<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 12, 1997.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
TRANSWESTERN PUBLISHING COMPANY LLC
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2741 33-0778740
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
---------------------------
TWP CAPITAL CORP. II
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2741 33-0778739
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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8344 CLAIREMONT MESA BOULEVARD
SAN DIEGO, CALIFORNIA 92111
TELEPHONE: (619) 467-2800
(Address, including zip code and telephone number, including area code of
registrants' principal executive offices)
---------------------------
<TABLE>
<S> <C>
JOAN M. FIORITO Copy to:
8344 CLAIREMONT MESA BOULEVARD WILLIAM S. KIRSCH, P.C.
SAN DIEGO, CALIFORNIA 92111 KIRKLAND & ELLIS
TELEPHONE: (619) 467-2800 200 EAST RANDOLPH DRIVE
(Name, address, including zip code, and CHICAGO, ILLINOIS 60601
telephone number, TELEPHONE: (312) 861-2000
including area code, of agent for service)
</TABLE>
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------
9 5/8% Senior Subordinated
Notes due 2007, Series
B......................... $100,000,000 100% $100,000,000 $29,500
</TABLE>
================================================================================
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f).
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
==================
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 12, 1997
PRELIMINARY PROSPECTUS
JANUARY , 1998
TRANSWESTERN PUBLISHING COMPANY LLC
TWP CAPITAL CORP. II
OFFER TO EXCHANGE THEIR SERIES B 9 5/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ANY AND ALL OF THEIR OUTSTANDING
9 5/8% SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
, 1998,
UNLESS EXTENDED.
TransWestern Publishing Company LLC, a Delaware limited liability company
("Transwestern"), and TWP Capital Corp. II, a Delaware corporation ("Capital II"
and, together with Transwestern, the "Company" or the "Issuers") hereby offer
(the "Exchange Offer"), upon the terms and conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of their Series B
9 5/8% Senior Subordinated Notes due 2007 (the "Exchange Notes"), registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement of which this Prospectus is a part, for each $1,000
principal amount of their outstanding 9 5/8% Senior Subordinated Notes due 2007
(the "Old Notes"), of which $100,000,000 aggregate principal amount is
outstanding. The form and terms of the Exchange Notes are the same as the form
and term of the Old Notes except that (i) the Exchange Notes will bear a Series
B designation, (ii) the Exchange Notes will have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof and (iii) holders of the Exchange Notes will not be entitled to certain
rights of holders of Old Notes under the Exchange Offer Registration Rights
Agreement (as defined herein). The Exchange Notes will evidence the same debt as
the Old Notes (which they replace) and will be issued under and be entitled to
the benefits of the Indenture dated as of November 12, 1997 (the "Indenture") by
and among the Company and Wilmington Trust Company, as trustee. The Old Notes
and the Exchange Notes are sometimes referred to herein collectively as the
"Notes." See "The Exchange Offer" and "Description of the Notes."
Interest on the Notes will be payable in cash semiannually on each May 15
and November 15, commencing May 15, 1998. The Notes will be redeemable at the
option of the Issuers, in whole or in part, at any time on or after November 15,
2002, at the redemption prices set forth herein, together with accrued and
unpaid interest thereon to the redemption date. In addition, the Issuers, at
their option, may redeem in the aggregate up to 35% of the original principal
amount of the Notes at any time on or prior to November 15, 2000 at a redemption
price equal to 109.625% of the aggregate principal amount thereof, together with
accrued and unpaid interest thereon to the redemption date, with the Net
Proceeds (as defined herein) of one or more Public Equity Offerings (as defined
herein), provided, however, that at least $65.0 million aggregate principal
amount of the Notes remains outstanding after any such redemption and that such
redemption occurs within 90 days following the closing of any such Public Equity
Offering. See "Description of the Notes -- Optional Redemption." Upon the
occurrence of a Change of Control (as defined herein), each holder of the Notes
will be entitled to require the Issuers to purchase such holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof, together
with accrued and unpaid interest thereon to the purchase date. See "Description
of the Notes -- Change of Control Offer."
The Notes will be general unsecured obligations of the Issuers subordinate
in right of payment to all existing and future Senior Indebtedness (as defined
herein) of the Issuers, pari passu in right of payment to all senior
subordinated indebtedness of the Issuers and senior in right of payment to all
subordinated indebtedness of the Issuers. As of October 31, 1997, after giving
effect to the consummation of the Initial Offerings (as defined herein) and the
Asset Drop-Down (as defined herein), the Issuers would have had approximately
$85.0 million aggregate principal amount of Senior Indebtedness outstanding. In
addition, the Issuers would have had $40.0 million of additional borrowing
availability under the Senior Credit Facility (as defined herein). The Company's
pro forma earnings were insufficient to cover fixed charges by approximately
$7.6 million for the six-month period ended October 31, 1997. See
"Capitalization" and "Description of the Notes."
