CONTRACT" means any contract or agreement to which
the Company or any Subsidiary is a party or by which it or any of its
Properties is bound or under or pursuant to which it owns, maintains or
operates any of its Properties or conducts business.
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"APPLICABLE PERMIT" means any Permit to which the Company or
any Subsidiary is a party or by which it or any of its Properties is
bound or under or pursuant to which it owns, maintains or operates any
of its Properties or conducts business.
"ASSURANCE" means, as to any Person, any contract, agreement
or understanding to guarantee, or in effect guarantee, any indebtedness
(the "PRIMARY OBLIGATION") of any other Person (the "PRIMARY OBLIGOR")
in any manner, whether directly or indirectly, including agreements:
(a) to purchase the Primary Obligation or any
Property constituting security therefor;
(b) to advance or supply funds (i) for the purchase
or payment of the Primary Obligation or (ii) to maintain
working capital or other balance sheet conditions, or
otherwise to advance or make available funds for the purchase
or payment of the Primary Obligation; or
(c) to purchase Property, securities or services
primarily for the purpose of assuring the holder of the
Primary Obligation of the ability of the Primary Obligor to
make payment of the Primary Obligation;
provided, however, that "Assurance" shall not include the endorsement
by any Person, in the ordinary course of business, of negotiable
instruments or documents for deposit or collection. The amount of any
Assurance shall be deemed to be an amount equal to the stated or
determinable amount of the Primary Obligation in respect of which such
Assurance is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming the
Person giving such Assurance is required to perform in respect thereof)
as determined by such Person in good faith.
"BANKRUPTCY LAW" has the meaning specified in Section
10.01(j).
"BENEFIT ARRANGEMENT" means an employee benefit plan (within
the meaning of Section 3(3) of ERISA) which is not a Plan and with
respect to which the Company or a member of the ERISA Group has an
obligation or liability, whether or not current or contingent, to make
contributions or pay benefits.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which commercial banking institutions in
New York,
New
York or Fort Worth, Texas are authorized or required by law, regulation
or executive order to be closed.
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 5.02
(any partial prepayment being applied in satisfaction of required
payments of principal in inverse order of their scheduled due dates) or
is declared to be or becomes immediately due and payable pursuant to
Section 10.01, as the context requires.
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"CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act, as amended from time to time,
together with all regulations and rulings thereunder and all
interpretations thereof by the Environmental Protection Agency.
"CLOSING" has the meaning specified in Section 1.03.
"CLOSING DATE" has the meaning specified in Section 1.03.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, together with all regulations and rulings thereunder
and all interpretations thereof by the Internal Revenue Service.
"COMPANY" has the meaning specified in the opening paragraph
of this Agreement.
"COMPANY FINANCIALS" has the meaning specified in Section
6.03(a)(8).
"CONSOLIDATED ADJUSTED NET INCOME" means, with respect to any
period, consolidated net income (after income taxes) of the Company and
the Consolidated Subsidiaries for such period, determined in accordance
with GAAP (excluding, (i) any gain or loss in excess of $1,000,000
(before income taxes) arising from the sale of capital assets during
such period and (ii) any other items during such period which would be
considered extraordinary items, in accordance with GAAP) plus to the
extent such amounts have been deducted in the computation of such
consolidated net income for such period, charges attributable to the
Rent-A-Tire Disposition up to an amount not to exceed $19,000,000.
"CONSOLIDATED CURRENT ASSETS" means, as of any date, the
current assets which would be reflected on a consolidated balance sheet
of the Company and the Consolidated Subsidiaries prepared as of such
date in accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, as of any date, the
current liabilities which would be reflected on a consolidated balance
sheet of the Company and the Consolidated Subsidiaries prepared as of
such date in accordance with GAAP.
"CONSOLIDATED EBITDA" means, in respect of any period,
Consolidated Adjusted Net Income for such period plus, to the extent
deducted in calculating such Consolidated Adjusted Net Income,
interest, income taxes, depreciation, amortization and any non-cash
gains or losses attributable to market fluctuations in the value of
derivative contracts provided that, with respect to any period during
which a Person shall have become, or ceased to be, a Subsidiary, or
during which the Company or any Subsidiary shall have acquired or
disposed of an On-Going Business, the calculation of Consolidated
EBITDA shall (a) include the EBITDA for such period of each Person who
shall have become a Subsidiary, and of
4
each On-Going Business acquired by the Company or any Subsidiary,
during such period as if such Person had been a Subsidiary or such
On-Going Business had been owned by the Company or a Subsidiary for the
entire period, or (b) exclude the EBITDA for such period of each Person
who shall have ceased to be a Subsidiary, and of each On-Going Business
disposed of by the Company or any Subsidiary, during such period as if
such Person had not been a Subsidiary at any time during the entire
period or such On-Going Business had not been owned or operated by the
Company or any Subsidiary at any time during such period. As used in
this definition, EBITDA with respect to any Person or On-Going Business
for any period shall mean, the net income (after income taxes) of such
Person or On-Going Business for such period, determined in accordance
with GAAP plus, to the extent deducted in calculating such net income,
interest, income taxes, depreciation, amortization and any non-cash
gains or losses attributable to market fluctuations in the value of
derivative contracts.
"CONSOLIDATED INDEBTEDNESS FOR MONEY BORROWED" means, at any
date, the Indebtedness for Money Borrowed of the Company and the
Consolidated Subsidiaries consolidated as of such date in accordance
with GAAP.
"CONSOLIDATED SUBSIDIARY" means, at any date, any Subsidiary
the accounts of which would, in accordance with GAAP, be consolidated
with those of the Company in its consolidated financial statements as
of such date.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date, the
total shareholders' equity which would appear on a consolidated balance
sheet of the Company and the Consolidated Subsidiaries prepared as of
such date in accordance with GAAP less the sum of (i) the aggregate
amount of all currency translation adjustments (gains and losses) shown
on such balance sheet and (ii) the net book value of all Intangible
Assets shown on such balance sheet. As used in this definition,
"Intangible Assets" means those assets (including licenses, patents,
copyrights, trademarks, tradenames, franchises, goodwill, experimental
expenses and other similar assets) which would be classified as
intangible assets for purposes of a balance sheet prepared in
accordance with GAAP.
"DEFAULT" means, with respect to any Loan Document, any event
or condition that constitutes, or with the giving of notice or the
lapse of time or both would constitute, a default thereunder or breach
thereof. Without limitation of the foregoing, "Default" shall include
any Event of Default as well as any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"DEFAULT RATE" means, at any time, a rate of interest per
annum equal to the lesser of (a) 2% above the interest rate then
payable on the Notes and (b) the Highest Lawful Rate.
"DISCOUNTED VALUE" means, 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.
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"DOLLARS" and the sign "$" means lawful currency of the United
States of America.
"ENVIRONMENTAL CLAIM" shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment,
order, consent decree, penalty, fine, lien, proceeding or claim
(whether administrative, judicial or private in nature) arising (a)
pursuant to, or in connection with an actual or alleged violation of,
any Environmental Law, (b) in connection with any Hazardous Material,
(c) from any abatement, removal, remedial, corrective or other response
action in connection with a Hazardous Material, Environmental Law or
other order of a Governmental Authority or (d) from any actual or
alleged damage, injury, threat or harm to health, safety, natural
resources or the environment.
"ENVIRONMENTAL LAWS" means applicable laws (including the
common law), regulations or rules, and any applicable judicial or
administrative interpretations thereof, as well as any applicable
judicial or administrative orders, decrees or judgments, relating to
pollution, environmental, health, safety, industrial hygiene or similar
matters.
"ENVIRONMENTAL PERMIT" means any Permit required under
applicable Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and all rules, regulations, rulings
and interpretations adopted by the Internal Revenue Service or the
Department of Labor thereunder.
"ERISA GROUP" means all corporations, trades or businesses
(whether or not incorporated) and other persons or entities which,
together with the Company, are treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code.
"EVENT OF DEFAULT" has the meaning specified in Section 10.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXECUTIVE OFFICER" means (a) the chairman of the board, the
chief executive officer, the chief operating officer, the chief
financial officer, the chief accounting officer or the chief legal
officer of the Company or (b) any other officer of the Company who has
been elected by the Board of Directors of the Company and designated as
an executive officer in any Form 10-K or successor Form filed by the
Company with the SEC.
"EXISTING BANK LOAN AGREEMENT" means that certain Amended and
Restated Senior Revolving Credit Facility Agreement dated as of June
19, 1996, among the Company, the banks party thereto and NationsBank of
Texas, N.A., as Agent, as in effect on the Closing Date.
"FISCAL QUARTER" means a fiscal quarter of the Company.
"FISCAL YEAR" means the fiscal year of the Company.
6
"GAAP" means generally accepted accounting principles as in
effect from time to time as set forth in the opinions, statements and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting
Standards Board and such other Persons who shall be approved by a
significant segment of the accounting profession and concurred in by
the Independent Accountants.
"GOVERNMENTAL AUTHORITY" means any foreign governmental
authority, the United States of America, any State of the United States
or any political subdivision, agency or instrumentality of any of the
foregoing, and any agency, department, commission, board, bureau, court
or other tribunal having jurisdiction over any Loan Party, the
Purchasers or any other Holder or their respective Property, including
the Texas Consumer Credit Commissioner, the United States Department of
the Treasury, Bureau of Alcohol, Tobacco and Firearms and the Office of
Fair Trading of the United Kingdom and any other governmental authority
charged with the enforcement of the Regulatory Acts or otherwise having
authority with respect to the regulation, supervision and licensing of
pawnshop activities in any jurisdiction in which the Company or any of
the Subsidiaries conducts business.
"GUARANTORS" means the Subsidiaries listed in Schedule II
(other than ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Limited, Pantbelaning, the Sweden
Subsidiary, Murtrum and the Murtrum Affiliate) and each other Person
that becomes bound by the Guaranty as contemplated by Section 9.20(a).
"GUARANTY" has the meaning specified in Section 3.10.
"HAZARDOUS MATERIALS" means any hazardous substance, hazardous
or toxic waste, pollutant, contaminant, oil, petroleum product or other
substance (a) which is listed, regulated or designated as toxic or
hazardous (or words of similar meaning and regulatory effect), or with
respect to which remedial obligations may be imposed, under any
Environmental Laws or (b) exposure to which may pose a health or safety
hazard.
"HIGHEST LAWFUL RATE" means the maximum nonusurious rate of
interest permitted to be charged by applicable federal or state law
(whichever shall permit the higher lawful rate) from time to time in
effect. The parties agree that, insofar as the provisions of Chapter
306 of the Texas Finance Code are at any time applicable to the
determination of the Highest Lawful Rate, the Highest Lawful Rate shall
be the "applicable ceiling" (as such term is used in such Chapter 306)
from time to time in effect, provided that, to the extent permitted by
such Chapter 306, each Holder may from time to time by notice to the
Company revise the election of such interest rate ceiling as such
ceiling affects the then current or future amounts outstanding under
the Notes held by such Holder.
"HOLDER" means (a) the Purchasers so long as any such
Purchaser is obligated to purchase the Notes hereunder or holds any
outstanding Note and (b) any other holder from time to time of any
outstanding Note.
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"INDEBTEDNESS FOR MONEY BORROWED" means, with respect to any
Person and without duplication:
(a) the principal amount of all indebtedness of such
Person, current or funded, secured or unsecured, incurred in
connection with borrowings (including the sale of debt
securities),
(b) all indebtedness of such Person created or
arising under any conditional sale or other title retention
agreement with respect to any Property acquired by such
Person,
(c) all indebtedness of such Person issued, incurred
or assumed in respect of the purchase price of Property or
services except for accounts payable incurred in the ordinary
course of business,
(d) all obligations of such Person evidenced by a
note, bond, debenture or similar instrument,
(e) the present value (determined in accordance with
GAAP) of all obligations of such Person under leases which
shall have been or should be recorded as capitalized leases in
accordance with GAAP,
(f) all Assurances of such Person in respect of
indebtedness of any other Person of any of the types described
in the preceding clauses (a) through (e), provided that, when
calculating the amount of any Person's Indebtedness for Money
Borrowed, no Assurance of such Person of the type described in
this clause (f) shall be included in such calculation unless,
and then only to the extent that, the indebtedness relating to
such Assurance, when aggregated with the total indebtedness
relating to all other outstanding Assurances of the Loan
Parties of the type described in this clause (f), exceeds
$500,000,
(g) the amount of all sinking fund payments or other
mandatory redemption or payments on any class of capital stock
of such Person,
(h) the maximum stated amount from time to time
available for drawing under any letters of credit issued at
the request of such Person, and
(i) the amount of any unreimbursed drawings under
letters of credit issued at the request of such Person.
"INDEMNITEES" means, collectively, the Purchasers, each
Transferee and each Holder and their respective successors and assigns,
and the officers, trustees, directors and employees of each of the
foregoing.
"INDEPENDENT ACCOUNTANTS" means PricewaterhouseCoopers LLP or
another firm of independent public accountants of recognized national
standing selected by the Company.
8
"innoVENTRY" means innoVentry Corp., a Delaware corporation
and successor in interest to Mr. Payroll Corporation, a Texas
corporation.
"INVESTMENT" means, as applied to any Person, (i) any direct
or indirect purchase or other acquisition by such Person of stocks,
bonds, notes, debentures or other securities of any other Person, (ii)
any direct or indirect loan, advance, extension of credit or capital
contribution by such Person to any other Person, (iii) any Assurance by
such Person of any indebtedness of any other Person, (iv) the
subordination by such Person of any claim against any other Person to
other indebtedness of such other Person and (v) any other item which
would be classified as an "investment" on a balance sheet of such
Person prepared in accordance with GAAP, including any direct or
indirect contribution by such Person of Property to a joint venture,
partnership or other business entity in which such Person retains an
interest.
"LEGAL REQUIREMENTS" means any and all (a) applicable
constitutional provisions, laws (statutory, administrative, judicial or
otherwise, including those established pursuant to common law or
equity) ordinances, treaties, rules, codes, standards and regulations
(or any interpretation of any of the foregoing), whether foreign or
domestic, including, without limitation, the Anti-Terrorism Order and
the USA Patriot Act, (b) judgments, orders, injunctions and decrees,
(c) Permits and (d) contracts with Governmental Authorities relating to
compliance with the items described in (a), (b) or (c) above.
"LIEN" means any mortgage, pledge, charge, encumbrance,
security interest, collateral assignment, conditional sale or title
retention arrangement or other lien or restriction of any kind, whether
based on common law, constitutional provision, statute or contract.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Notes, the Guaranty, the Subrogation and Contribution Agreement and all
other instruments and documents executed and delivered to the
Purchasers by the Loan Parties, or any of them, pursuant to this
Agreement.
"LOAN PARTIES" means, collectively, the Company and the
Guarantors.
"MAKE-WHOLE PREMIUM" means, with respect to the Called
Principal of any Note, a premium equal to the excess, if any, of the
Discounted Value of such Called Principal over such Called Principal.
The Make-Whole Premium shall in no event be less than zero.
"MATERIAL ADVERSE EFFECT" means any circumstance or event of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding) which (a)
could reasonably be expected to have a material adverse effect on the
financial condition, business, operations or Properties of the Company
and the Subsidiaries, taken as a whole, (b) could reasonably be
expected to diminish or impair in any material respect the ability of
the Company to perform any of its obligations under the Loan Documents
to which it is a party, (c) could reasonably be expected to diminish or
impair in any material respect the ability of the Purchasers or any
9
other Holder to enforce any of the Obligations or to exercise or
enforce any of their rights and remedies under the Loan Documents, (d)
causes an Event of Default, (e) causes a Default which could reasonably
be expected to become an Event of Default or (f) could reasonably be
expected to subject the Purchasers or any other Holder to civil or
criminal liability.
"MATERIAL CONTRACT" means any contract, agreement or
instrument to which the Company or any Subsidiary is a party (a) which
calls for payments to or from the Company or such Subsidiary of more
than $1,000,000 during any 12-month period or (b) pursuant to which the
Company or such Subsidiary acquires any right to an interest in
Property or a right to obtain services if the Company's or such
Subsidiary's inability to obtain such interest or services, as the case
may be, could reasonably be expected to have a Material Adverse Effect,
provided that "Material Contract" shall not include any Loan Document.
"MURTRUM" means Murtrum AB, formerly known as ▇▇▇▇▇▇ ▇▇▇▇▇ AB,
a corporation organized under the laws of Sweden and a Wholly-Owned
Subsidiary.
"MURTRUM AFFILIATE" means the following corporation which (i)
is organized under the laws of Sweden and (ii) is a Wholly-Owned
Subsidiary: AB Svensk Pantbelaning.
"NEW BANK LOAN AGREEMENT" means the Credit Agreement to be
executed by the Company, ▇▇▇▇▇ Fargo Bank Texas, National Association
and other lenders on or about the Closing Date substantially in the
form of Exhibit G hereto.
"1993 GUARANTY" means that certain Joint and Several Guaranty
dated as of May 6, 1993 delivered by the Company and certain of its
Subsidiaries in connection with the issuance and sale of the 1993
Notes.
"1993 LOAN DOCUMENTS" means the "Loan Documents" as defined in
the 1993
Note Agreement.
"1993
NOTE AGREEMENT" means that certain
Note Agreement dated
as of May 6, 1993 between the Company and Teachers Insurance and
Annuity Association of America, as amended.
"1993 NOTES" means those certain 8.33% Senior Notes due May 1,
2003 issued by the Company under and pursuant to the 1993
Note
Agreement.
"1995 GUARANTY" means that certain Joint and Several Guaranty
dated as of July 7, 1995 delivered by the Company and certain of its
Subsidiaries in connection with the issuance and sale of the 1995
Notes.
"1995 LOAN DOCUMENTS" means the "Loan Documents" as defined in
the 1995
Note Agreement.