(Cover continued on following page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE
EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 3
(Cover page continued)
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time on , 1998,
unless extended by the Company in its sole discretion (the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m. on the
Expiration Date. The Exchange Offer is subject to certain customary conditions.
The Old Notes were sold by the Company on November 12, 1997 to CIBC Oppenheimer
and First Union Capital Markets Corp. (the "Initial Purchasers") in a
transaction not registered under the Securities Act in reliance upon an
exemption under the Securities Act (the "Initial Offering"). The Initial
Purchasers subsequently placed the Old Notes with qualified institutional buyers
in reliance upon Rule 144A under the Securities Act. Accordingly, the Old Notes
may not be reoffered, resold or otherwise transferred in the United States
unless registered under the Securities Act or unless an applicable exemption
from the registration requirements of the Securities Act is available. The
Exchange Notes are being offered hereunder in order to satisfy the obligations
of the Company under the Exchange Offer Registration Rights Agreement entered
into by the Company and the Initial Purchasers in connection with the Initial
Offering. See "The Exchange Offer."
Based upon an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in certain no-action letters issued to
third parties, the Company believes that the Exchange Notes issued pursuant to
the Exchange Offer may be offered for resale, resold and otherwise transferred
by any holder thereof (other than any such holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such holder's business and such holder has no arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes. See "The Exchange Offer -- Resale of the Exchange Notes."
Holders of Old Notes wishing to accept the Exchange Offer must represent to the
Company, as required by the Exchange Offer Registration Rights Agreement, that
such conditions have been met. Each broker-dealer (a "Participating
Broker-Dealer") that receives Exchange Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer in connection with
resales of Exchange Notes received in exchange for Old Notes where such Old
Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities. The Issuers have agreed
that, for a period of 180 days after the Expiration Date, they will make this
Prospectus available to any Participating Broker-Dealer for use in connection
with any such resale. See "Plan of Distribution."
Holders of Old Notes not tendered and accepted in the Exchange Offer will
continue to hold such Old Notes and will be entitled to all the rights and
benefits and will be subject to the limitations applicable thereto under the
Indenture and with respect to transfer under the Securities Act.
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer. No underwriter is
being used in connection with the Exchange Offer.
There has not previously been any public market for the Old Notes or the
Exchange Notes. The Company does not intend to list the Exchange Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
Exchange Notes will develop. See "Risk Factors -- Absence of a Public Market
Could Adversely Affect the Value of Exchange Notes." Moreover, to the extent
that Old Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Old Notes could be adversely
affected.
Concurrent with the Initial Offering, TransWestern Holdings L.P.
("Holdings"), the parent company of the Issuers, and TWP Capital Corp.
("Capital," and together with Holdings, the "Discount Note Issuers"), sold (the
"Initial Discount Note Offering," and together with the Initial Offering, the
"Initial Offerings") $32.5 million in initial aggregate principal amount ($57.9
million principal amount at maturity) of their 11 7/8% Senior Discount Notes due
2008 (the "Old Discount Notes").
<PAGE> 4
(Cover page continued)
Concurrent with this Exchange Offer, the Discount Note Issuers are offering
to exchange (the "Discount Note Exchange Offer," and together with this Exchange
Offer, the "Exchange Offers") $1,000 principal amount at maturity of their
Series B 11 7/8% Senior Discount Notes due 2008 (the "Exchange Discount Notes")
registered under the Securities Act pursuant to a Registration Statement, for
each $1,000 principal amount at maturity of their outstanding Old Discount
Notes, of which $57.9 million aggregate principal amount at maturity is
outstanding as of the date hereof. The Old Discount Notes and the Exchange
Discount Notes are sometimes referred to herein collectively as the "Discount
Notes." See "The Transactions" and "Description of Certain Indebtedness --
Discount Notes."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF
TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER COMMENCEMENT OF THE EXCHANGE OFFER), ALL
DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
The Exchange Notes will be available initially only in book-entry form and
the Company expects that the Exchange Notes issued pursuant to the Exchange
Offer will be issued in the form of a Global Note (as defined), which will be
deposited with, or on behalf of, The Depository Trust Company ("DTC") and
registered in its name or in the name of Cede & Co., its nominee. Beneficial
interests in the Global Note representing the Exchange Notes will be shown on,
and transfers thereof will be effected through, records maintained by DTC and
its participants. After the initial issuance of the Global Note, Exchange Notes
in certificated form will be issued in exchange for the Global Note only under
limited circumstances as set forth in the Indenture. See "Description of the
Notes -- Book-Entry; Delivery and Form."
<PAGE> 5
AVAILABLE INFORMATION
The Issuers have filed with the Commission a registration statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the Exchange
Offer contemplated hereby. This Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement. For further information
with respect to the Issuers and the Exchange Offer, reference is made to the
Exchange Offer Registration Statement. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Exchange Offer Registration Statement, including
the exhibits thereto, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and inspected at the Commission's regional offices at 7
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of such site is http://www.sec.gov.
As a result of the filing of the Exchange Offer Registration Statement with
the Commission, the Issuers will become subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith will be required to file periodic reports and
other information with the Commission. The obligation of the Issuers to file
periodic reports and other information with the Commission will be suspended if
the Notes are held of record by fewer than 300 holders as of the beginning of
any fiscal year of the Issuers other than the fiscal year in which the Exchange
Offer Registration Statement is declared effective. TransWestern has agreed
that, whether or not it is required to do so by the rules and regulations of the
Commission, for so long as any of the Notes remain outstanding, it will furnish
to the holders of the Notes and file with the Commission (unless the Commission
will not accept such a filing) (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if TransWestern was required to file such
forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by TransWestern's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if TransWestern was required to file such reports. Capital II will furnish
to the holders of the Notes and file such reports with the Commission only if it
is required to file such reports with the Commission by the rules and
regulations of the Commission. In addition, for so long as any of the Notes
remain outstanding, the Issuers have agreed to furnish to the holders of the
Notes or any prospective transferee of any such holder, upon their request the
information required to be delivered by Rule 144A(d)(4) under the Securities
Act.
i
<PAGE> 6
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise specified herein, all market and
industry data relating to independent yellow pages directory publishers are
based on information provided by Cowles/Simba Information, an independent market
research firm, as adjusted to reflect actual performance and events known to the
Company, and all other market and industry data have been obtained from the
Yellow Pages Publishers Association, an independent trade association. Unless
the context otherwise requires (i) the term "TransWestern business" refers to
the historical operations of the Company and the TransWestern business acquired
in 1993 (the "1993 Acquisition") from US West Marketing Resources Group, Inc., a
subsidiary of US WEST INC. ("US West"), (ii) the term "Holdings" refers to
TransWestern Holdings L.P. (f/k/a TransWestern Publishing Company, L.P.), (iii)
the term "TCC" refers to TransWestern Communications Company, Inc., which is the
general partner of Holdings and the manager of TransWestern Publishing Company
LLC, (iv) the term "Capital" refers to TWP Capital Corp., a wholly-owned
subsidiary of Holdings, (v) the term "TransWestern" refers to TransWestern
Publishing Company LLC, a wholly-owned subsidiary of Holdings, (vi) the term
"Capital II" refers to TWP Capital Corp. II, a wholly-owned subsidiary of
TransWestern, (vii) the term "Company" or "Issuers" collectively refers to
TransWestern and Capital II, and where the context requires, to the historical
operations of TransWestern Publishing Company, L.P. prior to the Asset
Drop-Down, (viii) the term "Partnership" refers to TransWestern Publishing
Company, L.P. prior to the Asset Drop-Down, and (ix) a single customer that
advertises in more than one directory is counted as a separate "account" for
each directory in which it advertises. All references to fiscal years in this
Prospectus refer to years ended April 30.
THE COMPANY
The Company is one of the largest independent yellow pages directory
publishers in the United States. The Company's 142 directories serve communities
in the 12 states of California, Connecticut, Indiana, Kansas, Kentucky,
Louisiana, Massachusetts, New York, Ohio, Oklahoma, Tennessee and Texas. The
Company's presence in its markets is well-established; more than 70% of its
directories have been in publication for more than 10 years. The Company's
revenues are derived from the sale of advertising to a diversified base of over
93,000 accounts consisting primarily of small to medium-sized local businesses.
Yellow pages are an important advertising medium for local businesses due to
their low advertising cost, widespread distribution, lasting presence, and high
consumer usage. The strength of the Company's directories is evidenced by high
revenue renewal and account retention rates, which have averaged 86% and 76%,
respectively, during the last five years.
Since the 1993 Acquisition, the Company's management team has successfully
executed its strategy of growing revenues from existing directories, improving
operating efficiency, accelerating cash flows and starting and acquiring new
directories. Over this period, the Company increased average revenue per account
from $789 to $981 and increased its number of directories from 90 to 142,
driving the Company's net revenues from $54.9 million to $91.4 million. The
Company achieved this growth without significantly increasing working capital or
capital expenditures, while leveraging its existing cost structure and creating
a platform for future growth. As a result, the Company's EBITDA (as defined
herein) increased from $3.2 million to $25.2 million and its EBITDA margin
increased from 5.9% to 27.6%.
INDUSTRY OVERVIEW
The United States yellow pages directory industry generated revenues of
approximately $10.8 billion in 1996, with circulation of approximately 316
million directories. Yellow pages directories are published by both telephone
utilities and, in many markets, independent directory publishers, such as the
Company, which are not affiliated with the telephone service provider. More than
250 independent directory publishers circulated over 77 million directories and
generated an estimated $677 million in revenues during 1996. Between 1991 and
1996, while industry-wide yellow pages advertising revenues grew at a compound
annual rate of 3.5%, advertising revenues of independent directories grew at a
compound annual rate of approximately 6.9%. Concurrent with the overall
expansion of the yellow pages advertising market, independent directory
1
<PAGE> 7
publishers have steadily increased their market share from 5.5% in 1991 to 6.5%
in 1996. This has occurred because the diverse needs of both consumers and
advertisers are often not satisfied by a single utility directory.