10
"1995
NOTE AGREEMENT" means that certain
Note Agreement dated
as of July 7, 1995 between the Company and Teachers Insurance and
Annuity Association of America, as amended.
"1995 NOTES" means those certain 8.14% Senior Notes due July
7, 2007 issued by the Company under and pursuant to the 1995 Note
Agreement.
"1997 GUARANTY" means that certain Joint and Several Guaranty
dated as of December 1, 1997 delivered by the Company and certain of
its Subsidiaries in connection with the issuance and sale of the 1997
Notes.
"1997 LOAN DOCUMENTS" means the "Loan Documents" as defined in
the 1997 Note Agreement.
"1997 NOTE AGREEMENT" means that certain Note Agreement dated
as of December 1, 1997 between the Company and the purchasers listed on
Schedule I thereto, as amended.
"1997 NOTES" means those certain 7.10% Senior Notes due
January 2, 2008 issued by the Company under and pursuant to the 1997
Note Agreement.
"NON-DOMESTIC INDEBTEDNESS" means Indebtedness for Money
Borrowed of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Limited and the Sweden Subsidiary in an
aggregate amount not to exceed 20,000,000 pounds sterling (or its
equivalent in other currencies) incurred under and pursuant to that
certain letter agreement dated as of June 30, 2002, among ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Limited, the Sweden Subsidiary and Barclays Bank PLC.
"NOTES" has the meaning specified in Section 1.01.
"OBLIGATIONS" means all obligations, liabilities and
indebtedness of every nature of the Loan Parties from time to time
owing to the Purchasers and the other Holders under the Loan Documents,
including, without limitation, (a) all obligations of the Company under
the Loan Documents to pay principal, premium and interest in respect of
the Notes, (b) all obligations of the Guarantors in respect of the
Guaranty, (c) all obligations of the Loan Parties under the Loan
Documents to reimburse or indemnify the Purchasers or any other
Indemnitee and (d) all obligations of the Loan Parties to pay fees and
expenses pursuant to Section 11.02 and similar sections of the other
Loan Documents.
"OFFICERS' CERTIFICATE" means a certificate executed on behalf
of the Company by at least two of its Responsible Officers (in their
representative capacities and not in their individual capacities).
"ON-GOING BUSINESS" means a distinct operating business,
whether operated as a division of a larger business operation or
operated independently, which regardless of the form of legal entity
owns or operates the assets and has the liabilities, of such business.
11
"ORGANIZATIONAL DOCUMENTS" means (i) with reference to any
Person that is a corporation, its articles or certificate of
incorporation and its bylaws and (ii) with reference to any Person that
is a partnership, its partnership agreement and all other instruments
relating to its formation, existence or governance.
"OVERALL TRANSACTION" means the Private Placement and the
guarantees and other transactions and activities contemplated by the
Loan Documents.
"PANTBELANING " means CAII Pantbelaning AB, a corporation
organized under the laws of Sweden and a Wholly-Owned Subsidiary.
"PERMITS" means any and all permits, authorizations,
certificates, approvals, registrations, variances, licenses,
franchises, exemptions or orders issued, granted or otherwise made
available by any Governmental Authority.
"PERMITTED LIENS" means:
(a) Liens (if any) granted to the Holders to secure
the Obligations;
(b) Liens in existence on the date hereof and
described in Schedule IV;
(c) pledges or deposits made to secure payment of
worker's compensation (or to participate in any fund in
connection with worker's compensation), unemployment
insurance, pensions or social security programs;
(d) Liens imposed by mandatory provisions of law such
as for materialmen's, mechanics, warehousemen's and other like
Liens arising in the ordinary course of business, securing
indebtedness whose payment is not yet due, and landlords
liens, whether arising through contract or by operation by
law, but only if the same are not yet due and payable or if
the same are being contested in good faith and the payment of
which is not at the time required by Section 8.03,
(e) Liens for taxes, assessments and governmental
charges or levies imposed upon a Person or upon such Person's
income or profits or property, but only if the same are not
yet due and payable or if the same are being contested in good
faith and the payment of which is not at the time required by
Section 8.03;
(f) good faith deposits in connection with tenders,
leases, real estate bids or contracts (other than contracts
involving the borrowing of money), pledges or deposits to
secure public or statutory obligations, deposits to secure (or
in lieu of) surety, stay, appeal or customs bonds and deposits
to secure the payment of taxes, assessments, customs duties or
other similar charges;
(g) encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property,
provided that such do not materially impair the use of such
property for the uses intended, and none of which is violated
by existing or proposed structures or land use;
12
(h) Liens on Property of any Consolidated Subsidiary
securing obligations of such Consolidated Subsidiary owing to
the Company or to any Wholly-Owned Subsidiary;
(i) Liens created to secure (A) purchase money
indebtedness incurred to finance the purchase price of the
Property acquired in the ordinary course of business, but only
if each such Lien shall secure only the purchase money
indebtedness incurred to purchase the Property so acquired and
shall be confined solely to such Property and (B) the
indebtedness permitted by Section 9.08(b)(11); provided,
however, that the aggregate amount of all indebtedness at any
time secured by all Liens referred to in this clause (i) shall
not exceed $10,000,000; and
(j) Liens on Temporary Cash Investments, but only if
(A) such Liens secure short-term indebtedness owed by the
Company or a Consolidated Subsidiary to the broker or
investment banking firm which is holding such Temporary Cash
Investments for the account of the Company or a Consolidated
Subsidiary and (B) such indebtedness is to be repaid, in the
ordinary course of business, by the collection or liquidation
of such Temporary Cash Investments at the maturity of such
Temporary Cash Investments.
"PERSON" means and includes an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization
and a Governmental Authority.
"PLAN" means an employee pension benefit plan (within the
meaning of Section 3(3) of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the
Company, any Subsidiary or any Related Person or as to which the
Company, any Subsidiary or any Related Person would be treated as a
contributing sponsor under Section 4069 of ERISA if such plan were to
be terminated.
"PRIVATE PLACEMENT" has the meaning specified in Section 1.02.
"PROJECTIONS" has the meaning specified in Section 6.03(a)(9).
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, tangible or intangible.
"PURCHASERS" has the meaning specified in the opening
paragraph of this Agreement.
"REGULATORY ACTS" means (a) the Texas Pawnshop Act, (b) the
Consumer Credit ▇▇▇ ▇▇▇▇ enacted in the United Kingdom and (c) all
other foreign, Federal or state laws (statutory, administrative,
judicial or otherwise) relating to pawnshops and activities incidental
thereto.
"REINVESTMENT YIELD" means with respect to the Called
Principal of any Note, the sum of 50 basis points (0.50%) over the
yield to maturity implied by (a) the yields reported, as of 10:00 A.M.
(
New York City time) two Business Days next preceding the
13
Settlement Date with respect to such Called Principal, on the display
designated as page PX1 as reported by the Bloomberg Financial Market
Service Screen (or such other display as may replace page PX1 on
Bloomberg Financial Market Service) providing the most current yields
for actively traded United States Treasury securities with maturities
corresponding to the Remaining Average Life of such Called Principal as
of such Settlement Date, or, if such yields shall not be reported as of
such time or the yields reported as of such time shall not be
ascertainable, (b) the Treasury Constant Maturity Series yields
reported, for the latest day for which such yields shall have been so
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 any comparable successor publication) 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,
by (i) converting U.S. Treasury ▇▇▇▇ quotations to bond equivalent
yields in accordance with accepted financial practice and (ii)
interpolating linearly between reported yields.
"RELATED PERSON" means any trade or business, whether or not
incorporated, which, together with the Company, would be treated as a
single employer under Section 414 of the Code.
"RELEASE" has the meaning specified in CERCLA Section 101(22)
(42 U.S.C. Section 9601(22)).
"REMAINING AVERAGE LIFE" means, 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) the principal
component of 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
respective scheduled due date of such Remaining Scheduled Payment of
such Called Principal.
"REMAINING SCHEDULED PAYMENTS" means, 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 provided that, if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, the amount of the next succeeding
scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such
Settlement Date pursuant to Section 5.02 or Section 10.01, as the case
may be.
"RENT-A-TIRE" means RATI Holding, Inc., a Texas corporation
(f/k/a/ Rent-A-Tire, Inc., a Texas corporation).
"RENT-A-TIRE DISPOSITION" means the discontinuance of
operations and disposition of assets of 43 Rent-A-Tire stores in
existence on June 30, 2001.
14
"REQUIRED HOLDERS" means, at any time, the Holder or Holders
of at least 51% of the aggregate principal amount of the Notes then
outstanding.
"RESPONSIBLE OFFICER" means, as to any Loan Party, the
chairman of the board, the chief executive officer, the president, the
chief financial officer, the principal accounting officer, the chief
legal officer or the treasurer of such Loan Party.
"RESTRICTED PAYMENT" means as specified in Section 9.07(a).
"SEC" means the Securities and Exchange Commission.
"SEK" means the legal currency of Sweden.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 5.02 or is declared to be or becomes immediately
due and payable pursuant to Article 10, as the context requires.
"STOCK" means (i) in the case of any corporation, capital
stock of any class of such corporation (however designated) and
warrants or options to purchase such capital stock, (ii) in the case of
any partnership, partnership interests of such partnership (however
designated) and warrants or options to purchase such partnership
interests and (iii) in the case of any other entity, equity interests
of such entity (however designated) and warrants or options to purchase
such equity interests.
"SUBROGATION AND CONTRIBUTION AGREEMENT" means the Subrogation
and Contribution Agreement dated as of August 12, 2002 among the
Company and the Guarantors substantially in the form of Exhibit F.
"SUBSIDIARY" means, at any time, (a) any corporation 50% or
more of the outstanding Voting Stock of which is owned, directly or
indirectly, by the Company at such time and (b) any partnership,
association, joint venture or other entity in which the Company owns,
directly or indirectly, a 50% or greater equity interest (however
designated) at such time, provided, however, for all purposes under
this Agreement, innoVentry, Rent-A-Tire and Tire Rental Express
Corporation, a Texas corporation, shall not be considered Subsidiaries.
"SWEDEN SUBSIDIARY" means Svensk Pantbelaning Service A.B., a
corporation organized under the laws of Sweden and, as of the Closing
Date, a Wholly-Owned Subsidiary.
"TEMPORARY CASH INVESTMENT" mean any of the following
investments: (a) Investments in open market commercial paper maturing
within 180 days after acquisition thereof and rated at least A-1 (or
the equivalent thereof) by Standard & Poor's Ratings Group (or any
successor thereto which is a nationally recognized rating agency) or at
least P-1 (or the equivalent thereof) by ▇▇▇▇▇'▇ Investors Service,
Inc. (or any successor
15
thereto which is a nationally recognized rating agency), (b)
Investments in marketable obligations, maturing within 180 days after
acquisition thereof, issued or unconditionally guaranteed by the United
States of America or an instrumentality or agency thereof and entitled
to the full faith and credit of the United States of America, (c)
Investments in money market funds that invest solely in the types of
Investments permitted under clauses (a) and (b) above, (d) Investments
in repurchase agreements of any financial institution or brokerage firm
acceptable to the Required Holders which are fully secured by
securities described in clause (b) above, (e) certificates of deposit
and time deposits (including Eurodollar deposits), maturing within 180
days from the date of deposit thereof, with a domestic office of (i)
any national or state bank or trust company organized under the laws of
the United States of America or any state therein and having capital,
surplus and undivided profits of at least $100,000,000 or (ii) any
other national or state bank so long as all such deposits are federally
insured, (f) in the case of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Limited, certificates of
deposit and other instruments substantially equivalent to a certificate
of deposit maturing within 180 days from the date of acquisition and
issued by a bank or trust company organized and located in the United
Kingdom having capital, surplus and undivided profits of at least
65,000,000 pounds sterling and (g) in the case of Pantbelaning, the
Sweden Subsidiary, Murtrum and Murtrum Affiliate, certificates of
deposit and other instruments substantially equivalent to a certificate
of deposit maturing within 180 days from the date of acquisition and
issued by a bank or trust company organized and located in Sweden
having capital, surplus and undivided profits of at least SEK
750,000,000.
"TRANSFEREE" means any direct or indirect transferee of all or
any part of any Note purchased by the Purchasers under this Agreement.
"USA PATRIOT ACT" means United States Public Law 107-56,
Uniting and Strengthening America By Providing Appropriate Tools
Required To Intercept and Obstruct Terrorism (USA Patriot Act) Act of
2001.
"VOTING STOCK" means, when used with respect to any Person,
any Stock of such Person having general voting power under ordinary
circumstances to elect a majority of the board of directors (or other
governing body) of such Person (irrespective of whether at the time any
Stock of such Person shall have or might have voting power by reason of
the happening of any contingency).
"WHOLLY-OWNED SUBSIDIARY" means a Consolidated Subsidiary, all
of the outstanding Stock (other than directors' qualifying shares, if
required by law) of which are at the time owned directly by the Company
or by one or more Wholly-Owned Subsidiaries or by the Company and one
or more Wholly-Owned Subsidiaries.
Section 2.02 Interpretation.
(a) In this Agreement, unless a clear contrary intention appears:
(1) the singular number includes the plural number and vice
versa;
16
(2) reference to any gender includes each other gender;
(3) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(4) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually,
provided that nothing in this clause (4) is intended to authorize any
assignment not otherwise permitted by this Agreement;
(5) reference to any agreement, document, instrument or report
means, unless the context otherwise requires, such agreement, document,
instrument or report as in effect when delivered to the Purchasers
pursuant to this Agreement and as the same may thereafter be amended,
supplemented or modified in accordance with the terms thereof and
hereof, and reference to any Note includes any note issued pursuant
hereto in renewal, rearrangement, reinstatement, enlargement,
amendment, modification, extension, substitution or replacement
therefor;
(6) reference to any Article, Section, Schedule or Exhibit
means such Article or Section hereof or such Schedule or Exhibit
hereto;
(7) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(8) with respect to the determination of any period of time,
the word "from" means "from and including" and the word "to" means "to
but excluding";
(9) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified or reenacted, in whole or in
part, and in effect from time to time;
(10) accounting terms used but not defined herein shall be
construed in accordance with GAAP, and whenever the character or amount
of any asset or liability or item of income or expense is required to
be determined, or any consolidation or accounting computation is
required to be made, for purposes hereof, such determination or
computation shall be made in accordance with GAAP;
(11) the word "knowledge", when used in any representation or
warranty of the Company contained herein, means the actual knowledge of
any Responsible Officer;
(12) where any provision of this Agreement refers to action to
be taken by any Person, or which such Person is prohibited from taking,
such provision shall be applicable whether such action is taken
directly or indirectly by such Person; and
(13) if any action or failure to act by the Company violates
any covenant or obligation of the Company contained herein, such
violation shall not be excused by the
17
fact that such action or failure to act is required or permitted by any
other covenant or obligation of the Company contained herein.
(b) Should there be a change in GAAP following the date of this
Agreement and should either (i) the Company determine (in good faith) that the
requirements of one or more of the covenants contained in Article 9 are
materially increased or made more severe as a result thereof or (ii) the
Required Holders determine (in good faith) that the requirements of one or more
of the covenants contained in Article 9 are materially reduced or relaxed as a
result thereof, then the Company and such Required Holders shall enter into good
faith negotiations with the desired result being that such covenant(s) shall be
amended in such a way that the criteria therein set forth for evaluating the
financial condition of the Company and/or the Subsidiaries shall be the same
after such amendment as if such change in GAAP had not been made.
(c) The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
(d) No provision of this Agreement shall be interpreted or construed
against any Person solely because that Person or its legal representative
drafted such provision.
ARTICLE 3. CONDITIONS OF CLOSING
The obligation of the Purchasers to purchase and pay for the Notes
hereunder is subject to the satisfaction of the following conditions:
Section 3.01 Representations and Warranties.
The representations and warranties of the Loan Parties contained in the
following instruments shall be true and correct at the time of Closing: (i) this
Agreement, (ii) the other Loan Documents and (iii) the instruments delivered by
one or more of the Loan Parties pursuant to this Article 3.
Section 3.02 Performance; No Default.
The Loan Parties shall have performed and complied with all agreements
and conditions contained in this Agreement or in the other Loan Documents
required to be performed or complied with by them prior to or at the Closing. At
the time of Closing, no Default shall have occurred and be continuing or would
result from the consummation of the Overall Transaction.
Section 3.03 Compliance Certificate.
The Purchasers shall have received an Officers' Certificate, dated the
Closing Date and satisfactory in form and substance to the Purchasers,
certifying that the conditions specified in Sections 3.01 and 3.02 have been
fulfilled. If required by the Purchasers, such Officers' Certificate will also
certify as to such matters of fact as the Purchasers may reasonably request to
enable the Purchasers to determine compliance with such conditions.
18
Section 3.04 Opinions of Counsel.
The Purchasers shall have received (a) a favorable opinion from Jenkens
& ▇▇▇▇▇▇▇▇▇, a Professional Corporation, counsel for the Company and the
Guarantors, in the form of Exhibit B, (b) a favorable opinion of ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, General Counsel to the Company and the Guarantors, in the form of
Exhibit C and (c) a favorable opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, special
counsel for the Purchasers, in the form of Exhibit D. Each such opinion shall
(i) be addressed to the Purchasers, (ii) be dated the Closing Date and (iii)
state that all Transferees are entitled to rely thereon as though it were
addressed to them.
Section 3.05 Resolutions, Etc.
The Purchasers shall have received (a) copies of resolutions of the
Board of Directors of each Loan Party, certified as of the Closing Date by the
Secretary or an Assistant Secretary of such Loan Party, duly authorizing the
Overall Transaction, (b) a certificate as to the incumbency and authority of the
Person or Persons executing and delivering Loan Documents on behalf of such Loan
Party and (c) such other documents and evidence as the Purchasers or its special
counsel may request with respect to any Loan Party or the Overall Transaction,
including the taking of all corporate proceedings in connection therewith and
compliance with the conditions set forth herein, in each case in form and
substance satisfactory to the Purchasers.
Section 3.06 Purchase Permitted by Applicable Laws, Etc.
The consummation of the Private Placement on the terms and conditions
herein provided (including the use of the proceeds of such Notes by the Company)
shall (i) not violate any Legal Requirement (including, without limitation,
section 5 of the Securities Act or Regulation U, T or X of the Board of
Governors of the Federal Reserve System), (ii) not subject the Purchasers to any
tax (other than routine income taxes), penalty, liability or other onerous
condition under or pursuant to any Legal Requirement and (iii) constitute a
legal investment under the laws and regulations of each jurisdiction to which
the Purchasers are subject, but without resort to provisions (such as Section
1405(a)(8) of the
New York Insurance Law) which permit the making of an
investment without restriction as to the character of the particular investment
being made. If required by the Purchasers, the Purchasers shall have received an
Officers' Certificate, dated the Closing Date, certifying as to such matters of
fact as the Purchasers may reasonably specify to enable the Purchasers to
determine compliance with the conditions set forth in the preceding sentence.
Section 3.07 Payment of Closing Fees.
The Company shall have paid the fees and disbursements which it is
obligated to pay pursuant to Section 11.02 and which have been invoiced to the
Company prior to the time of Closing.
Section 3.08 Private Placement Number.
The CUSIP Service Bureau of Standard & Poor's Information Group shall
have issued to the Purchasers a private placement number with respect to the
Notes.
19
Section 3.09 Notes.
The Purchasers shall have received the Notes complying with the
requirements of Section 1.03.
Section 3.10 Guaranty; Subrogation and Contribution Agreement.
Each Guarantor and the Company shall have duly authorized, executed and
delivered to the Purchasers a Joint and Several Guaranty, dated the Closing
Date, in the form of Exhibit E (as may be amended from time to time, the
"GUARANTY") and a Subrogation and Contribution Agreement.
Section 3.11 Other Loan Documents.
Each of the other Loan Documents shall (a) have been duly authorized,
executed, acknowledged (if appropriate) and delivered by the respective Loan
Parties thereto, (b) be dated as of the Closing Date, (c) be in form and
substance satisfactory to the Purchasers and (d) be in full force and effect on
the Closing Date without any default existing thereunder. A counterpart of each
Loan Document executed by the Loan Parties thereto shall have been delivered to
the Purchasers or its special counsel. Each Loan Document shall constitute the
valid and binding obligation of each Loan Party thereto, enforceable against
such Loan Party in accordance with the terms thereof.
Section 3.12 Proceedings.
All proceedings taken or to be taken in connection with the Overall
Transaction prior to or on the Closing Date (and all documents incident thereto)
shall be satisfactory in substance and form to the Purchasers, and the
Purchasers and its special counsel shall have received all such counterpart
originals or certified or other copies of such documents as the Purchasers may
reasonably request.
ARTICLE 4. USE OF PROCEEDS
Section 4.01 Use of Proceeds.
The Company will apply the proceeds of the Private Placement solely to
pay the costs and expenses described in Section 11.02 and to repay indebtedness
of the Company outstanding under the Existing Bank Loan Agreement and for no
other purpose. Nothing in this Section 4.01 is intended to prohibit the Company
from borrowing or re-borrowing under the New Bank Loan Agreement.
Section 4.02 Margin Regulations.
The Company will not, directly or indirectly, use any of the proceeds
of the Private Placement 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 the private placement of
a "purpose credit," in each case within the meaning of Regulation U (12 C.F.R.
221, as amended) or Regulation T (12 C.F.R. 220, as amended) of the Board of
Governors of the Federal Reserve System, or otherwise take or permit to be taken
any action
20
which would involve a violation of such Regulation U or T or of Regulation X (12
C.F.R. 224, as amended) of the Board of Governors of the Federal Reserve System
or any other regulation of such Board.
ARTICLE 5. PREPAYMENTS
Section 5.01 Required Prepayments of the Notes.
(a) Unless the aggregate principal amount of the then outstanding Notes
shall have become due and payable pursuant to Section 10.01, the Company shall
apply to the prepayment of the Notes, without premium, and there shall become
due and payable, the sum of $8,500,000 on August 12 in each of the years 2005
through 2008 (or, in the case of any such prepayment, such lesser principal
amount of the Notes as shall then be outstanding), leaving $8,500,000 principal
amount (or such other principal amount thereof as then remains unpaid) of the
Notes for payment at their stated maturity on August 12, 2009. Each such
prepayment shall be at 100% of the principal amount of the Notes so prepaid,
together with all accrued and unpaid interest thereon to the date of prepayment.
No partial prepayment of the Notes pursuant to Section 5.02 shall relieve the
Company from its obligation to make the required prepayments provided for in
this Section 5.01.
(b) Whenever any prepayment to be made under this Section 5.01 shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and the amount of such
prepayment shall bear interest at the applicable rate during such extension.
Section 5.02 Optional Prepayments of the Notes.
The Company may, at its option, upon notice as provided in Section
5.03, at any time or from time to time, prepay any part (in a principal amount
of at least $1,000,000 or an integral multiple of $100,000 in excess thereof) or
all of the Notes at 100% of the principal amount so prepaid, together with all
accrued and unpaid interest thereon to the date of prepayment, plus a premium
equal to the Make-Whole Premium, if any, on the amount so prepaid, determined as
of two Business Days prior to the date of such prepayment pursuant to this
Section 5.02.
Section 5.03 Notice of Optional Prepayments; Officers' Certificate.
The Company shall give each Holder irrevocable written notice of each
optional prepayment of Notes made under Section 5.02 not less than 30 nor more
than 60 days prior to the date fixed for such prepayment (which shall be a
Business Day), in each case specifying (a) such prepayment date, (b) the
aggregate principal amount of the Notes to be prepaid, (c) the aggregate
principal amount of the Notes held by such Holder to be prepaid, (d) that a
Make-Whole Premium may be payable, (e) the date when such Make-Whole Premium
will be calculated, (f) the estimated Make-Whole Premium together with a
reasonably detailed calculation of such Make-Whole Premium and (g) the accrued
interest applicable to the prepayment. The Company will give each Holder, one
Business Day prior to the date scheduled for any such prepayment, an Officers'
Certificate certifying that the conditions of Section 5.02 have been fulfilled
and specifying the particulars of such fulfillment, and setting forth the
calculations used in computing
21
such Make-Whole Premium, or stating that no Make-Whole Premium is due and
including the reason for such statement.
Section 5.04 Allocation of Partial Prepayments.
Any partial prepayment of the Notes shall be allocated among all Notes
at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts of the Notes so outstanding, with
adjustments, to the extent practicable, to compensate for any prior payments not
made exactly in such proportion. All partial prepayments shall be applied to the
Notes in anticipation and satisfaction of the prepayments required to be made by
the provisions of Section 5.01, in inverse order of the maturity thereof.
Section 5.05 Maturity; Surrender, Etc.
In the case of any prepayment of the Notes pursuant to this Article 5,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Premium, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when due and payable, together with the interest and Make-Whole
Premium, if any, as aforesaid, interest on such principal amount shall cease to
accrue. Any Note paid or prepaid in full shall, after such payment or prepayment
in full, be surrendered to the Company and be cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal amount of
any Note.
Section 5.06 Retirement of Notes.
The Company shall not, and shall not permit any of its Affiliates to,
prepay or otherwise retire, in whole or in part, prior to their stated final
maturity (other than by prepayment pursuant to this Article 5 or upon
acceleration of such final maturity pursuant to Section 10.01), or purchase or
otherwise acquire, directly or indirectly, Notes held by any Holder unless the
Company or such Affiliate shall have offered to prepay or otherwise retire or
purchase or otherwise acquire, as the case may be, the same proportion of the
aggregate principal amount of Notes held by each other Holder at the time
outstanding upon the same terms and conditions. Any Notes prepaid pursuant to
this Article 5 or Section 10.01 or otherwise retired or purchased or otherwise
acquired by the Company or any of its Affiliates shall not be deemed to be
outstanding for any purpose under this Agreement, provided that, with respect to
each prepayment pursuant to this Article 5, all Notes then held by the Company
and its Affiliates shall nonetheless be entitled to participate in such
prepayment the same as if such Notes were deemed outstanding.
22
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants that:
Section 6.01 Subsidiaries.
(a) The Company has no Subsidiaries on the date hereof except those
listed in Schedule II, each of which is a Consolidated Subsidiary and a
Wholly-Owned Subsidiary. The Company has a controlling interest in the
outstanding Voting Stock of Rent-A-Tire.
(b) Schedule II sets forth, with respect to each of the Subsidiaries
listed therein, (i) whether such Subsidiary is a corporation or partnership,
(ii) the jurisdiction of its incorporation or formation (as the case may be) and
(iii) each jurisdiction in which it is qualified to do business as a foreign
Person.
(c) All of the issued and outstanding Stock of each Subsidiary is
validly issued, fully-paid and is nonassessable and, except for directors'
qualifying shares (if any), is owned (beneficially and of record) by the Company
free and clear of any Lien.
(d) No Subsidiary owns any Stock of the Company.
Section 6.02 Organization, Qualification, Authorization, Etc.
(a) The Company and each Subsidiary (i) is a corporation or partnership
(as the case may be) duly organized or formed (as the case may be) and existing
in good standing under the laws of the jurisdiction of its organization or
formation (as the case may be), (ii) is duly qualified or registered and in good
standing as a foreign Person in each jurisdiction in which the nature of such
qualification or registration is necessary and in which the failure to so
qualify or register could have a Material Adverse Effect and (iii) has the
corporate or partnership (as the case may be) power (A) to own its Properties,
(B) to carry on its business as now being conducted and (C) to consummate the
Overall Transaction. Schedule III sets forth each jurisdiction in which the
Company is qualified or registered to do business as a foreign corporation.
(b) The execution, delivery and performance by each Loan Party of the
Loan Documents to which it is a party have been duly authorized by all necessary
corporate or partnership (as the case may be) action on the part of such Loan
Party. This Agreement constitutes, and the Notes and such other Loan Documents
(when executed and delivered as contemplated hereby) will each constitute, a
legal, valid and binding obligation of each Loan Party thereto, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditors' rights.
Section 6.03 Disclosure Documents.
(a) The Company has heretofore furnished the Purchasers with true,
correct and complete copies of the following documents:
(1) the Organizational Documents of the Company and each
Subsidiary as in effect on the date hereof;
(2) the Existing Bank Loan Agreement;
(3) each Material Contract described in Schedule V;
23
(4) the Company's Annual Reports to Stockholders for the
Fiscal Years ended December 31, 1997 through 2001 (inclusive);
(5) the Company's Annual Reports on Form 10-K for the Fiscal
Years ended December 31, 1997 through 2001 (inclusive), as filed with
the SEC;
(6) the Company's Quarterly Report on Form 10-Q for the Fiscal
Quarter ended March 31, 2002 as filed with the SEC;
(7) all proxy statements relating to all meetings of the
Company's stockholders (whether annual or special) since December 31,
1997;
(8) the consolidated financial statements of the Company and
the Consolidated Subsidiaries described in Schedule VI (the "COMPANY
FINANCIALS");
(9) the projections described in Schedule VII (the
"PROJECTIONS");
(10) the New Bank Loan Agreement (in the form of Exhibit G);
and.
(11) the letter agreement referred to in the definition of
Non-Domestic Indebtedness.
(b) The Company Financials (including any related schedules and/or
notes) (i) were true and correct in all material respects as at the dates
thereof, (ii) were prepared in accordance with GAAP consistently followed
throughout the periods involved and (iii) show all liabilities, direct and
contingent, of the Company and the Consolidated Subsidiaries required to be
shown in accordance with GAAP. The balance sheets included in the Company
Financials fairly present the consolidated financial condition of the Company
and the Consolidated Subsidiaries as at the dates thereof, and the statements of
operations and statements of cash flows included in the Company Financials
fairly present the consolidated results of operations and cash flows of the
Company and the Consolidated Subsidiaries for the periods indicated.
(c) The Projections are based on good faith estimates and assumptions
believed by the Company to be reasonable at the time made, it being recognized
by the Purchasers that the Projections, insofar as they relate to future events,
are not to be viewed as facts and that actual results during the period or
periods covered by the Projections may differ materially from the projected
results. Since the preparation of the Projections, nothing has occurred to cause
the Company to believe that the estimates and assumptions on which the
Projections are based are no longer reasonable.
Section 6.04 Changes, Etc.
(a) Since December 31, 2001, (i) neither the Company nor any Subsidiary
has entered into any materially adverse transactions not in the ordinary course
of business, nor incurred any material liabilities or obligations, direct or
contingent, except for the Loan Documents and (ii) no events have occurred
which, individually or in the aggregate, have had, or in the future could
reasonably be expected to have, a Material Adverse Effect.
24
(b) Neither the business nor the Properties of the Company or any of
the Subsidiaries are presently affected by any fire, explosion, accident, labor
controversy, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty which
could reasonably be expected to have a Material Adverse Effect.
Section 6.05 Tax Returns and Payments.
(a) The Company and each Subsidiary has filed all tax returns required
by law to be filed by it (or obtained extensions with respect thereto) and has
paid all taxes, assessments and other governmental charges levied upon it or any
of its Properties, income or franchises which are shown to be due and payable on
such returns and all other taxes and assessments payable by it, other than (i)
those which are not past due, (ii) those which are presently being contested in
good faith by appropriate proceedings diligently conducted for which such
reserves or other appropriate provisions, if any, as shall be required by GAAP
have been made and (iii) those not reflected on such returns the non-payment of
which could not reasonably be expected to have a Material Adverse Effect. No
contest referred to in the foregoing clause (ii) could reasonably be expected to
have a Material Adverse Effect.
(b) After due inquiry, the Company knows of no proposed tax assessment
against the Company or any Subsidiary which could reasonably be expected to have
a Material Adverse Effect. In the opinion of the Company, all tax liabilities of
the Company and the Subsidiaries are adequately provided for on their respective
books. The Federal income tax returns of the Company and the Subsidiaries have
been audited by the Internal Revenue Service for all Fiscal Years up to and
including the Fiscal Year ended December 31, 1996.
Section 6.06 Indebtedness; Solvency.
(a) The Company and the Subsidiaries have no outstanding Indebtedness
for Money Borrowed other than (i) the indebtedness evidenced by the Notes and
the Guaranty, (ii) the indebtedness evidenced by the 1993 Notes and the 1993
Guaranty, (iii) the indebtedness evidenced by the 1995 Notes and the 1995
Guaranty, (iv) the indebtedness evidenced by the 1997 Notes and the 1997
Guaranty, (v) indebtedness outstanding under the Existing Bank Loan Agreement,
(vi) the indebtedness described in Schedule XIII, (vii) Non-Domestic
Indebtedness, and (viii) other indebtedness permitted under Section 9.08 which
indebtedness does not exceed $500,000 in the aggregate.
(b) Each of the Loan Parties (i) has, and after giving effect to the
Overall Transaction will have, capital sufficient to carry on its business and
transactions and all the business and transactions in which it is about to
engage, (ii) is, and after giving effect to the Overall Transaction will be,
solvent and able to pay its debts as they mature and (iii) owns, and after
giving effect to the Overall Transaction will own, Property having a value, both
at fair valuation and present fair salable value, greater than the amount
required to pay the probable liability on its debts.
Section 6.07 Permits.
The Company and each Subsidiary possess all Permits that are necessary
or desirable in connection with the ownership, use or operation by it of its
Properties and the conduct by it, in
25
the ordinary course, of its business as now conducted and as currently proposed
to be conducted, except those Permits the absence of which would not have a
Material Adverse Effect. None of such Permits impose any material burden or
restriction on the Company or any Subsidiary. The Company and the Subsidiaries
are in compliance with all terms of such Permits. All such Permits are valid and
in full force and effect and, to the Company's knowledge (after due inquiry),
none are threatened to be revoked, cancelled, suspended or modified for any
reason.
Section 6.08 Material Contracts.
Schedule V describes all Material Contracts existing on the date
hereof. Each of such Material Contracts (a) has been duly executed and delivered
by, and constitutes the legal, valid and binding obligation of, each Loan Party
thereto, enforceable against each such Loan Party in accordance with its terms,
(b) is in full force and effect and (c) except as reflected in Schedule V, has
not been amended or modified, nor any provision thereof waived, in any respect.
The Company and each Subsidiary has, and, to the Company's knowledge, all other
parties to such Material Contracts have, performed and complied in all material
respects with all of the terms and conditions set forth therein. No default by
the Company, any Subsidiary or, to the Company's knowledge, any such other party
exists under any such Material Contract, which individually, or in the aggregate
for all such defaults, could reasonably be expected to have a Material Adverse
Effect.
Section 6.09 Title to Property, Etc.
(a) The Company and each Subsidiary has good and indefeasible fee
simple title to its real property and good and defensible title to all of its
other Property, including the Property reflected in the balance sheets included
in the Company Financials (other than Properties disposed of in the ordinary
course of business), subject to no Lien of any kind except Permitted Liens which
do not, individually or in the aggregate, materially affect or interfere with,
or if used or availed of will not materially affect or interfere with, the
occupancy, use or operation of such item of Property for its intended purpose or
the peaceful and quiet use and enjoyment thereof by the Company or such
Subsidiary, as the case may be.
(b) No lease under which the Company or any Subsidiary is the lessee or
is operating contains any provision which individually or in the aggregate
interferes with the ordinary conduct of the business of the Company or such
Subsidiary or otherwise could reasonably be expected to have a Material Adverse
Effect. The Company and each Subsidiary enjoys peaceful and undisturbed
possession under all leases under which it is the lessee or is operating, except
where the absence of such possession would not have a Material Adverse Effect.