Successful independent publishers effectively compete with telephone
utilities by differentiating their product based on geographical market
segmentation, pricing strategy and enhanced product features. To maximize both
advertiser value and consumer usage, independent directory publishers target
their directory coverage areas based on consumer shopping patterns. In contrast,
most directories published by telephone utilities coincide with their telephone
service territories, which may incorporate multiple local markets or only
portions of a single market. Also, independent publishers generally offer yellow
pages advertisements at a significant discount to the price that competing
telephone utilities usually charge. As a result, independent yellow pages
directories allow local advertisers to target cost-effectively their desired
market and are often more useful for consumers.
OPERATING STRENGTHS
The Company believes that it benefits from the following operating
strengths:
High Revenue Stability and Account Renewal Rates. The Company's high
revenue renewal and account retention rates (averaging 86% and 76%,
respectively, during the last five fiscal years) have provided considerable
revenue and profit stability and form a strong base of business from which to
grow. For many local businesses, yellow pages directory advertising is their
principal form of advertising and provides an effective means of reaching their
potential customers. Also, advertisement placement within a directory is based
on size and seniority, and therefore advertisers have a strong incentive to
increase the size of their advertisements and to renew their advertising
program. In addition, advertisers are reluctant to cancel their advertising
programs when their local competition is well represented in that directory.
Geographic, Directory, Industry and Account Diversity. The Company's 142
directories serve communities in 12 states across the country. No single
directory accounted for more than 5% of net revenues, and the top five
directories accounted for less than 19% of net revenues in fiscal 1997. The
Company's 93,000 accounts represent a wide variety of service, retailing and
other businesses and its top 1,000 accounts represented less than 12% of the
Company's fiscal 1997 net revenues. This high level of diversification reduces
the Company's exposure to adverse regional economic conditions and enhances
revenue and cash flow stability.
Favorable Cash Flow Characteristics. The Company's favorable cash flow
characteristics result from its stable revenues, high level of advance payments,
predictable cost structure, low working capital investment and minimal capital
expenditure needs. During fiscal 1997, the Company collected approximately 45%
of its net revenues prior to publication of its directories, up from
approximately 26% in fiscal 1993. In addition to collecting higher levels of
advance payments, the Company shortened customer payment terms and reduced
credit exposure to its smallest customers. Further, the Company's capital
expenditures have averaged less than $750,000 per year over the last five fiscal
years.
Proven, Experienced Management. The Company has a proven senior management
team with extensive experience in the yellow pages business. Since the 1993
Acquisition, management has demonstrated the ability to grow the Company
profitably while the Company has had significant financial leverage.
Collectively, management owns approximately 9% of Holdings and also participates
in a substantial equity-based incentive program tied to the successful long-term
performance of the Company.
BUSINESS STRATEGY
The Company's strategy is to capitalize on its operating structure,
consisting of a decentralized sales force and centralized production and
administrative operations, in order to grow its position as a leading
independent yellow pages publisher. This strategy recognizes the inherent
operating leverage of established directories where production and
administrative costs are largely fixed, resulting in high marginal profit from
incremental sales. At the same time, the Company's focus on continuous process
improvements has significantly expanded
2
<PAGE> 8
capacity without increasing production costs, establishing a platform to start
and acquire directories in a highly profitable manner. Specific elements of the
Company's business strategy are as follows:
Grow Revenues from Existing Directories. Management believes there are
opportunities to increase revenues from both existing advertisers and new
accounts. Specific initiatives include (i) cross-selling advertisers into
multiple directories, (ii) encouraging customers to purchase larger
advertisements or advertisements under multiple headings within the same
directory, (iii) introducing new premium advertising features, including color,
at premium prices, and (iv) offering Internet directory listings.
The Company also utilizes its proprietary database to increase its customer
penetration by systematically targeting potential customers and converting them
into new advertisers. To support this strategy, the Company has expanded its
sales force from 223 employees at the end of fiscal 1993 to 448 as of November
30, 1997, representing an increase of approximately 101%. Management believes
that new account growth drives long term profitability and improves the quality
of its directories.
Improve Operating Efficiency. The Company works to continuously improve
its production processes and systems in order to increase its operating
efficiency. Management has created a team-oriented environment focused on
managing costs, streamlining processes and cross-training personnel to adjust to
fluctuations in production levels. These efforts have resulted in increased
capacity and lower production costs.