All of such leases are valid and subsisting and no default by the Company, such
Subsidiary or, to the Company's knowledge, any such other party exists
thereunder, which individually, or in the aggregate for all such defaults, could
reasonably be expected to have a Material Adverse Effect.
Section 6.10 Condition of Property.
The facilities of the Company and the Subsidiaries, taken as a whole,
are in a condition and state of repair which are sufficient and adequate to
operate their respective businesses in a proper and efficient manner.
26
Section 6.11 Compliance with Applicable Laws, Permits and Contracts.
(a) Neither the Company nor any Subsidiary is in violation of (i) any
provision of its Organizational Documents, (ii) any Applicable Permit or
Applicable Contract (including the Existing Bank Loan Agreement, the 1993 Note
Agreement, the 1995 Note Agreement, and the 1997 Note Agreement) or (iii) any
instrument evidencing or otherwise relating to Indebtedness for Money Borrowed
(other than, in the case of the foregoing clauses (ii) and (iii), violations
which, individually or collectively, could not reasonably be expected to have a
Material Adverse Effect), and the execution, delivery and performance of the
Loan Documents and the consummation of the Overall Transaction will not result
in any violation of or constitute a default under any of the foregoing or result
in the creation of (or impose any obligation on the Company or any Subsidiary to
create) any Lien upon any Property of the Company or any Subsidiary.
(b) Neither the Company nor any Subsidiary is in violation of any Legal
Requirement other than violations which, individually or collectively, will not
have a Material Adverse Effect, and the execution, delivery and performance of
the Loan Documents and the consummation of the Overall Transaction will not
result in a violation of any Legal Requirement.
(c) Except for this Agreement, the Existing Bank Loan Agreement, the
1993 Note Agreement, the 1995 Note Agreement, the 1997 Note Agreement and the
agreement evidencing the Non-Domestic Indebtedness, neither the Company nor any
Subsidiary is a party to or bound by any Permit, agreement or instrument
(including its Organizational Documents) which contains any restrictions or
limitations on the incurrence by the Company or such Subsidiary of any
Indebtedness for Money Borrowed.
(d) Neither the Company nor any Subsidiary is in default and no waiver
of default is currently in effect, in the payment of any principal or interest
on any Indebtedness for Money Borrowed of the Company or such Subsidiary.
Section 6.12 Litigation, Etc.
No action, suit, investigation or proceeding is pending or, to the
knowledge of the Company (after due inquiry), threatened against or affecting
the Company or any Subsidiary or any Property of the Company or any Subsidiary
which (a) individually or collectively, could reasonably be expected to have a
Material Adverse Effect or (b) questions the validity of any Loan Document or
any action taken or to be taken pursuant thereto.
Section 6.13 ERISA.
Neither the Company nor any member of its ERISA Group has ever
maintained or contributed to, or had an obligation or liability to contribute
to, any Plan. Each Benefit Arrangement is (and has been) maintained and operated
in compliance in all material respects with the applicable provisions of ERISA,
the Code and other Legal Requirements. Neither the Company nor any member of the
ERISA Group has failed to timely make any required contribution or payment to or
in respect of any Benefit Arrangement. No Benefit Arrangement provides post
employment health benefits except as required by Part 6 of Subtitle B of ERISA.
No litigation, investigation or claim (other than a routine claim for benefits)
is pending or, to the
27
knowledge of the Company (after due inquiry), threatened or anticipated
concerning any Benefit Arrangement. The Company and/or the members of its ERISA
Group may at any time unilaterally, without the consent of any Person, terminate
any and/or all Benefit Arrangement(s) without incurring any material liability.
The execution and delivery of this Agreement and the other Loan Documents and
the issue and sale of the Notes will not involve any transaction which is
subject to the prohibitions of section 406 of ERISA or in connection with which
a tax could be imposed pursuant to section 4975 of the Code. The representation
by the Company in the next preceding sentence is made in reliance upon and
subject to the accuracy of the representation of the Purchasers in Article 7 as
to the source of the funds to be used to pay the purchase price of the Notes.
Section 6.14 No Governmental Consents Required for Overall Transaction.
Neither the nature of the Company nor any Subsidiary, nor the business
or Properties of the Company or any Subsidiary, nor any relationship between the
Company or any Subsidiary and any other Person, nor any circumstance in
connection with the offering, issuance, sale or delivery of the Notes is such as
to require any authorization, consent, approval, exemption or other action by or
notice to or filing with any Governmental Authority in connection with the
execution and delivery of this Agreement, the other Loan Documents or the
consummation of the Overall Transaction other than routine SEC filings by the
Company under the Exchange Act.
Section 6.15 Offering of Notes.
Neither the Company nor its Affiliates nor anyone acting on its or
their behalf has, directly or indirectly, (a) offered the Notes or any similar
security of the Company for sale to, or solicited any offers to buy the Notes or
any similar security of the Company from, or otherwise approached or negotiated
with respect thereto with, any Person other than the Purchasers and not more
than 30 other institutional investors, each of which has been offered the Notes
at a private sale for investment or (b) taken or will take any action which
would require the issuance or sale of the Notes to be registered pursuant to the
provisions of section 5 of the Securities Act or pursuant to the provisions of
any securities or Blue Sky law of any jurisdiction.
Section 6.16 Use of Proceeds.
The Company will apply the proceeds of the sale of the Notes in
accordance with Article 4. No indebtedness being reduced or retired, directly or
indirectly, out of the proceeds of the sale of the Notes was incurred for the
purpose of purchasing or carrying any stock which is currently a "margin stock"
(as defined in Section 4.02), and the Company neither owns nor has any present
intention of acquiring any amount of "margin stock." None of the proceeds of the
sale of the Notes will be used to acquire any security in any transaction which
is subject to section 13 or 14 of the Exchange Act, including particularly
sections 13(d) and 14(d) thereof.
Section 6.17 Foreign Assets Control Regulations, Etc.
(a) Neither the issue and sale of the Notes by the Company nor its use
of the proceeds thereof as contemplated by this Agreement will violate the
Trading with the Enemy Act, (50 U.S.C. App. Sections 1 et seq., as amended), or
any of the foreign assets control regulations of the
28
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any enabling legislation or executive order relating thereto.
(b) No Loan Party has violated the Anti-Terrorism Order or the USA
Patriot Act.
Section 6.18 Status Under Certain Federal Statutes.
No Loan Party is (a) an "investment company" or a Person "controlled"
by or acting on behalf of an "investment company," in each case within the
meaning of the Investment Company Act of 1940, as amended, (b) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended,
(c) subject to regulation under 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.
Section 6.19 Environmental Matters.
(a) The Company and each Subsidiary has all Environmental Permits
necessary for the conduct of its business and for the ownership, use,
maintenance and operation of its assets, and is in compliance with all material
terms thereof. All such Environmental Permits are valid and in full force and
effect and, to the Company's knowledge, none are threatened to be revoked,
cancelled, suspended or modified adversely for any reason. As to any such
Environmental Permit that is about to expire or is needed for the proposed
conduct of its business, the Company or such Subsidiary, as the case may be, has
timely and properly applied for renewal or receipt of the same or, if such
Permit is not reasonably expected to be renewed, such nonrenewal will not have a
Material Adverse Effect.
(b) Without in any manner limiting any other representations and
warranties set forth in this Agreement:
(i) neither the Company nor any Subsidiary, nor any real
property or facility presently owned, used, maintained or operated by
the Company or any Subsidiary, nor any of the other assets of the
Company or any Subsidiary is in violation of or is in noncompliance
with, any Environmental Laws, except for violations or noncompliances
which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect; and
(ii) without in any manner limiting the generality of clause
(i) above:
(A) no Hazardous Materials have been used, generated,
manufactured, transported, stored or treated, or disposed of,
landfilled or in any other way Released by or on behalf of the
Company or any Subsidiary, except for those of the foregoing
activities which, individually or in the aggregate, could not
have a Material Adverse Effect, and
29
(B) to the Company's knowledge, no Hazardous
Materials have been used, generated, manufactured, stored or
treated, or disposed of, landfilled or in any other way
Released (and no Release is threatened), by any Person other
than the Company or any Subsidiary on, under, about or from
any Property now or previously owned, used, maintained or
operated by the Company or any Subsidiary or any Property
adjacent to any such Property except for those of the
foregoing activities (including Releases and threatened
Releases) which, individually or in the aggregate, could not
have a Material Adverse Effect;
(C) neither the Company nor any Subsidiary is
subject, as a result of the operation or condition of its
business or assets prior to or at Closing, to any (1)
contingent liability in connection with any Release or
threatened Release of any Hazardous Materials into the
environment whether on or off any Property owned, used,
maintained or operated by the Company or such Subsidiary or
(2) reclamation or remediation requirements under
Environmental Laws, or any reporting requirements related
thereto, except for liabilities or requirements which,
individually or in the aggregate, could not have a Material
Adverse Effect;
(D) neither the Company nor any Subsidiary has been
named as a potentially responsible party under, and none of
its Property has been nominated or identified as a facility
which is subject to an existing or potential claim under,
CERCLA or comparable Environmental Laws, and no such Property
is subject to any Lien arising under Environmental Laws;
(E) the Company and each Subsidiary has all
environmental and pollution control equipment necessary for
(1) compliance in all material respects with all Environmental
Laws (including all applicable Permits) and (2) operation of
the business of the Company or such Subsidiary as it is
presently conducted;
(F) no Hazardous Materials have been incorporated
into or contained in any of the personal property or
improvements to real property owned, used, maintained or
operated by the Company or any Subsidiary such that such
Hazardous Materials could reasonably be expected to have a
Material Adverse Effect;
(G) none of the locations where Hazardous Materials
have been used, generated, manufactured, stored, treated,
recycled, disposed of or Released by or on behalf of the
Company or any Subsidiary has been nominated or identified as
a facility which may be subject to an existing or potential
claim under CERCLA or comparable Environmental Laws;
30
(H) to the knowledge of the Company, none of the
offsite locations where Hazardous Materials from any of the
assets of the Company or any Subsidiary have been stored,
treated, recycled, disposed of or Released has been nominated
or identified as a facility which may be subject to an
existing or potential claim under CERCLA or comparable
Environmental Laws;
(I) neither the Company nor any Subsidiary has
received any written notices of (1) any violation of,
noncompliance with or remedial obligation under Environmental
Laws relating to the ownership, use, maintenance, operation
of, or conduct of business related to, any Property of the
Company or such Subsidiary or (2) any Release or threatened
Release of Hazardous Materials, except for violations,
noncompliances, obligations, Releases or threatened Releases
which, individually or in the aggregate, could not have a
Material Adverse Effect;
(J) there are no writs, injunctions, decrees, orders
or judgments outstanding, or lawsuits, claims, proceedings or
investigations pending or, to the knowledge of the Company,
threatened relating to the ownership, use, maintenance,
operation of, or conduct of business related to, any Property
of the Company or any Subsidiary arising out of or relating to
Environmental Laws, nor does the Company or any Subsidiary
have knowledge (after due inquiry) of any basis for any of the
foregoing, except for writs, injunctions, decrees, orders,
judgments, lawsuits, claims, proceedings or investigations
which, individually or in the aggregate, could not have a
Material Adverse Effect;
(K) no underground or aboveground storage tanks or
surface impoundments are located at any Property owned, used,
maintained or operated by the Company or any Subsidiary other
than those which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect; and
(L) there are no material obligations, undertakings
or liabilities arising out of or relating to Environmental
Laws which the Company or any Subsidiary has agreed to,
assumed or retained, by contract or otherwise.
Section 6.20 Books and Records.
The Company maintains books, records and accounts with respect to
itself and the Subsidiaries which, in reasonable detail, accurately and fairly
reflect their transactions and dispositions of their assets, and maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (a) transactions are executed in accordance with management's
general or specific authorization, (b) transactions are recorded as necessary
(i) to permit preparation of financial statements in accordance with GAAP, and
(ii) to maintain
31
accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Section 6.21 Fiscal Year.
The fiscal year of the Company and each Subsidiary coincides with the
calendar year.
Section 6.22 Brokerage.
All negotiations relative to this Agreement, the other Loan Documents
and the transactions contemplated hereby have been carried on by the Company and
the other Loan Parties without the intervention of any Person which might give
rise to a valid claim against the Purchasers for a brokerage commission or other
like payment.
Section 6.23 Labor Matters.
Schedule IX lists each employment, consultant or similar agreement and
all labor contracts and collective bargaining agreements to which the Company or
any Subsidiary is a party or by which it is bound. Except as otherwise listed on
Schedule IX, no strikes or other labor disputes are pending or threatened
against the Company or any Subsidiary. All payments due from the Company or any
Subsidiary on account of employee health and welfare insurance have been paid
or, if not due, have been accrued as liabilities on the books of the Company or
such Subsidiary.
Section 6.24 Patents, Trademarks, Etc.
The Company and each Subsidiary owns, or is licensed or otherwise has
the lawful right to use, all patents, trademarks, tradenames, copyrights,
technology, know-how and processes necessary for the conduct of its business as
now conducted and as proposed to be conducted. All tradenames used by the
Company or any Subsidiary are listed on Schedule X. Assumed name certificates
have been duly filed of record with appropriate Governmental Authorities for
each of such tradenames.
Section 6.25 Chief Executive Office.
The chief executive office of the Company and the office where it
maintains its records is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
Section 6.26 Permitted Investments.
Schedule XI specifies the aggregate amount of each investment held by
the Company and any of its Subsidiaries on the date hereof other than those
permitted by clauses (a) through (k) of Section 9.11.
32
Section 6.27 Liens.
None of the Properties of the Company or any Subsidiary is subject to
any Lien other than Permitted Liens.
Section 6.28 Full Disclosure.
(a) Neither this Agreement (including the Schedules and Exhibits
hereto), the other Loan Documents, the Company Financials, the instruments
described in Section 6.03(a) nor any document delivered by the Company or any of
its Affiliates pursuant to Article 3 contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which the same were made.
(b) There is no fact (excluding general economic conditions not
peculiar to the Company or any Subsidiary) which (i) has had a Material Adverse
Effect or, in the opinion of any Responsible Officer of the Company, could
reasonably be expected in the future to have a Material Adverse Effect and (ii)
has not been set forth in this Agreement (including the Schedules and Exhibits
hereto) or in the Company Financials.
ARTICLE 7. PURCHASE FOR INVESTMENT; SOURCE OF FUNDS
Section 7.01 Representations of the Purchasers.
(a) Each of the Purchasers hereby represents to the Company that it (i)
is purchasing the Notes for its own account for investment and not with a view
to, or for sale in connection with, the distribution thereof or with any present
intention of distributing or selling any of the Notes, provided that the
disposition of the Purchaser's property shall at all times be within its
control, (ii) is an "accredited investor", as defined in Regulation D under the
Securities Act, and (iii) (x) has knowledge and experience in financial and
business matters such that it is capable of evaluating the merits and risks of
the investment in the Notes and (y) is able to bear the economic risk of such
investment. Each of the Purchasers understands that the Notes have not been
registered under the Securities Act and may not be sold or otherwise transferred
by the Purchasers except pursuant to an effective registration statement under
such Act or pursuant to an available exemption therefrom under such Act.
(b) Each of the Purchasers further represents to the Company that at
least one of the following statements is an accurate representation as to each
source of funds (a "Source") to be used by it to pay the purchase price of the
Notes to be purchased by it hereunder:
(i) the Source is an "insurance company general account"
within the meaning of Department of Labor Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee
benefit plan, treating as a single plan, all plans maintained by the
same employer or employee organization, with respect to which the
amount of the general account reserves and liabilities for all
contracts held by or on behalf of such plan, exceeds ten percent (10%)
of the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus, as set forth
in the most recent NAIC Annual Statement filed with such Purchaser's
state of domicile; or
33
(ii) the Source is either (1) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (2) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has
disclosed to the Company in writing pursuant to this paragraph (ii), no
employee benefit plan or group of plans maintained by the same employer
or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(iii) (1) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption (PTE 84-14))
managed by a "qualified professional asset manager" or "QPAM" (within
the meaning of Part V of the QPAM Exemption), (2) no employee benefit
plan's assets that are included in such investment fund, when combined
with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning
of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, (3) the conditions of Part
1(c) and (g) of the QPAM Exemption are satisfied, (4) neither the QPAM
nor a person controlling or controlled by the QPAM (applying the
definition of "control" in Section V(e) of the QPAM Exemption) owns a
5% or more interest in the Company and (5) the identity of such QPAM
and the names of all employee benefit plans whose assets are included
in such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (iii); or
(iv) the Source is a governmental plan; or
(v) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (v); or
(vi) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA; or
(vii) the Source constitutes assets of a "plan(s)" (within the
meaning of Section IV of PTE 96-23 (the "INHAM Exemption")) managed by
an "in-house asset manager" or "INHAM" (within the meaning of Part IV
of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of
the INHAM Exemption are satisfied, neither the INHAM nor a person
controlling or controlled by the INHAM (applying the definition of
"control" in Section IV(h) of the INHAM Exemption) owns a 5% or more
interest in the Company and (a) the identity of such INHAM and (b) the
name(s) of the employee benefit plan(s) whose assets constitute the
Source have been disclosed to the Company in writing pursuant to this
clause (vii); or
(viii) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
If a Purchaser or any prospective transferee of a Note identifies a
plan pursuant to paragraphs (ii), (iii), (v) or (vii) above, the Company shall
deliver a certificate on the appropriate
34
date of closing, with respect to such Purchaser and on or prior to the date of
any transfer of any Note, with respect to any prospective transferee, which
certificate shall state (x) whether it is a party in interest or a "disqualified
person" (as defined in section 4975(e)(2) of the Code), with respect to any plan
identified pursuant to paragraphs (ii), (v) or (vii) above, or (y) with respect
to any plan, identified pursuant to paragraph (iii) above, whether it or any
"affiliate" (as defined in Section V(c) of the QPAM Exemption) has, at such time
or during the immediately preceding one year, exercised the authority to appoint
or terminate said QPAM as manager of the assets of any plan identified in
writing pursuant to paragraph (c) above or to negotiate the terms of said QPAM's
management agreement on behalf of any such identified plans.
As used in this Section 7.01(b), the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in section 3 of ERISA.
ARTICLE 8. AFFIRMATIVE COVENANTS
Section 8.01 Financial Statements, Reports and Documents.
The Company shall deliver to each Holder (in duplicate):
(a) as soon as available, and in any event within 45 days,
after the end of each Fiscal Quarter (other than the last Fiscal
Quarter in any Fiscal Year), a consolidated balance sheet of the
Company and the Consolidated Subsidiaries (in reasonable detail) as of
the end of such Fiscal Quarter and the related consolidated statements
of income, stockholders' equity and cash flows of the Company and the
Consolidated Subsidiaries (in reasonable detail) for such Fiscal
Quarter and for the portion of the current Fiscal Year ending on the
last day of such Fiscal Quarter, in each case (i) prepared in
accordance with GAAP and (ii) setting forth in comparative form the
figures for the corresponding period of the preceding Fiscal Year,
which financial statements shall be certified (subject to normal
year-end audit adjustments) as to fairness of presentation, compliance
with GAAP and consistency with prior periods by a Responsible Officer
of the Company, it being understood that no such statement need be
accompanied by complete footnotes;
(b) as soon as available, and in any event within 90 days,
after the end of each Fiscal Year, a consolidated balance sheet of the
Company and the Consolidated Subsidiaries (in reasonable detail) as of
the end of such Fiscal Year and the related consolidated statements of
income, stockholders' equity and cash flows of the Company and the
Consolidated Subsidiaries (in reasonable detail) for such Fiscal Year,
in each case (i) prepared in conformity with GAAP and (ii) setting
forth in comparative form the figures for the preceding Fiscal Year,
which financial statements shall be accompanied by an opinion thereon
(which shall not be qualified by reason of any limitation imposed by
the Company) of the Independent Accountants stating that such financial
statements, in the opinion of the Independent Accountants, present
fairly the consolidated financial position of the Company and the
Consolidated Subsidiaries as of the date thereof and the consolidated
results of their operations and cash flows for the period covered
thereby in conformity with GAAP consistently applied (except for noted
changes in which the
35
Independent Accountants concur) and that the examination of the
Independent Accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards
and, accordingly, includes such tests of the accounting records and
such other auditing procedures as were considered necessary in the
circumstances;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, an Officers'
Certificate (i) setting forth in reasonable detail the calculations
required to establish whether the Company was in compliance with the
requirements of Sections 9.01, 9.02, 9.03, 9.04, 9.05, 9.06 and 9.07 on
the date of such financial statements, (ii) stating that the signers
have reviewed this Agreement and the other Loan Documents and have
made, or caused to be made under their supervision, a review of the
transactions and condition of the Company during the accounting period
covered by such financial statements and (iii) stating that such review
did not disclose the existence during or at the end of such accounting
period of any Default or, if any Default exists, specifying the nature
and period of existence thereof and what action the Company has taken,
is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (b) above, a written statement by the
Independent Accountants giving the opinion thereon stating (i) that
their audit has included a review of the terms of this Agreement and
that such review is sufficient to enable them to make the statement
referred to in clause (iv) of this paragraph (d) (it being understood
that such Independent Accountants shall not be required to conduct or
make any special or additional audit procedures or examinations for
purposes of such written statement, other than those required by
generally accepted auditing standards, and that their audit will not
have been directed primarily toward obtaining knowledge of any
Default), (ii) whether, in the course of their audit, they obtained
knowledge (and whether, as of the date of such written statement, they
have knowledge) of the existence and continuance of any Default and, if
so, specifying the nature and period of existence thereof, (iii) that
they have examined the Officers' Certificate delivered in connection
therewith pursuant to clause (c) above and (iv) that the matters set
forth in such Officers' Certificate pursuant to subclause (i) of clause
(c) above have been properly stated in accordance with this Agreement;
(e) promptly upon receipt thereof, a copy of each management
letter submitted to the Company by the Independent Accountants (and
each response of the Company thereto), it being understood and agreed
that all material items which are furnished to the Holders pursuant to
this clause (e) shall be treated as confidential if such items are not
previously known to any Holder and if, and so long as, such items are
not generally available to the public, but nothing herein contained
shall limit or impair the right of any Holder to (i) disclose such
items to any other Holder, any prospective Transferee, the National
Association of Insurance Commissioners or any Governmental Authority,
(ii) disclose such items in connection with any litigation,
investigation or similar proceeding, (iii) use such information to the
extent pertinent to an evaluation of the Obligations or to enforce
compliance with the terms and conditions of this Agreement, (iv) take
any action required by law or (v) take any lawful action which such
36
Holder deems necessary to protect its interests under this Agreement or
any other Loan Document;
(f) promptly upon becoming available, a copy of each
consolidating balance sheet and income statement of the Company and the
Consolidated Subsidiaries prepared by or on behalf of the Company after
the date hereof;
(g) promptly upon transmission thereof, a copy of each (i)
financial statement, proxy statement, notice and report sent or made
available by the Company to its security holders in compliance with the
Exchange Act or any comparable federal or state laws relating to the
disclosure by any Person of information to its security holders, (ii)
regular and periodic report, registration statement (excluding
exhibits) and prospectus filed by the Company with any securities
exchange or with the SEC or any Governmental Authority succeeding to
any of its functions and (iii) press release or other statement made
available by the Company to the public concerning material developments
in the business of the Company;
(h) as soon as practicable, and in any event within two
Business Days, after the Company obtains knowledge of any Default, an
Officers' Certificate specifying the nature and period of existence
thereof and what action the Company has taken, is taking or proposes to
take with respect thereto;
(i) as soon as practicable, and in any event within ten
Business Days, after the Company obtains knowledge of any condition
(excluding general economic conditions not peculiar to the Company or
any Subsidiary), happening or event which, in the opinion of the Board
of Directors or any Responsible Officer of the Company, could
reasonably be expected to have a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence thereof and
what action the Company has taken, is taking or proposes to take with
respect thereto;
(j) promptly, a copy of each Material Contract entered into or
assumed by the Company after the date hereof and each amendment,
supplement or modification entered into after the date hereof in
respect of any Material Contract; and
(k) such other information concerning the business, financial
condition, results of operation, prospects or Properties of the Company
or any Subsidiary as any Holder shall reasonably request.
Section 8.02 Payment of Principal, Interest and Premium.
The Company will duly and punctually pay the principal of, and interest
and premium (if any) on, the Notes in accordance with the terms of the Notes and
this Agreement.
Section 8.03 Payment of Taxes, Claims and Indebtedness.
The Company will, and will cause each Subsidiary to, pay and discharge,
as and when due and payable, (a) all taxes, assessments and governmental charges
or levies imposed upon it or any of its Properties or in respect of any of its
franchises, business, income or profits, (b) all
37
claims (including claims for labor, services, materials and supplies) for sums
which, if unpaid, might become a Lien upon any of its Property and (c) all of
its other indebtedness in excess of $500,000; provided, however, that no such
tax, assessment, charge or levy, claim or indebtedness (other than the
Obligations) need be paid if and so long as (i) no Default shall be in
existence, (ii) the amount, applicability or validity thereof is being contested
in good faith by appropriate proceedings promptly initiated and diligently
conducted and (iii) such reserves or other appropriate provision (if any) as
shall be required by GAAP shall have been made therefor.
Section 8.04 Maintenance of Existence and Rights; Conduct of Business.
The Company will, and will cause each Subsidiary to, (a) preserve and
keep in full force and effect (except as permitted by Section 9.16) its
corporate or partnership, as the case may be, existence and all of its rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, (b) qualify and remain qualified as a foreign Person authorized to do
business in each jurisdiction in which such qualification is required and (c)
carry on and conduct its business (i) in the ordinary course, (ii) in an orderly
and efficient manner consistent with good business practices and (iii) in
accordance, in all material respects, with all Legal Requirements.
Section 8.05 Compliance with Loan Documents.
The Company will, and will cause each Subsidiary to, promptly comply
with any and all covenants and provisions of each Loan Document to which it is a
party.
Section 8.06 Compliance with Contracts and Permits.
The Company will, and will cause each Subsidiary to, comply with all of
its Applicable Contracts and Applicable Permits except for noncompliances which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
Section 8.07 Inspection.
(a) The Company will, and will cause each Subsidiary to, permit any
Person designated by any Holder, at all reasonable times, to (i) visit and
inspect any of its Properties, (ii) examine, copy or make excerpts from, any and
all books, records, software, documents and other information in the possession
of the Company or such Subsidiary and relating to its affairs and (iii) discuss
its affairs, finances and accounts with its directors, officers and independent
public accountants; and, by this provision, the Company (on behalf of itself and
each Subsidiary) irrevocably authorizes such accountants to discuss with such
Person the affairs, finances and accounts of the Company and such Subsidiary.
All such visits and inspections shall be at the expense of such Holder unless a
Default shall exist, in which event the reasonable costs and expenses associated
with all such events and inspections shall be at the expense of the Company.
(b) The Company will keep at its principal executive office a true copy
of this Agreement and each other Loan Document and cause the same to be
available for inspection at said office during normal business hours by any
Holder or any Transferee or prospective Transferee designated by any Holder.
38
Section 8.08 Books and Records.
The Company will, and will cause each Subsidiary to, (a) maintain (in
accordance with good accounting practices and all Legal Requirements) complete
and accurate books, records and accounts accurately and fairly reflecting its
transactions in reasonable detail and (b) maintain a system of internal
accounting controls sufficient to provide reasonable assurances that:
(i) its transactions are executed in accordance with
management's general or specific authorization;
(ii) its transactions are recorded as necessary (A) to permit
preparation of financial statements in accordance with GAAP and (B) to
maintain accountability for its assets;
(iii) access to its assets is permitted only in accordance
with management's general or specific authorization; and
(iv) the recorded accountability for its assets is compared
with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
Section 8.09 Compliance with Legal Requirements.
(a) The Company will, and will cause each Subsidiary to, comply with
all Legal Requirements applicable to it or any of its Properties, business,
operations or transactions except for noncompliances which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Without limiting the foregoing, the Company will, and will cause
each Subsidiary to, (i) comply in a timely fashion with, or operate pursuant to
valid waiver of the provisions of, all Environmental Laws, including any such
Laws relating to contamination from any Hazardous Materials except for
noncompliances which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, (ii) notify each Holder promptly in
the event of any material violation of any Environmental Law and (iii) promptly
forward to each Holder a copy of any Permit, order, notice, application or other
communication or report in connection with any material matter relating to the
Environmental Laws as they may affect it or any of its Properties.
Section 8.10 Insurance.
The Company will, and will cause each Subsidiary to, maintain in full
force and effect, with sound and reputable insurers, such insurance on its
Properties and business against such casualties, risks, liabilities and
contingencies, and in such types and amounts, as are consistent with customary
practices and standards of companies engaged in similar businesses; provided,
however, except as may be required by any Legal Requirement, neither the Company
nor any Subsidiary shall be required to maintain (i) business interruption
insurance or (ii) insurance on its inventories.
39
Section 8.11 Authorizations and Approvals.
The Company will, and will cause each Subsidiary to, promptly obtain,
from time to time at its own expense, all such Permits as may be required to
enable it to comply with its obligations hereunder and under the other Loan
Documents.
Section 8.12 Maintenance of Properties.
(a) The Company will, and will cause each Subsidiary to, protect and
maintain (or cause to be protected or maintained), in good repair, working order
and condition (ordinary wear and tear excepted), all Properties used or intended
for use in its business.
(b) From time to time, the Company will, and will cause each Subsidiary
to, make (or cause to be made) all appropriate repairs, renewals and
replacements thereof so that, at all times, it may conduct its business properly
and efficiently and in accordance with all Legal Requirements; provided that
failure to perform this paragraph (b) in accordance with its terms will not
constitute an Event of Default unless such failure could have a Material Adverse
Effect.
(c) The Company will, and will cause each Subsidiary to, comply at all
times with the provisions of all leases to which it is a party as lessee or
under which it occupies Property; provided that nothing in this paragraph (c)
shall require the Company or any Subsidiary to comply with any such provision
unless the noncompliance with such provision could reasonably be expected to
have a Material Adverse Effect.
Section 8.13 Ownership of Subsidiaries.
The Company will, at all times, directly or indirectly own and hold the
entire legal title to and beneficial interest in all outstanding Stock (other
than directors' qualifying shares, if any, to the extent required by applicable
law) of each Subsidiary, in each case free and clear of all Liens.
Section 8.14 Further Assurances.
The Company will, and will cause each Subsidiary to, promptly take all
such actions as the Required Holders may, at any time or from time to time,
reasonably request in order to (i) further carry out and consummate the Overall
Transaction or (ii) comply with or accomplish the covenants and agreements of
the Loan Parties in any of the Loan Documents.
Section 8.15 New Bank Loan Agreement.
The Company will use its best efforts to cause the New Bank Loan
Agreement to be executed by the Company, ▇▇▇▇▇ Fargo Bank Texas, National
Association, and other lenders within 5 days of the Closing Date. The Company
shall send an executed version of the New Bank Loan Agreement to each of the
Holders within 10 days of its execution.
40
ARTICLE 9. NEGATIVE COVENANTS
Until payment in full of the Notes and all other Obligations, the
Company covenants and agrees as follows:
Section 9.01 Consolidated Indebtedness for Money Borrowed.
(a) The Company will not permit Consolidated Indebtedness for Money
Borrowed, as of the last day of any Fiscal Quarter ending on or after the
Closing Date, to be greater than the amount determined by multiplying the
Applicable Percentage times the sum of (a) Consolidated Indebtedness for Money
Borrowed as of such date and (b) Consolidated Tangible Net Worth as of such
date. As used in this Section 9.01, "Applicable Percentage" means 75%.
(b) The Company will not permit the ratio of
(i) Consolidated Indebtedness for Money Borrowed, minus an
amount equal to what would be classified as cash or cash equivalents on
a consolidated balance sheet of the Company and the Consolidated
Subsidiaries prepared in accordance with GAAP, in each case determined
as of the end of each Fiscal Quarter, to
(ii) Consolidated EBITDA for the period of four (4)
consecutive Fiscal Quarters ending with such Fiscal Quarter
to be greater than (a) 3.65 to 1.00, as of each Fiscal Quarter ending on or
after the Closing Date to and including December 31, 2002, or (b) 3.50 to 1.00,
as of each Fiscal Quarter ending after December 31, 2002.
Section 9.02 Consolidated Tangible Net Worth.
The Company will not permit Consolidated Tangible Net Worth at any time
to be less than the sum of (a) $93,000,000 plus (b) 50% of Consolidated Adjusted
Net Income (but only if positive) for each Fiscal Quarter ending on or after the
Closing Date.
Section 9.03 Current Assets to Current Liabilities Ratio.
The Company will not permit the ratio of (a) Consolidated Current
Assets to (b) Consolidated Current Liabilities to be less than 3.5 to 1 as of
the last day of any Fiscal Quarter ending on or after the Closing Date.
Section 9.04 Current Assets to Total Indebtedness Ratio.
The Company will not permit the ratio of (a) Consolidated Current
Assets to (b) Consolidated Current Liabilities plus Consolidated Funded Debt to
be less than 0.8 to 1 as of the last day of any Fiscal Quarter ending on or
after the Closing Date. As used in this Section 9.04, "Consolidated Funded Debt"
means, at any time, Consolidated Indebtedness for Money Borrowed at such time,
provided that in no event shall Consolidated Funded Debt include any obligation
included in Consolidated Current Liabilities.
Section 9.05 Inventory Turnover.
The Company will not at any time permit the ratio of (a) cost of goods
sold by the Company and the Consolidated Subsidiaries for the Computation Period
(as shown on the consolidated statements of income delivered by the Company
pursuant to clause (a) or (b) of Section 8.01 with respect to the Computation
Period) to (b) the Average Monthly Inventory for
41
the Computation Period to be less than 1.65 to 1. As used in this Section 9.05,
(i) "Computation Period" means, at any time, the 12-month period ended on the
date of the most recent balance sheet delivered (or required to be delivered) by
the Company pursuant to clause (a) or (b) of Section 8.01 and (ii) "Average
Monthly Inventory" means, when used with reference to any Computation Period,
the amount determined by dividing (A) the aggregate amounts of inventory
appearing on the books of the Company and the Consolidated Subsidiaries as of
the last day of each calendar month within such Computation Period by (B)
twelve.
Section 9.06 Fixed Charge Coverage.
The Company will not at any time permit the ratio of (a) the sum of
Consolidated Adjusted Net Income for the Computation Period plus the aggregate
amount of all taxes, rents, leases and interest expenses deducted from gross
income to obtain such Consolidated Adjusted Net Income to (b) the aggregate
amount of all such rents, leases and interest expenses so deducted to be less
than 1.5 to 1. As used in this Section 9.06, "Computation Period" means, at any
time, the period of four consecutive Fiscal Quarters ended on the date of the
most recent balance sheet delivered (or required to be delivered) by the Company
pursuant to clause (a) or (b) of Section 8.01.
Section 9.07 Restricted Payments.
(a) The Company will not, and will not permit any Subsidiary to, (i)
declare or make any dividends or distributions on any of its Stock (other than
dividends payable in shares of its Stock), (ii) purchase, redeem or acquire for
value any of the Company's or any Subsidiary's Stock, (iii) make any principal
payment on (or make any payment, transfer or deposit for the purpose of
canceling, extinguishing, satisfying or defeasing) any indebtedness of the
Company which is subordinate in right of payment to the Notes or any other
Obligation, (iv) set aside funds for any such purposes or (v) become liable to
do any of the foregoing (in each case, a "Restricted Payment") unless,
immediately after giving effect thereto, (A) no Default shall exist and (B) the
aggregate amount of all Restricted Payments made by the Company and all
Subsidiaries on or after the Closing Date does not exceed the sum of $42,000,000
plus 50% of Consolidated Adjusted Net Income for the period (treated as one
accounting period) from the Closing Date to the end of the calendar month most
recently ended.