Accelerate Cash Flows. The Company continues to focus on increasing the
amount of cash it collects from advertisers prior to the publication of each
directory. Increasing advance payments and shortening customer payment terms (i)
reduces the Company's investment in working capital, (ii) decreases collection
and bad debt costs and (iii) permits the Company to finance the introduction of
new directories from internally generated funds.
New Directory Growth. The Company's strategy includes growth through new
directory start-ups and selective acquisitions. The Company minimizes start-up
risks by launching new directories in areas contiguous to the Company's existing
markets where it has established sales infrastructure and local recognition and
where existing customers can provide an initial revenue base. Since the 1993
Acquisition, the Company has introduced 26 new "fill-in" directory start-ups in
California, Connecticut, Indiana, Louisiana, New York, Oklahoma and Texas.
In addition, the Company has acquired 24 directories in California,
Indiana, Kentucky, Massachusetts, New York and Tennessee since the 1993
Acquisition. Although the Company has no current acquisition commitments,
management continuously reviews acquisition opportunities and believes it can
successfully acquire and integrate additional directories into its existing
production and administrative infrastructure.
THE TRANSACTIONS
The Initial Offering was made in conjunction with the Partnership's $312.7
million Recapitalization which was consummated in October 1997.
In the Recapitalization, new investors, led by Thomas H. Lee Equity Fund
III, L.P. ("THL") and its affiliates (together, the "THL Parties"), along with
other investors, the Existing Limited Partners (as defined herein), and the
Company's 25 most senior managers (the "Management Investors"), invested new and
continuing capital of $130.0 million in the Partnership and TCC (the "Equity
Investment"). The proceeds of the Equity Investment, together with approximately
$182.7 million of aggregate proceeds from the debt financings described below,
were used (i) for $224.5 million of Recapitalization consideration, including
the redemption of a portion of the limited partnership interests from the
Existing Limited Partners, (ii) to repay $75.6 million under the Partnership's
existing credit facilities (the "Old Credit Facility") and (iii) to pay $10.6
million of fees and expenses and (iv) for $2.0 million for general corporate
purposes, including working capital.
The Recapitalization was financed with (i) the Equity Investment of $130.0
million, (ii) borrowings of approximately $107.7 million under a $125.0 million
senior credit facility (the "Senior Credit Facility") and (iii) borrowings of
$75.0 million under a senior subordinated financing facility (the "Senior
Subordinated
3
<PAGE> 9
Facility"). The above-described purchase and redemption of partnership units and
the borrowings under the Senior Credit Facility and the Senior Subordinated
Facility and the use of proceeds therefrom are collectively referred to herein
as the "Recapitalization."
The Company applied the net proceeds of the Initial Offering to repay the
Senior Subordinated Facility and to reduce its outstanding indebtedness under
the Revolving Credit Facility (as defined herein) established by the Senior
Credit Facility. Concurrent with the Initial Offering, Holdings and Capital
offered $32.5 million in initial aggregate principal amount ($57.9 million
principal amount at maturity) of 11 7/8% Senior Discount Notes due 2008. The
Discount Notes are unsecured obligations of the Discount Note Issuers and are
effectively subordinated to all liabilities of Holdings' subsidiaries, including
the Notes and trade payables. The net proceeds of the Initial Discount Note
Offering were used to redeem approximately $31.3 million of the Equity
Investment. However, this redemption by Holdings did not reduce the equity
capitalization of TransWestern. See "The Transactions" and "Limited Partnership
Agreement."
In November 1997, the Partnership formed and contributed substantially all
of its assets to TransWestern, TransWestern assumed or guaranteed all of the
liabilities of the Partnership, and the Partnership changed its name to
TransWestern Holdings L.P. (the "Asset Drop-Down"). As a result of the Asset
Drop-Down, Holdings' only assets are all of the TransWestern membership
interests and all of Capital's capital stock. All of the operations that were
previously conducted by the Partnership are now being conducted by TransWestern.
The Recapitalization, together with the Asset Drop-Down and the Initial
Offerings and the use of proceeds therefrom, are collectively referred to herein
as the "Transactions."
After giving effect to the Transactions, the THL Parties collectively own
approximately 59% of the equity of Holdings and the CIVC Parties (as defined
herein) and the Management Investors own approximately 23% and 9% of the equity
of Holdings, respectively. The remainder of the equity of Holdings is held by
other investors. TCC is owned approximately pro rata by all the equity investors
in Holdings. See "The Transactions."
THE PRINCIPAL INVESTORS
The Company's principal equity investor, THL, is party to a management
agreement with Thomas H. Lee Company ("THL Co."), one of the oldest and most
successful private equity investment firms in the United States. Founded in
1974, THL Co. focuses on identifying and acquiring substantial ownership stakes
in middle market growth companies. THL Co. currently manages over $3 billion of
capital and has participated in more than 100 acquisitions and investments.
Continental Illinois Venture Corporation ("CIVC") was the principal
investor in the 1993 Acquisition and continues to be a principal investor in the
Partnership. CIVC is an indirect subsidiary of BankAmerica Corporation, an
international financial services organization.