(b) Notwithstanding the foregoing provisions of this Section 9.07, the
Company may, so long as no Default shall be in existence or shall result
therefrom, purchase, redeem or acquire shares of the Company's capital stock
with the net cash proceeds received by the Company during the immediately
preceding 18-month period from the sale of other shares of the Company's capital
stock, in which event both the receipt and expenditure of such proceeds shall be
excluded from any calculation under paragraph (a) above.
(c) Nothing in this Section 9.07 shall prohibit any Subsidiary from
making any Restricted Payment to the Company or any Wholly-Owned Subsidiary, and
no such Restricted Payment shall be taken into account in any calculation under
paragraph (a) above.
42
Section 9.08 Limitation on Indebtedness.
(a) The Company will not incur, create, assume or have outstanding any
indebtedness, except:
(1) (A) indebtedness of the Company arising out of this
Agreement and the other Loan Documents, (B) indebtedness of the Company
arising out of the 1993 Note Agreement and the other 1993 Loan
Documents, (C) indebtedness of the Company arising out of the 1995 Note
Agreement and the other 1995 Loan Documents, and (D) indebtedness of
the Company arising out of the 1997 Note Agreement and the other 1997
Loan Documents;
(2) indebtedness of the Company arising out of either the
Existing Bank Loan Agreement or the New Bank Loan Agreement (but not
both);
(3) purchase money indebtedness (not to exceed $10,000,000 in
the aggregate for the Company and all Subsidiaries at any time
outstanding);
(4) current liabilities for taxes and assessments incurred in
the ordinary course of business and not yet due, and other liabilities
for unpaid taxes being contested in good faith by the obligor the
payment of which is not at the time required by Section 8.03;
(5) current indebtedness (other than indebtedness for borrowed
money or purchase money indebtedness) for accounts payable or other
claims (including claims for labor, services, materials and supplies)
incurred in the ordinary course of business, provided that all such
accounts and claims shall be promptly paid and discharged when due or
in conformity with customary trade terms, except for those being
contested in good faith by the obligor and the payment of which is not
at the time required by Section 8.03;
(6) contingent liabilities resulting from the endorsement of
negotiable instruments in the ordinary course of business;
(7) indebtedness constituting Assurances of the Company
permitted by Section 9.09;
(8) indebtedness for borrowed money of the Company owing to
any Subsidiary, but only if permitted by Section 9.11;
(9) indebtedness secured by Liens described in clause (j) of
the definition of "Permitted Liens" in Section 2.01; and
(10) indebtedness for borrowed money of the Company not
otherwise permitted by the foregoing provisions of this Section 9.08(a)
if (A) immediately after giving effect the incurrence or assumption
thereof by the Company, the Company is in compliance with Sections
9.01, 9.02, 9.03, 9.04, 9.05 and 9.06 and (B) at the time of the
incurrence or assumption thereof by the Company and immediately
thereafter, no Default shall exist.
43
(b) The Company will not permit any Subsidiary to incur, create, assume
or have outstanding any indebtedness, except:
(1) (A) indebtedness of Subsidiaries arising out of this
Agreement and the other Loan Documents, (B) indebtedness of
Subsidiaries arising out of the 1993 Guaranty, (C) indebtedness of
Subsidiaries arising out of the 1995 Guaranty, and (D) indebtedness of
Subsidiaries arising out of the ▇▇▇▇ ▇▇▇▇▇▇▇▇;
(2) purchase money indebtedness (not to exceed $10,000,000 in
the aggregate for the Company and all Subsidiaries at any time
outstanding);
(3) current liabilities for taxes and assessments incurred in
the ordinary course of business and not yet due, and other liabilities
for unpaid taxes being contested in good faith by the obligor the
payment of which is not at the time required by Section 8.03;
(4) current indebtedness (other than indebtedness for borrowed
money or purchase money indebtedness) for accounts payable or other
claims (including claims for labor, services, materials and supplies)
incurred in the ordinary course of business, provided that all such
accounts and claims shall be promptly paid and discharged when due or
in conformity with customary trade terms, except for those being
contested in good faith by the obligor and the payment of which is not
at the time required by Section 8.03;
(5) contingent liabilities resulting from the endorsement of
negotiable instruments in the ordinary course of business;
(6) indebtedness constituting Assurances of Subsidiaries
permitted by Section 9.09;
(7) indebtedness for borrowed money of any Subsidiary owing to
the Company or to any other Subsidiary, but only if permitted by
Section 9.11;
(8) indebtedness secured by Liens described in clause (j) of
the definition of "Permitted Liens" in Section 2.01;
(9) other indebtedness of any Subsidiary not otherwise
permitted by the foregoing provisions of this Section 9.08(b), but (A)
only if such indebtedness is outstanding on the date hereof and
described in Schedule VIII and (B) excluding any extensions, renewals
and rearrangements of such indebtedness;
(10) in the case of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Limited, the Sweden
Subsidiary, Pantbelaning, Murtrum, and the Murtrum Affiliate, the
Non-Domestic Indebtedness, and to the extent permitted under the 1993
Note Agreement, the 1995 Note Agreement and the 1997 Note Agreement,
additional Indebtedness for Money Borrowed in an amount not to exceed
5,000,000 pounds sterling in the aggregate at any time outstanding
incurred after the date hereof pursuant to a credit facility to be
extended by one or more banks, but only if no Default or Event of
Default shall be in existence at the time of the incurrence of such
Indebtedness for Money Borrowed; provided that the Indebtedness for
Money
44
Borrowed described in this clause (10) may be extended, renewed or
refinanced so long as there is no increase in principal amount of such
Indebtedness for Money Borrowed and so long as no Default shall be in
existence or shall occur upon such extension, renewal or refinancing;
and
(11) in the case of any Wholly-Owned Subsidiary acquired by
the Company after the date hereof in accordance with Section
9.20(a)(1), all indebtedness of such Subsidiary outstanding on the date
of its acquisition by the Company, but (i) only if the amount of such
indebtedness, when aggregated with the total amount of all other
indebtedness of all Persons (including such Wholly-Owned Subsidiary)
outstanding pursuant to this clause (11), does not exceed $750,000,
(ii) only if such indebtedness was incurred, created or assumed by such
Subsidiary prior to its acquisition by the Company and not in
anticipation of, or in connection with, such acquisition and (iii)
excluding any extensions, renewals and rearrangements of such
indebtedness.
Section 9.09 Assurances.
The Company will not, and will not permit any Subsidiary to, enter
into, assume or become or be liable in respect of any Assurance, except for (i)
Assurances by the Company of indebtedness of Subsidiaries permitted by Section
9.08(b), (ii) Assurances by one or more Guarantors of indebtedness (other than
the Obligations) of the Company permitted by Section 9.08(a) but only if and so
long as the Guaranty is in full force and effect, (iii) Assurances of the
Guarantors evidenced by the Guaranty, (iv) Assurances by the Company and the
Guarantors of the Non-Domestic Indebtedness, (v) Assurances under any of the
Material Contracts, and (vi) other Assurances not otherwise permitted by this
Section 9.09 but only to the extent that the aggregate amount of all
indebtedness relating to such Assurances does not exceed $500,000.
Section 9.10 Negative Pledge.
The Company will not, and will not permit any Subsidiary to, assume,
create or suffer to exist any Lien upon any of its Properties (whether now owned
hereafter acquired) except Permitted Liens.
Section 9.11 Limitation on Investments.
The Company will not, and will not permit any Subsidiary to, make or
have outstanding any Investments in any Person, except for:
(a) pawn transactions and pawn loans made in the ordinary
course of business;
(b) travel advances and other similar advances made to
employees in the ordinary course of business;
(c) short term consumer loans, advances and extensions of
credit (in the form of accounts receivable or otherwise) made to
customers in the ordinary course of business;
45
(d) advances and deposits made by the Company or any
Subsidiary in the ordinary course of business to contractors performing
services for the Company or such Subsidiary, as the case may be;
(e) in the case of the Company, Investments in Wholly-Owned
Subsidiaries (including Wholly-Owned Subsidiaries acquired after the
date hereof in accordance with Section 9.20(a)(1)) resulting from its
acquisition or ownership of Stock of, or capital contributions to, such
Subsidiaries but, in each case, only to the extent not prohibited by
Section 9.20;
(f) in the case of any Subsidiary, Investments in the Company;
(g) in the case of any Subsidiary, Investments in Wholly-Owned
Subsidiaries (including Wholly-Owned Subsidiaries acquired after the
date hereof in accordance with Section 9.20(a)(1)) resulting from its
acquisition or ownership of Stock of, or capital contributions to, such
Wholly-Owned Subsidiaries but, in each case, only to the extent not
prohibited by Section 9.20;
(h) loans and advances by the Company to any Wholly-Owned
Subsidiary, provided that, in the case of any such loan or advance made
after the date hereof, no Default shall exist either immediately before
or after giving effect thereto;
(i) loans and advances made by any Subsidiary to the Company
or to any Wholly-Owned Subsidiary;
(j) Temporary Cash Investments;
(k) to the extent permitted by applicable law, loans to
officers of the Company and Subsidiaries in an aggregate amount not
exceeding $5,000,000 at any one time outstanding;
(l) other Investments not otherwise permitted by this Section
9.11, but only if owned by the Company and/or any Subsidiary on the
date hereof and described in Schedule XI; and
(m) other Investments made after the date hereof and not
otherwise permitted by this Section 9.11, provided that neither the
Company nor any Subsidiary shall make any Investment under this clause
(m) if a Default shall be in existence immediately before or after such
Investment or if the amount of such Investment, when aggregated with
the total amount of all other Investments then outstanding under this
clause (m), exceeds 7.5% of Consolidated Tangible Net Worth as of the
date of such Investment.
Section 9.12 Alteration of Contracts, Etc.
The Company will not, and will not permit any Subsidiary to, (a)
cancel, terminate, surrender, release, alter, amend, modify or supplement any
Applicable Contract or Applicable Permit, (b) waive timely performance of any of
the provisions of any Applicable Contract or Applicable Permit or (c) consent or
agree to, or permit, any of the foregoing, provided that any
46
such action may be taken if the Company shall determine in good faith that such
action could not reasonably be expected to have a Material Adverse Effect.
Section 9.13 Transactions with Affiliates.
The Company will not, and will not permit any Subsidiary to, enter into
any transaction with, or pay any management fees to, any of its Affiliates
except in the ordinary course of business and then only upon terms that are no
less favorable to Company or such Subsidiary, as the case may be, than would be
obtainable at the time in arms'-length transactions with Persons which are not
Affiliates of the Company or such Subsidiary, as the case may be, provided that
this Section 9.13 shall not apply to transactions between the Company and any
Wholly-Owned Subsidiary or to any management fees payable by any Subsidiary to
the Company or any Wholly-Owned Subsidiary.
Section 9.14 Limitation on Sale or Issuance of Subsidiary Stock.
(a) The Company will not permit any Subsidiary to issue or sell any
shares of Stock (or any securities convertible into or exchangeable for or
carrying rights to subscribe for shares of Stock) of such Subsidiary to any
Person other than the Company or a Wholly-Owned Subsidiary.
(b) The Company will not (i) sell, transfer or otherwise dispose of any
shares of Stock (or any securities convertible into or exchangeable for or
carrying rights to subscribe for shares of Stock) of any Subsidiary or (ii)
permit any Subsidiary to sell, transfer or otherwise dispose of any shares of
Stock (or any securities, convertible into or exchangeable for or carrying
rights to subscribe for shares of Stock) of any other Subsidiary.
Section 9.15 Limitation on Sale of Properties.
The Company will not, and will not permit any Subsidiary to, sell,
assign, convey, exchange, lease or otherwise dispose of any of its Properties
(including accounts receivable and pawn loans), whether now owned or hereafter
acquired, except in the ordinary course of its business; provided, however, that
the Company and the Subsidiaries may sell Properties having an aggregate net
book value (at the time of the disposition thereof) not in excess of $5,000,000
during any Fiscal Year and, provided further, that this Section 9.15 shall not
operate to prevent the transactions permitted by Section 9.14 or Section 9.16 or
any sale, transfer or lease of Property by a Wholly-Owned Subsidiary to the
Company or to another Wholly-Owned Subsidiary and, provided further, that the
Company will not, and will not permit any Subsidiary to, sell, assign, discount
or otherwise dispose of any accounts receivable, except in the ordinary course
of business consistent with the Company's collection practices as in effect from
time to time and not a part of a financing.
Section 9.16 Dissolution; Liquidation; Merger; Consolidation.
The Company will not, and will not permit any Subsidiary to, dissolve
or liquidate or consolidate or merge with, or sell, assign, convey, exchange,
lease or otherwise dispose of its Properties as an entirety or substantially as
an entirety to, any other Person except that:
47
(a) any corporation may consolidate with or merge into the
Company if (i) the Company shall be the surviving corporation, (ii)
immediately after giving effect to such transaction, (A) no Default or
Event of Default shall have occurred and be continuing, (B) the Company
is solvent and no less creditworthy than immediately prior to the
consummation of such transaction and (C) the consummation of such
transaction did not have, and could not reasonably be expected to have,
a Material Adverse Effect and (iii) each Holder shall have received an
Officers' Certificate, dated not more than 10 days prior to the
effective date of such transaction, describing such transaction and
stating that such transaction is permitted by this Section 9.16;
(b) the Company may consolidate with or merge into, or sell,
assign, convey, exchange, lease or otherwise dispose of its Properties
as an entirety or substantially as an entirety to, any Person if (i)
such Person shall be a solvent corporation organized under the laws of
any state of the United States of America, (ii) such Person shall, by
written instrument in form and substance acceptable to the Required
Holders, expressly and unconditionally assume, agree to pay and perform
all the Obligations and to be bound by this Agreement and the other
Loan Documents the same as if such Person had originally executed this
Agreement in place of the Company and had been the original maker of
the Notes, (iii) immediately after giving effect to such transaction,
(A) no Default or Event of Default shall have occurred and be
continuing, (B) such Person is no less creditworthy than was the
Company immediately prior to the consummation of such transaction and
(C) the consummation of such transaction did not have, and could not be
reasonably expected to have, a Material Adverse Effect and (iv) each
Holder shall have received an Officers' Certificate, dated not more
than ten days prior to the effective date of such transaction,
describing such transaction and stating that such transaction is
permitted by this Section 9.16;
(c) any Wholly-Owned Subsidiary may consolidate with or merge
into, or sell, assign, convey, exchange, lease or otherwise dispose of
its Properties as an entirety or substantially as an entirety to, the
Company or any other Wholly-Owned Subsidiary; and
(d) any Wholly-Owned Subsidiary may consolidate or merge with
any Person solely for the purpose of the Company's acquisition of such
Person in accordance with Section 9.20(a)(1).
Section 9.17 Change of Name, Fiscal Year and Method of Accounting.
The Company will not, and will not permit any Subsidiary to, (i) change
its name, (ii) change its fiscal year, (iii) change its principal accounting
firm to an accounting firm other than the Independent Accountants or (iv) change
its method of accounting unless required under GAAP.
Section 9.18 Lines of Business.
The Company will not, and will not permit any Subsidiary to, engage in
any business other than (i) the pawnshop business, (ii) the business of cashing
checks and conducting related
48
cash dispensing transactions, (iii) the business of offering short-term consumer
loans and other neighborhood financial services, and (iv) activities related to
the above.
Section 9.19 Amendment of Organizational Documents.
The Company will not, and will not permit any Subsidiary to, amend its
Organizational Documents if such action could reasonably be expected to have a
Material Adverse Effect.
Section 9.20 Limitation on Acquisition of New Subsidiaries.
(a) The Company will not, and will not permit any Subsidiary to, (i)
acquire any Stock of any Person, (ii) enter into any partnership or joint
venture or (iii) take any action which would result in the Company having any
Subsidiary other than those listed in Schedule II except that, from time to
time, the Company may:
(1) acquire (whether by purchase, merger or other similar
transaction) any Person, but only if:
(A) immediately after giving effect to such acquisition,
such Person shall constitute a Wholly-Owned
Subsidiary;
(B) immediately after giving effect to such acquisition,
no Default shall be in existence, and the
consummation of such acquisition did not have, and
could not be reasonably expected to have, a Material
Adverse Effect;
(C) each Holder shall have received an Officers'
Certificate, dated not more than ten days prior to
the effective date of such acquisition, describing
such acquisition (including the name of such Person
and the business conducted by it) and stating that
such acquisition is permitted by this Section 9.20,
which Officers' Certificate shall be accompanied by
complete and accurate copies of the Organizational
Documents of such Person; and
(D) promptly (and in any event within 15 days) after the
consummation of such acquisition, such Person (if
such Person is organized under the laws of the United
States of America or any state or political
subdivision thereof) shall duly authorize, execute
and deliver to each Holder an instrument in writing
pursuant to which such Person agrees to become a
Guarantor under, and to be bound as a Guarantor by
the terms of, the Guaranty and the Subrogation and
Contribution Agreement; and
(2) create or form a new corporation or limited partnership
(the "NEW ENTITY") and thereupon cause the New Entity to become a
Wholly-Owned Subsidiary, but only if:
(A) no Default shall exist immediately after the New
Entity becomes a Subsidiary;
(B) subject to paragraph (b) below, promptly (and in any
event within 15 days) after its creation or
formation, the New Entity (if such New Entity is
49
organized under the laws of the United States of
America or any state or political subdivision
thereof) shall duly authorize, execute and deliver to
each Holder an instrument in writing pursuant to
which the New Entity agrees to become a Guarantor
under, and to be bound as a Guarantor by the terms
of, the Guaranty and the Subrogation and Contribution
Agreement;
(C) except as required by clause (B) above, the New
Entity shall not conduct any business prior to
becoming a Subsidiary; and
(D) subject to paragraph (b) below, promptly (and in any
event within 15 days) after the creation or formation
of the New Entity, the Company shall deliver to each
Holder an Officers' Certificate notifying the Holders
of the formation or creation of the New Entity, which
Officers' Certificate shall (i) specify the name of
the New Entity and the jurisdiction of its
incorporation or formation, (ii) describe, in
reasonable detail, the business proposed to be
conducted by the New Entity, (iii) state that the
Company is authorized to form or create the New
Entity and to cause it to become a Subsidiary in
accordance with this Section 9.20 and (iv) be
accompanied by complete and accurate copies of the
Organizational Documents of the New Entity.
(b) In no event shall any New Entity created or formed pursuant to
paragraph (a)(2) above be required to execute and deliver a written instrument
with respect to the Guaranty as contemplated by clause (B) thereof nor shall the
Company be required to deliver the documents described with respect to such New
Entity in clause (D) thereof until the earlier of (i) the date on which the
Company makes an Investment in such New Entity (other than the incurrence of
routine organizational expenses and other than capital contributions totaling
less than $5,000) and (ii) the date on which such New Entity first conducts
business.
(c) Nothing in this Section 9.20 shall operate to prevent any
transaction permitted by Section 9.11 or Section 9.16.
(d) If any Person becomes a Subsidiary at any time after the date
hereof, such Person shall be deemed to have incurred or made, as the case may
be, at the time it becomes a Subsidiary (i) all Assurances, indebtedness, loans,
advances and Investments of such Person which are outstanding at such time and
(ii) all Liens then in effect with respect to any of its Properties.
Section 9.21 ERISA.
The Company will not, and will not permit any Subsidiary or Related
Person to,
(a) engage in any transaction in connection with which the
Company or any Subsidiary could be subject to either a civil penalty
assessed pursuant to section 502(i) of ERISA or a tax imposed by
section 4975 of the Code, terminate any Plan (other than a
multiemployer plan) in a manner, or take any other action with respect
to any such Plan, which could result in any liability of the Company or
any Subsidiary to the Pension
50
Benefit Guaranty Corporation, fail to make full payment when due of all
amounts which, under the provisions of applicable law, or the terms of
any Plan or collective bargaining agreement, the Company or any
Subsidiary is required to pay as contributions thereto, or permit to
exist any accumulated funding deficiency, whether or not waived, with
respect to any Plan (other than a multiemployer plan), if, in any such
case, such penalty or tax or such liability, or the failure to make
such payment, or the existence of such deficiency, as the case may be,
could reasonably be expected to have a Material Adverse Effect;
(b) permit the aggregate present value of all benefit
liabilities under all Plans maintained at such time by the Company, any
Subsidiary and any Related Persons (other than multiemployer plans)
that are subject to Title IV of ERISA to exceed the aggregate current
value of the assets of such Plans allocable to such benefit liabilities
by more than $500,000; or
(c) permit the aggregate complete or partial withdrawal
liability under Title IV of ERISA with respect to multiemployer plans
incurred by the Company, the Subsidiaries and Related Persons to exceed
$250,000.
As used in this Section 9.21, (i) the term "accumulated funding deficiency" has
the meaning specified in section 302 of ERISA and section 412 of the Code, (ii)
the terms "present value," "benefit liabilities" and "current value" have the
respective meanings specified in sections 3 and 4001 of ERISA and (iii)
"multiemployer plan" means a Plan which is a "multiemployer plan" as defined in
section 4001(a)(3) of ERISA.
Section 9.22 No Inconsistent Agreements.
The Company will not enter into, assume or otherwise become obligated
under any agreement or instrument which restricts the ability of the Company to
consummate the Private Placement or perform its obligations under any Loan
Document.
Section 9.23 Incorporation of More Restrictive Covenants.
In the event the Existing Bank Loan Agreement, the New Bank Loan
Agreement or any renewal, modification, or replacement thereof at any time
includes a financial covenant or restriction (other than those specific
covenants in their current form set forth in Section 7.19(a)-(d) of the form of
the New Bank Loan Agreement attached hereto as Exhibit G) similar to the
covenants and restrictions set forth in Section 9.01, 9.05 or 9.06 that is more
restrictive than the levels set forth in said Section 9.01, 9.05 and 9.06 (the
"MORE RESTRICTIVE COVENANT"), the Company shall, immediately upon such inclusion
of the More Restrictive Covenant, notify the Purchasers and furnish a verbatim
statement of the More Restrictive Covenant. Such notification shall also inform
the Purchasers of the Required Holders' right to elect in writing to substitute
such More Restrictive Covenant as described below and shall state the date by
which such election must be made in accordance with this Section 9.23. The
Required Holders may elect to substitute the More Restrictive Covenant for the
corresponding Section 9.01, 9.05 or 9.06 by notifying the Company in writing
within sixty (60) days after receipt of the notice referred to in the preceding
sentence.
51
ARTICLE 10. EVENTS OF DEFAULT
Section 10.01 Events of Default.
If any of the following events (each such event being an "Event of
Default") shall occur and be continuing for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or come about or be effected
by operation of law or otherwise):
(a) the Company shall fail to pay when due under this
Agreement any principal of or premium, if any, on any Note; or
(b) any Loan Party shall fail to pay any interest, premium or
other Obligation when due under any Loan Document, and such failure
shall have continued for five days; or
(c) any representation or warranty made by or on behalf of any
Loan Party in any Loan Document shall prove to be untrue or inaccurate
as of the date hereof or as of the Closing Date; or
(d) any representation or warranty made by or on behalf of any
Loan Party in any certificate, statement or other writing furnished to
any Holder after the date hereof in connection with or pursuant to any
Loan Document shall prove to be untrue or inaccurate in any material
respect as of the date on which such representation or warranty is
made; or
(e) the Company shall fail to perform or observe any covenant
or agreement contained in Section 8.01(h), Sections 9.01 through 9.07
or Section 9.14; or
(f) the Company shall fail to perform or observe any other
covenant, agreement, term or condition contained in any Loan Document
and such failure shall not be remedied within 30 consecutive days after
the earlier of (i) the date on which such failure became known to any
Responsible Officer of the Company and (ii) the date on which written
notice thereof shall have been received by the Company from any Holder;
or
(g) any Guarantor shall fail to perform or observe any
agreement contained in its Guaranty; or
(h) any Loan Party, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Limited, the Sweden
Subsidiary, Pantbelaning, Murtrum or any Murtrum Affiliate shall (i)
default in any payment of principal of or interest on any other
indebtedness in excess of $500,000 (or its equivalent in another
currency) beyond any period of grace provided with respect thereto or
(ii) fail to perform or observe any other covenant or agreement
contained in any agreement under which any such indebtedness is created
or outstanding within any applicable grace period provided therein (or
if any other event thereunder or under any such agreement shall occur
and be continuing) and the effect of such failure or other event is (A)
to cause such indebtedness to become due prior to its stated maturity
or (B) to permit the holder or holders of such indebtedness (or any
Person acting on behalf of such holder or holders) to cause such
indebtedness to become due prior to its stated maturity; or
52
(i) the Company or any Subsidiary shall make an assignment for
the benefit of creditors or shall fail to generally pay its debts as
such debts become due; or
(j) any decree or order for relief in respect of the Company
or any Subsidiary shall be entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect, of any jurisdiction (herein called the "BANKRUPTCY
LAW") and such decree or order remains unstayed and in effect for more
than 60 days; or
(k) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession
by, a trustee, receiver, custodian, liquidator or similar official of
such Person, or of any substantial part of the assets of such Person,
or commences a voluntary case under the federal Bankruptcy Law or any
proceedings relating to such Person under the Bankruptcy Law of any
other jurisdiction; or
(l) any such petition or application is filed, or any such
proceedings as described in clause (k) above are commenced, against the
Company or any Subsidiary and such Person by any act indicates its
approval thereof, consent thereto or acquiescence therein; or
(m) an order, judgment or decree is entered appointing any
such trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for more than 60
consecutive days; or
(n) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing the
dissolution, winding-up or liquidation of such Person and such order,
judgment or decree remains unstayed and in effect for more than 60
consecutive days; or
(o) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a split-up
of such Person which requires the divestiture of assets and such order,
judgment or decree remains unstayed and in effect for more than 60
consecutive days; or
(p) any final judgment or final judgments for the payment of
money in excess of the sum of $500,000 in the aggregate shall be
rendered against the Company or any Subsidiary and such judgment or
judgments shall not be satisfied, discharged or stayed (with sufficient
reserves having been set aside by the Company or such Subsidiary to pay
such judgment or judgments) at least ten days prior to the date on
which any of its assets could be lawfully sold to satisfy such
judgment; or
(q) this Agreement or any other Loan Document shall at any
time, for any reason, cease to be in full force and effect or shall be
declared to be null and void in whole or in any material part by the
final judgment of any court or other Governmental Authority having
jurisdiction in respect thereof, or the validity or the enforceability
of this Agreement or any other Loan Document shall be contested by or
on behalf of any
53
Loan Party, or any Loan Party shall renounce this Agreement or any
other Loan Document, or deny that it is bound by the terms hereof or
thereof or has any further liability hereunder or thereunder; or
(r) the Company or any Subsidiary shall have (i) concealed or
removed, or permitted to be concealed or removed, any part of its
Property with the intent to hinder, delay or defraud its creditors or
any of them or (ii) made or suffered a transfer under any bankruptcy,
fraudulent conveyance or similar law;
then (i) if such event is an Event of Default specified in clauses (i), (j),
(k), (l) or (m) of this Section 10.01, all of the Notes shall thereupon be and
become automatically due and payable together with interest accrued thereon and
together with the Make-Whole Premium, if any, with respect to each Note, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by the
Company, (ii) if such event is an Event of Default specified in clause (a) or
clause (b) (but only with respect to the failure of any Loan Party to pay
interest) of this Section 10.01, any Holder may at its option, by notice in
writing to the Company, declare all of the Notes held by such Holder to be, and
all of such Notes shall thereupon be and become, immediately due and payable
together with interest accrued thereon and together with the Make-Whole Premium,
if any, with respect to each such Note, without presentment, demand, protest,
notice of intent to accelerate or other notice of any kind, all of which are
hereby waived by the Company, and (iii) if such event is any other continuing
Event of Default, the Holders of at least 66-2/3% of the aggregate principal
amount of the Notes at the time outstanding may at their option, by notice in
writing to the Company, declare all of the Notes to be, and all of the Notes
shall thereupon be and become, immediately due and payable together with
interest accrued thereon and together with the Make-Whole Premium, if any, with
respect to each Note, without presentment, demand, protest, notice of intent to
accelerate or other notice of any kind, all of which are hereby waived by the
Company; provided that in the case of each acceleration of the Notes solely on
account of any Default (other than a payment default) described in clause (c),
(d), (e), (f), (g), (h) or (p) of this Section 10.01, the Make-Whole Premium, if
any, with respect to each Note shall be due and payable upon such acceleration
only if such Default is the result of an intentional or willful act of the
Company or any Affiliate of the Company.
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 at least 66-2/3% of
the aggregate principal amount of the Notes at the time outstanding may at their
option, by written notice to the Company, rescind and annul any such declaration
and its consequences if (a) 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 such Notes at a rate per annum from time to time
equal to the Default Rate, (b) the Company has paid all sums paid or advanced by
any Holder under any Loan Document (other than the loans evidenced by the
Notes), (c) all Defaults, other than nonpayment of amounts which have become due
solely by reason of such declaration, have been cured or waived pursuant to
Section 11.03, and (d) no judgment or decree has been entered for the payment of
any monies due pursuant to the Notes or any other Loan Document; but no such
rescission and annulment shall extend to or affect any subsequent Default or
impair any right consequent thereon.
54
Section 10.02 Other Remedies.
If any Event of Default shall occur and be continuing, any Holder may
proceed to protect and enforce its rights under this Agreement and the other
Loan Documents by exercising such remedies as are available to such Holder in
respect thereof under applicable law, either by suit in equity or by action at
law, or both, whether for specific performance of any covenant or other
agreement contained in this Agreement or any other Loan Document or in aid of
the exercise of any power granted in this Agreement or in any other Loan
Document, or such Holder may proceed to enforce the payment of all Obligations
or to enforce any other legal or equitable right of such Holder.
ARTICLE 11. MISCELLANEOUS
Section 11.01 Note Payments.
(a) The Company agrees that, so long as the Purchasers or their
respective nominees shall hold any Note, it will make payments of principal
thereof (and premium if any, and interest thereon) which comply with the terms
of this Agreement, by electronic funds transfer to the account or accounts of
the Purchasers as specified in Schedule I or such other account or accounts in
the United States of America as the Purchasers may designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment.
(b) The Purchasers agree that, before disposing of any Note, they will
make a notation thereon (or on a schedule attached thereto) of all principal
payments previously made thereon and of the date to which interest thereon has
been paid, provided that the failure to so endorse or any error in so endorsing
any such amount on such schedule (or on a continuation thereof) shall not limit
or otherwise affect the obligation of the Company or any other Loan Party to pay
the Obligations.
(c) The Company agrees to afford the benefits of paragraph (a) of this
Section 11.01 to any Transferee which shall have made the same agreement as the
Purchasers have made in paragraph (b) of this Section 11.01.
55
Section 11.02 Expenses.
(a) Whether or not the transactions contemplated by this Agreement
shall be consummated, the Company will pay and will indemnify and hold harmless
the Purchasers and each other Indemnitee in respect of all reasonable 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 or any other Loan Document, including: (i) the reasonable
costs and expenses of preparing and reproducing this Agreement, the Notes and
the other Loan Documents, of furnishing all opinions of counsel referred to
herein and all certificates on behalf of the Company and the Subsidiaries, and
of the performance of and compliance with all agreements and conditions
contained herein and in the other Loan Documents on the part of the Company and
the Subsidiaries to be performed or complied with, (ii) the cost of delivering
to the principal office of the Purchasers, insured to the satisfaction of the
Purchasers, the Notes originally issued to the Purchasers hereunder and any
Notes delivered to the Purchasers upon any substitution of such Notes and of the
Purchasers delivering any Notes, insured to the satisfaction of the Purchasers,
upon any such substitution, (iii) the reasonable fees, expenses and
disbursements of special counsel to the Purchasers in connection with such
transactions (including the costs and expenses incurred in connection with
obtaining a private placement number) and any such amendments or waivers
(whether or not such amendments or waivers become effective), and (iv) the
reasonable costs and expenses, including attorneys' fees, incurred by the
Purchasers or any Transferee in enforcing any rights under this Agreement or the
other Loan Documents or in responding to any subpoena or any other legal process
issued in connection with this Agreement, the other Loan Documents or the
Overall Transaction or by reason of the Purchasers' or any Transferee's having
acquired any Note, including reasonable costs and expenses incurred in any
bankruptcy case.
(b) The Company also will pay, and will indemnify, and hold the
Purchasers and each other Indemnitee harmless from, all claims in respect of the
fees, if any, of brokers and finders engaged by or on behalf of the Company.
(c) In furtherance of the foregoing, at the Closing the Company will
pay the reasonable fees and disbursements of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, special
counsel to the Purchasers, which are reflected as unpaid in the statement of
special counsel to the Purchasers delivered to the Company at or prior to the
time of Closing.
(d) The obligations of the Company under this Section 11.02 shall
survive the transfer of any Note or portion thereof or interest therein by the
Purchasers or any Transferee and the payment of the Notes.
(e) In the event any Holder or Holders propose to engage special
counsel in connection with any amendments or waivers requested by the Company
under or in respect of this Agreement or any other Loan Document, such Holder or
Holders agree to engage only one special counsel for each such matter and to use
reasonable efforts to cause such special counsel to furnish the Company with an
estimate of the total fees, expenses and disbursements to be incurred by such
special counsel in connection with such engagement, provided that the failure
(for any reason) of such special counsel to provide such an estimate (nor any
error therein or deviation therefrom) shall not relieve the Company of any of
its obligations under this Section 11.02.
56
Section 11.03 Consent to Waivers and Amendments.
(a) This Agreement and the other Loan Documents may be amended, and the
Company may take any action herein or therein prohibited, or omit to perform any
act herein or therein required to be performed by it, if the Company shall
obtain the written consent to such amendment, action or omission to act, of the
Required Holders except that, without the written consent of the Holder or
Holders of all Notes at the time outstanding, no amendment to this Agreement or
any other Loan Document shall change the maturity of any Note, or change the
principal of, or the rate or time of payment of interest or any premium payable
with respect to any Note, or affect the time, amount or allocation of any
required prepayments, or alter or amend the right of any Holder to declare all
of the Notes held by such Holder to be due and payable in accordance with the
provisions of Section 10.01 or change or modify any of the provisions of this
Section 11.03. Each Holder of any Note at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 11.03, whether or not
such Note shall have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent.
(b) Executed or true and correct copies of any consent, waiver and
amendment effected pursuant to the provisions of this Section 11.03 shall be
delivered by the Company to each Holder forthwith following the date on which
the same shall have been executed and delivered by the Required Holders.
(c) No course of dealing between the Company and the Holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any Holder of such Note.
Section 11.04 Solicitation of Holders.
The Company will not solicit, request or negotiate for or with respect
to any proposed consent, waiver or amendment of any of the provisions of this
Agreement or any other Loan Document unless each Holder shall concurrently be
informed thereof in writing by the Company and shall be afforded the opportunity
to consider the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto. The
Company will not pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Holder as
consideration for or as an inducement to the entering into by any such Holder of
any waiver or amendment of any of the terms and provisions of this Agreement or
any other Loan Document unless such remuneration is concurrently paid, on the
same terms, ratably to each Holder.