The Management Investors have all been members of the Company's senior
management since at least 1993 and have extensive experience in the yellow pages
publishing business. See "Management" and "Security Ownership of Certain
Beneficial Owners and Management."
The Company's principal executive offices are located at 8344 Clairemont
Mesa Boulevard, San Diego, California 92111, and its telephone number is (619)
467-2800.
4
<PAGE> 10
THE INITIAL OFFERING
Old Notes.................. The Old Notes were sold by the Issuers on November
12, 1997 to the Initial Purchasers pursuant to a
Securities Purchase Agreement dated November 6,
1997 (the "Purchase Agreement"). The Initial
Purchasers subsequently resold the Old Notes to
qualified institutional buyers pursuant to Rule
144A under the Securities Act.
Registration Rights
Agreement.................. Pursuant to the Purchase Agreement, the Company and
the Initial Purchasers entered into a Registration
Rights Agreement dated as of November 12, 1997 (the
"Exchange Offer Registration Rights Agreement"),
which grants the holders of the Old Notes certain
exchange and registration rights. The Exchange
Offer is intended to satisfy such exchange rights
which terminate upon the consummation of the
Exchange Offer.
THE EXCHANGE OFFER
Securities Offered......... $100,000,000 aggregate principal amount of Series B
9 5/8% Senior Subordinated Notes due 2007 of the
Issuers.
The Exchange Offer......... $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of Old
Notes. As of the date hereof, $100,000,000
aggregate principal amount of Old Notes are
outstanding. The Issuers will issue the Exchange
Notes to holders on or promptly after the
Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Issuers believe that Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale,
resold and otherwise transferred by any holder
thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the
ordinary course of such holder's business and that
such holder does not intend to participate and has
no arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes. Each holder accepting the Exchange Offer is
required to represent to the Issuers in the Letter
of Transmittal that, among other things the
Exchange Notes will be acquired by the holder in
the ordinary course of business and the holder does
not intend to participate and has no arrangement or
understanding with any person to participate in the
distribution of such Exchange Notes.
Any Participating Broker-Dealer that acquired Old
Notes for its own account as a result of
market-making activities or other trading
activities may be a statutory underwriter. Each
Participating Broker-Dealer that receives Exchange
Notes for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Partici-
5
<PAGE> 11
pating Broker-Dealer in connection with resales of
Exchange Notes received in exchange for Old Notes
where such Old Notes were acquired by such
Participating Broker-Dealer as a result of
market-making activities or other trading
activities. The Issuers have agreed that, for a
period of 180 days after the Expiration Date, they
will make this Prospectus available to any
Participating Broker-Dealer for use in connection
with any such resale. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose of
participating, in a distribution of the Exchange
Notes cannot rely on the position of the staff of
the Commission enunciated in no-action letters and,
in the absence of an exemption therefrom, must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. Failure to
comply with such requirements in such instance may
result in such holder incurring liability under the
Securities Act for which the holder is not
indemnified by the Issuers.
Expiration Date............ 5:00 p.m., New York City time, on , 1998
unless the Exchange Offer is extended, in which
case the term "Expiration Date" means the latest
date and time to which the Exchange Offer is
extended.
Accrued Interest on the
Exchange Notes and the
Old Notes................ Each Exchange Note will bear interest from its
issuance date. Holders of Old Notes that are
accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the
issuance date of the Exchange Notes. Such interest
will be paid with the first interest payment on the
Exchange Notes. Interest on the Old Notes accepted
for exchange will cease to accrue upon issuance of
the Exchange Notes.
Conditions to the
Exchange Offer........... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Issuers. See
"The Exchange Offer -- Conditions."
Procedures for Tendering
Old Notes................ Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a facsimile
thereof or transmit an Agent's Message (as defined
herein) in connection with a book-entry transfer,
in accordance with the instructions contained
herein and therein, and mail or otherwise deliver
such Letter of Transmittal, such facsimile or such
Agent's Message, together with the Old Notes and
any other required documentation to the Exchange
Agent (as defined herein) at the address set forth
herein. By executing the Letter of Transmittal or
Agent's Message, each holder will represent to the
Issuers that, among other things, the Exchange
Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business
of the person receiving such Exchange Notes,
whether or not such person is the holder, that
neither the holder nor any such other person (i)
has any arrangement or understanding with any
person to participate in the distribution of such
Exchange Notes, (ii) is engaging in or intends to
engage in the distribution of such Exchange Notes,
or (iii) is an "affiliate," as defined under Rule
405 of the Securities Act, of the Issuers. See "The
Exchange Offer -- Purpose and Effect of the
Exchange Offer" and "-- Procedures for Tendering."
6
<PAGE> 12
Untendered Old Notes....... Following the consummation of the Exchange Offer,
holders of Old Notes eligible to participate but
who do not tender their Old Notes will not have any
further exchange rights and such Old Notes will
continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market
for such Old Notes could be adversely affected.
Consequences of Failure
to Exchange.............. The Old Notes that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, such Old Notes may be
resold only (i) to the Issuers, (ii) pursuant to
Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the
Securities Act, (iii) outside the United States to
a foreign person pursuant to the requirements of
Rule 904 under the Securities Act, or (iv) pursuant
to an effective registration statement under the
Securities Act. See "The Exchange
Offer -- Consequences of Failure to Exchange."
Shelf Registration
Statement.................. If any holder of the Old Notes (other than any such
holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities
Act) is not eligible under applicable securities
laws to participate in the Exchange Offer, and such
holder has satisfied certain conditions relating to
the provision of information to the Issuers for use
therein, the Issuers have agreed to register the
Old Notes on a shelf registration statement (the
"Shelf Registration Statement") and use their
reasonable best efforts to cause it to be declared
effective by the Commission as promptly as
practical on or after the consummation of the
Exchange Offer. The Issuers have agreed to maintain
the effectiveness of the Shelf Registration
Statement for, under certain circumstances, a
maximum of two years, to cover resales of the Old
Notes held by any such holders.
Special Procedures for
Beneficial Owners........ Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered holder
promptly and instruct such registered holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's
own behalf, such owner must, prior to completing
and executing the Letter of Transmittal and
delivering its Old Notes, either make appropriate
arrangements to register ownership of the Old Notes
in such owner's name or obtain a properly completed
bond power from the registered holder. The transfer
of registered ownership may take considerable time.
The Issuers will keep the Exchange Offer open for
not less than thirty days in order to provide for
the transfer of registered ownership.
Guaranteed Delivery
Procedures............... Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date
must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer -- Guaranteed Delivery Procedures."
7
<PAGE> 13
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
Acceptance of Old Notes and
Delivery of Exchange
Notes.................... The Issuers will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer -- Terms of the Exchange
Offer."
Use of Proceeds............ There will be no cash proceeds to the Company from
the exchange pursuant to the Exchange Offer.
Exchange Agent............. Wilmington Trust Company
THE EXCHANGE NOTES
General.................... The form and terms of the Exchange Notes are the
same as the form and terms of the Old Notes (which
they replace) except that (i) the Exchange Notes
bear a Series B designation, (ii) the Exchange
Notes have been registered under the Securities Act
and, therefore, will not bear legends restricting
the transfer thereof, and (iii) the holders of
Exchange Notes will not be entitled to certain
rights under the Exchange Offer Registration Rights
Agreement, including the provisions providing for
an increase in the interest rate on the Old Notes
in certain circumstances relating to the timing of
the Exchange Offer, which rights will terminate
when the Exchange Offer is consummated. See "The
Exchange Offer -- Purpose and Effect of the
Exchange Offer." The Exchange Notes will evidence
the same debt as the Old Notes and will be entitled
to the benefits of the Indenture. See "Description
of the Notes." The Old Notes and the Exchange Notes
are referred to herein collectively as the "Notes."
Maturity Date.............. November 15, 2007.
Interest Payment Dates..... Interest will accrue on the Exchange Notes from the
date of issuance (the "Issue Date") and will be
payable in cash semiannually on each May 15 and
November 15, commencing May 15, 1998.
Ranking.................... The Notes will be general unsecured obligations of
the Issuers subordinate in right of payment to all
existing and future Senior Indebtedness of the
Issuers, pari passu in right of payment to all
senior subordinated indebtedness of the Issuers and
senior in right of payment to all subordinated
indebtedness of the Issuers. As of October 31,
1997, after giving effect to the consummation of
the Initial Offerings and the Asset Drop-Down, the
Issuers would have had approximately $85.0 million
aggregate principal amount of Senior Indebtedness
outstanding. In addition, the Issuers would have
had $40.0 million of additional borrowing
availability under the Senior Credit Facility.
Guarantees by Future
Subsidiaries............. The Notes will be unconditionally guaranteed, on an
unsecured senior subordinated basis, as to the
payment of principal, premium, if any, and
interest, jointly and severally (the "Guarantees"),
by all future direct and indirect Restricted
Subsidiaries (as defined herein) of the Issuers
having either assets or stockholders' equity in
excess of $100,000 (the
8
<PAGE> 14
"Guarantors"). Any such Guarantees will be
subordinated in right of payment to all Senior
Indebtedness of the respective Guarantors. No
Guarantees will be effective on the Issue Date. See
"Description of the Notes -- Certain
Covenants -- Limitation on Creation of
Subsidiaries."