Section 11.05 Form, Registration, Transfer and Exchange of Notes; Lost
Notes.
(a) The Notes are issuable as registered notes without coupons in
minimum denominations equal to $1,000,000 (except as may be necessary to reflect
any principal amount not evenly divisible by $1,000,000). The Company shall keep
at its principal executive office a register in which the Company shall provide
for the registration of Notes and of transfers of Notes. Upon surrender for
registration of transfer of any Note at the principal executive office of the
Company, the Company shall, at its expense, execute and deliver one or more new
Notes of
57
like tenor and of a like aggregate principal amount, registered in the name of
the designated Transferee or Transferees. Every Note surrendered for
registration of transfer shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the Holder of such Note, or such
Holder's attorney, duly authorized in writing.
(b) At the option of any Holder, any Note held by such Holder may be
exchanged for other Notes of like tenor and of any authorized denominations, of
a like aggregate principal amount, upon surrender of the Note to be exchanged at
the principal office of the Company. Whenever any Notes are so surrendered for
exchange, the Company shall, at its expense, execute and deliver the Notes which
the Holder making the exchange is entitled to receive.
(c) Any Note or Notes issued in exchange for any Note or upon transfer
thereof shall carry the rights to unpaid interest and interest to accrue which
were called by the Note so exchanged or transferred, so that neither gain nor
loss of interest shall result from any such transfer or exchange. Upon receipt
of written notice from the Holder of any Note of the loss, theft, destruction or
mutilation of such Note and, in the case of any such loss, theft or destruction,
upon receipt of such Holder's unsecured indemnity agreement, or in the case of
any such mutilation upon surrender and cancellation of such Note, the Company
will make and deliver a new Note, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Note.
Section 11.06 Persons Deemed Owners.
Prior to due presentment for registration of transfer, the Company may
treat the Person in whose name any Note is registered in accordance with Section
11.05 as the owner and Holder of such Note for the purpose of receiving payment
of principal of and premium, if any, and interest on such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the Company
shall not be affected by notice to the contrary.
Section 11.07 Reliance on and Survival of Representations and
Warranties.
(a) All of the representations and warranties of the Loan Parties
contained in the Loan Documents or in any certificates or other instruments
delivered by any Loan Party at or after the Closing pursuant to any Loan
Document shall (i) survive the execution and delivery of this .Agreement, the
Notes and the other Loan Documents, the transfer by the Purchasers of any Note
or portion thereof or interest therein and the payment of any Note, and may be
relied upon by the Purchasers or any Transferee, regardless of any investigation
made at any time by or on behalf of the Purchasers, any Transferee or any other
Person and (ii) be deemed to be material and to have been relied upon by each
Holder, notwithstanding any investigation heretofore or hereafter made by or on
behalf of any Holder.
(b) All representations, warranties and covenants contained herein made
by the Purchasers or any Holder shall survive the execution and delivery of this
Agreement, the Notes and the other Loan Documents, and may be relied upon by the
Company and its successors and assigns. No Holder (including the Purchasers)
shall be responsible for the truth, correctness or performance of the
representations or warranties of the Company, the Guarantors or any other Holder
(including any Transferee).
58
Section 11.08 Successors and Assigns.
All covenants and other agreements in this Agreement contained by or on
behalf of either of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto (including, without
limitation, any Transferee) whether so expressed or not. Each Transferee, by
taking any Note, shall be deemed to have made the representation contained in
Part 1 of Schedule XII and at least one of the representations contained in Part
2 of Schedule XII and to have agreed to be bound by the terms and conditions of
this Agreement.
Section 11.09 Notices.
All written communications provided for hereunder shall be sent by
first class mail or nationwide overnight delivery service (with charges prepaid)
and (a) if to the Purchasers, addressed to it at the address specified for such
communications in Schedule I, or at such other address as the Purchasers shall
have specified to the Company in writing, (b) if to any other Holder, addressed
to such other Holder at such address as such other Holder shall have specified
to the Company in writing or, if any such other Holder shall not have so
specified an address to the Company, then addressed to such other Holder in care
of the last holder of such Note which shall have so specified an address to the
Company and (c) if to the Company, addressed to it at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: President, or at such other address as the
Company shall have specified to each Holder in writing.
Section 11.10 Substitution of Purchasers.
The Purchasers shall have the right, by written notice to the Company,
to substitute any one of its Affiliates as the purchaser of the Notes, which
notice shall be signed by both the Purchasers and such Affiliate and shall
contain such Affiliate's agreement to be bound by this Agreement and shall
contain a confirmation by such Affiliate of the accuracy with respect to it of
the representation contained in Part 1 of Schedule XII and of at least one of
the representations set forth in Part 2 of Schedule XII. Upon receipt of such
notice, wherever the word "Purchaser" is used in this Agreement (other than in
this Section 11.10) or any other Loan Document or certificate, opinion or other
instrument delivered or to be delivered pursuant hereto or thereto, such word
shall be deemed to refer to such Affiliate in lieu of the Purchaser. In the
event such Affiliate is so substituted as a purchaser hereunder and such
Affiliate thereafter transfers to the Purchaser all of the Notes then held by
such Affiliate, upon receipt by the Company of notice of such transfer, wherever
the word "Purchaser" is used in this Agreement or any other Loan Document or
certificate, opinion or other instrument delivered or to be delivered pursuant
hereto or thereto, such word shall no longer be deemed to refer to such
Affiliate, but shall refer to the Purchaser, and the Purchaser shall have all
the rights of an original Holder of the Notes under this Agreement.
Section 11.11 Satisfaction Requirement.
If any agreement, certificate or other writing, or any action taken or
to be taken, is by the terms of this Agreement required to be satisfactory to
the Purchasers or to the Required Holders, the determination of such
satisfaction shall be made by the Purchasers or the Required Holders, as the
case may be, in the sole and exclusive judgment of the Person or Persons making
such
59
determination unless, by the terms of this Agreement, such matter is required to
be reasonably satisfactory to the Purchasers or to the Required Holders, as the
case may be, in which event the determination of such satisfaction shall be made
by the Purchasers or the Required Holders, as the case may be, in the reasonable
judgment of the Person or Persons making such determination.
Section 11.12 Independence of Covenants.
All covenants contained in this Agreement shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that such action or condition would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
Section 11.13 Remedies Cumulative.
No right, power or remedy granted under any Loan Document is intended
to be exclusive, but each shall be cumulative and in addition to any other
rights, powers or remedies referred to in such Loan Document or otherwise
available at law or in equity and the exercise or beginning of exercise by any
party hereto of any one or more of such rights, powers or remedies shall not
preclude the simultaneous or later exercise by such party of any or all such
other rights, powers or remedies.
Section 11.14 Reproduction of Documents.
This Agreement, the Notes, and the other Loan Documents and all
documents relating hereto and thereto, including (a) consents, waivers and
notifications which may hereafter be executed, (b) documents received by the
Purchasers at the Closing and (c) financial statements, certificates and other
information previously or hereafter furnished to any Holder of a Note, may be
reproduced by such Holder or the Company by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and any
original document so reproduced may be destroyed. The Company and the Purchasers
agree and stipulate that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 11.15 Notes as Securities.
The Company and the Purchasers agree that the Notes are securities as
defined in each of the Securities Act and the Exchange Act.
Section 11.16 Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability
60
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
Section 11.17 Interest.
(a) Each provision in this Agreement, the Notes and the other Loan
Documents is expressly limited so that in no event whatsoever shall the amount
paid, or otherwise agreed to be paid, to any Holder for the use, forbearance or
detention of the indebtedness evidenced by the Notes or any other Loan Document
or otherwise (including any sums paid as required by any covenant or obligation
contained herein or in any other Loan Document which is for the use, forbearance
or detention of such money), exceed that amount of money which would cause the
effective rate of interest to exceed the Highest Lawful Rate, and all amounts
owed under this Agreement, the Notes and each other Loan Document shall be held
to be subject to reduction to the effect that such amounts so paid or agreed to
be paid which are for the use, forbearance or detention of money under this
Agreement, the Notes or any other Loan Documents shall in no event exceed that
amount of money which would cause the effective rate of interest to exceed the
Highest Lawful Rate.
(b) Anything in this Agreement, any Note or any other Loan Document to
the contrary notwithstanding, the Company shall never be required to pay
unearned interest on any Note or ever be required to pay interest on such Note
at a rate in excess of the Highest Lawful Rate, and if the effective rate of
interest which would otherwise be payable under this Agreement, such Note or any
other Loan Document would exceed the Highest Lawful Rate, or if the Holder of
such Note shall receive any unearned interest or shall receive monies that are
deemed to constitute interest which would increase the effective rate of
interest payable by the Company under this Agreement, such Note and the other
Loan Documents to a rate in excess of the Highest Lawful Rate, then (i) the
amount of interest which would otherwise be payable by the Company under this
Agreement, such Note and the other Loan Documents shall be reduced to the amount
allowed under applicable law and (ii) any unearned interest paid by the Company
or any interest paid by the Company in excess of the Highest Lawful Rate shall
be in the first instance credited on the principal of such Note with the excess
thereof, if any, refunded to the Company.
(c) It is further agreed that, without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received by any
Holder under the Notes held by it, or under this Agreement or the other Loan
Documents, which are made for the purpose of determining whether such rate
exceeds the Highest Lawful Rate shall be made, to the extent permitted by usury
laws applicable to such Notes (now or hereafter enacted), by amortizing,
prorating and spreading in equal parts during the period of the full stated term
of the loans evidenced by said Notes all interest at any time contracted for,
charged or received by such Holder in connection therewith.
(d) If, at any time and from time to time, (i) the amount of interest
payable to any Holder on any date shall be computed at the Highest Lawful Rate
and (ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such holder would be less than the Highest Lawful
Rate, then the amount of interest payable to such Holder in respect of such
subsequent interest computation period shall continue to be computed at the
61
Highest Lawful Rate until the total amount of interest payable to such Holder
shall equal the total amount of interest which would have been payable to such
Holder if the total amount of interest had been computed without giving effect
to this Section 11.17.
Section 11.18 Representations, Etc. Cumulative.
All representations, covenants, agreements and indemnities contained in
this Agreement shall be in addition to and cumulative of the representations,
covenants, agreements and indemnities contained in the other Loan Documents.
Section 11.19 Submission to Jurisdiction.
THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN
NEW YORK,
NEW YORK OVER
ANY ACTION OR PROCEEDING (A) TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS AGREEMENT
OR UNDER ANY OTHER LOAN DOCUMENT OR (B) ARISING FROM OR RELATING TO ANY
FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT AND THE LOAN
DOCUMENTS, AND THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR
FEDERAL COURT. THE COMPANY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL POSTAGE PREPAID, TO
THE COMPANY AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 11.09, SUCH SERVICE
TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. EACH SUCH SERVICE IS HEREBY
ACKNOWLEDGED BY THE COMPANY TO BE SUFFICIENT, EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. IF ANY AGENT APPOINTED BY THE COMPANY REFUSES TO ACCEPT SERVICE,
THE COMPANY HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
THAT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM OR VENUE TO
THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. THE COMPANY HEREBY AGREES THAT
A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS SECTION 11.19 SHALL AFFECT THE RIGHT OF ANY
HOLDER OR ANY OTHER PERSON TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY APPLICABLE LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR
THE PROPERTY OF THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.
Section 11.20 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE
62
GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 11.21 Indemnification.
The Company hereby waives any claim for contribution against any
Indemnitee and agrees to indemnify, exonerate and hold each Indemnitee free and
harmless from and against any and all actions, causes of action, suits,
citations, directives, demands, assessments, losses, liabilities, damages and
expenses, including (without limitation) reasonable attorneys' fees and
disbursements and, in the case of clause (e) below, fees and disbursements of
environmental consultants (collectively, the "INDEMNIFIED LIABILITIES"),
incurred, suffered, sustained or required to be paid by the Indemnitees or any
of them as a result of, or arising out of, or relating to (a) any transaction
financed in whole or in part directly or indirectly with the proceeds of any of
the Notes, (b) the exercise, protection or enforcement of any Holder's rights,
remedies, powers or privileges under this Agreement or any other Loan Document,
(c) the breach of any representation or warranty of any Loan Party contained
herein or in any other Loan Document, (d) the nonfulfillment by any Loan Party
of, or its failure to perform, any of its covenants or agreements contained in
this Agreement or any of the other Loan Documents or (e) the presence of
Hazardous Materials on, or the escape, seepage, leakage, spillage, discharge,
emission or release of Hazardous Materials from, any of the real Properties of
the Company or any Subsidiary or any site, facility or location to which any
material, products, waste or other substances from or attributable to the
business or operations of the Company or any Subsidiary have been transported
for treatment, disposal, storage or deposit, any violation of, or noncompliance
with, any Environmental Law at any such Property, site, facility or location,
any Environmental Claim in connection with the Company or any Property of the
Company, except, in each case, for any of such Indemnified Liabilities arising
on account of such Indemnitee's gross negligence or willful misconduct, and if
and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to the
payment and satisfaction of the Indemnified Liabilities that is permissible
under applicable law. The obligations of the Company under this Section 11.21
shall survive the transfer and payment of the Notes.
Section 11.22 Survival of Indemnities, Etc.
(a) The indemnities contained in this Agreement are cumulative and in
addition to the indemnities contained in the other Loan Documents and shall
survive the termination of this Agreement and the transfer and payment of the
Notes.
(b) THE INDEMNITIES CONTAINED IN THIS AGREEMENT SHALL COVER AND INCLUDE
LOSSES, COSTS, EXPENSES, CLAIMS, DAMAGES, PENALTIES AND OBLIGATIONS ARISING OUT
OF OR RESULTING FROM THE NEGLIGENCE OF ANY INDEMNITEE, REGARDLESS OF WHETHER
SUCH NEGLIGENCE BE ORDINARY OR SOLE.
63
Section 11.23 Judgment Currency.
(a) The obligation of the Company hereunder and under the other Loan
Documents to make payments in Dollars shall not be discharged or satisfied by
any tender or recovery pursuant to any judgment expressed in or converted into
any currency other than Dollars, except to the extent that such tender or
recovery results in the effective receipt by each Holder of the full amount of
Dollars expressed to be payable to such Holder under this Agreement or any other
Loan Documents. If for the purpose of obtaining or enforcing judgment against
the Company in any court or in any jurisdiction, it becomes necessary to convert
into or from any currency other than Dollars (such other currency being referred
to in this Section 11.23 as the "JUDGMENT CURRENCY") an amount due in Dollars,
the conversion shall be made, at the Dollar Equivalent, as of the Business Day
immediately preceding the day on which the judgment is given (such Business Day
being referred to in this Section 11.23 as the "JUDGMENT CURRENCY CONVERSION
DATE"). For purposes of this Section 11.23, the term "Dollar Equivalent" shall
mean, with respect to any monetary amount in a currency other than Dollars, at
any time for the determination thereof, the amount of Dollars obtained by
converting such foreign currency involved in such computation into Dollars at
the spot rate for the purchase of Dollars with the applicable foreign currency
as quoted to such Holder by a nationally recognized commercial bank or
investment bank, which is not affiliated with such Holder, at approximately
10:00 A.M. (
New York City time) on the date of determination thereof specified
herein.
(b) If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the amount
due, the Company covenants and agrees to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount), as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of Dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial award at the rate of
exchange prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the Dollar Equivalent for this Section
11.23, such amounts shall include any premium and costs payable in connection
with the purchase of the Dollars.
Section 11.24 Liabilities of Holders.
Neither this Agreement nor any other Loan Documents nor any disposition
of the Notes shall be deemed to create any liability or obligation of any Holder
to enforce any provision hereof or of any other Loan Document for the benefit or
on behalf of any other Person who may be the holder of any Note.
Section 11.25 Taxes.
The Company will (a) pay all taxes (including interest and penalties)
that may be payable in connection with the execution and delivery of this
Agreement or any other Loan Document or any amendment of, or waiver or consent
under or with respect to, this Agreement or any other Loan Document and (b)
indemnify and hold the Purchasers and each other Holder harmless from and
against any loss or liability resulting from nonpayment or delay in payment of
any such tax.
64
The obligations of the Company under this Section 11.25 shall survive the
transfer and payment of the Notes.
Section 11.26 Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
Section 11.27 Entire Agreement.
This Agreement and the other Loan Documents to which the Company is a
party constitute the entire contract between the parties relative to the subject
matter hereof. Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement and the other Loan
Documents. Subject to Section 11.08, nothing in this Agreement or in the other
Loan Documents, expressed or implied, is intended to confer upon any Person
other than the parties hereto and thereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.
65
The Purchasers should indicate their agreement with the foregoing by
signing the form of acceptance on the enclosed counterpart of this letter and
return the same to the Company, whereupon this letter shall become a binding
agreement between the Purchasers and the Company.
Very truly yours,
CASH AMERICA INTERNATIONAL, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President and Treasurer
The foregoing Agreement is hereby accepted as of the date first above written.
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
MINNESOTA LIFE INSURANCE COMPANY
BY: ADVANTUS CAPITAL MANAGEMENT, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN
BY: ADVANTUS CAPITAL MANAGEMENT, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
[Signature Page to Note Agreement]
MTL INSURANCE COMPANY
BY: ADVANTUS CAPITAL MANAGEMENT, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
AMERICAN FIDELITY ASSURANCE COMPANY
BY: ADVANTUS CAPITAL MANAGEMENT, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
GREAT WESTERN INSURANCE COMPANY
BY: ADVANTUS CAPITAL MANAGEMENT, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN
BY: ADVANTUS CAPITAL MANAGEMENT, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
FARM BUREAU GENERAL INSURANCE COMPANY OF MICHIGAN
BY: ADVANTUS CAPITAL MANAGEMENT, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
THE TRAVELERS INSURANCE COMPANY
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Investment Officer