Optional Redemption........ The Notes will be redeemable at the option of the
Issuers, in whole or in part, at any time on or
after November 15, 2002, at the redemption prices
set forth herein, together with accrued and unpaid
interest thereon to the redemption date. In
addition, the Issuers, at their option, may redeem
in the aggregate up to 35% of the original
principal amount of the Notes at any time prior to
November 15, 2000 at a redemption price equal to
109.625% of the aggregate principal amount thereof,
together with accrued and unpaid interest thereon
to the redemption date, with the Net Proceeds of
one or more Public Equity Offerings, provided,
however, that at least $65.0 million aggregate
principal amount of the Notes remains outstanding
after any such redemption and that such redemption
occurs within 90 days following the closing of any
such Public Equity Offering. See "Description of
the Notes -- Optional Redemption."
Change of Control.......... Upon the occurrence of a Change of Control, each
holder of the Notes will be entitled to require the
Issuers to purchase such holder's Notes at a
purchase price equal to 101% of the aggregate
principal amount thereof, together with accrued and
unpaid interest thereon to the purchase date. See
"Description of the Notes -- Change of Control
Offer."
Asset Sale Proceeds........ The Issuers will be obligated in certain instances
to make an offer to repurchase the Notes at a
purchase price equal to 100% of the aggregate
principal amount thereof, together with accrued and
unpaid interest thereon to the purchase date, with
the net cash proceeds of certain asset sales. See
"Description of the Notes -- Certain
Covenants -- Limitation on Certain Asset Sales."
Certain Covenants.......... The Indenture pursuant to which the Notes were
issued contains covenants for the benefit of the
holders of the Notes that, among other things,
restrict the ability of the Issuers and any of
their Restricted Subsidiaries to (i) incur
additional Indebtedness (as defined herein), (ii)
pay dividends and make distributions, (iii) issue
stock of subsidiaries, (iv) make certain
investments, (v) repurchase stock, (vi) create
liens, (vii) enter into transactions with
affiliates, (viii) enter into sale lease-back
transactions, (ix) merge or consolidate the Company
or any Guarantors, and (x) transfer or sell assets.
These covenants are subject to a number of
important exceptions, including the allowance of
Permitted Tax Distributions (as defined herein).
See "Description of the Notes -- Certain
Covenants."
RISK FACTORS
Prospective investors should carefully consider the specific matters set
forth under "Risk Factors" as well as the other information and data set forth
in this Prospectus before tendering the Old Notes in exchange for Exchange
Notes.
9
<PAGE> 15
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS)
The following table presents summary historical financial data for the five
fiscal years ended April 30, 1997. The statement of operations data for each of
the three years in the period ended April 30, 1997 have been derived from the
audited financial statements of the Company and the TransWestern business and
the notes thereto appearing elsewhere in this Prospectus. The statement of
operations data for the years ended April 30, 1993 and 1994 are derived from the
audited financial statements of the Company and the TransWestern business not
appearing in this Prospectus. The summary historical financial data for the six
months ended October 31, 1996 and October 31, 1997 have been derived from
unaudited financial statements of the Company, which in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the unaudited
interim periods. Results for the six months ended October 31, 1997 are not
necessarily indicative of results that may be expected for the entire year.
The following unaudited summary pro forma statement of operations data give
effect to, among other things, the Transactions, as if they had occurred at the
beginning of each period presented. The following unaudited summary pro forma
balance sheet data give effect to, among other things, the Initial Offerings and
the Asset Drop-Down, as if they had occurred October 31, 1997. Certain
management assumptions and adjustments relating to the Initial Offerings and the
Asset Drop-Down are described in the Notes to Unaudited Pro Forma Financial Data
and should be read in conjunction therewith. The unaudited summary pro forma
financial data do not purport to be indicative of the actual financial position
or results of operations of the Company that would have actually been attained
had the Transactions in fact occurred on the date specified, nor are they
necessarily indicative of the results of operations that may be achieved in the
future. See "Unaudited Pro Forma Financial Data," "Selected Historical Financial
and Other Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements of the Company and notes
thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
YEARS ENDED APRIL 30, SIX MONTHS ENDED OCTOBER 31,
------------------------------------------------------------------ --------------------------------
PREDECESSOR PRO FORMA PRO FORMA
1993(A) 1994 1995 1996 1997 1997 1996 1997 1997
----------- ------- ------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.......... $54,949 $62,219 $69,845 $77,731 $91,414 $91,414 $38,050 $38,254(b) $38,254(b)
Gross profit.......... 37,110 43,431 52,889 59,529 71,914 71,914 29,054 29,082 29,082
Income (loss) from
operations.......... 1,844 4,093 11,414 14,538 18,453 13,010 5,296 (1,468) (1,418)
Other income
(expense), net...... 243 344 470 375 48 48 18 (107) (107)
Interest expense...... (342) (2,951) (4,345) (6,630) (7,816) (18,039)(c) (4,029) (4,333) (11,572)(c)
Income (loss) before
extraordinary
item................ $ 1,745 $ 1,486 $ 7,539 $ 8,283 $10,685 $(4,981) $ 1,285 $(5,908) $(13,097)
OTHER DATA:
Depreciation and
amortization........ $ 1,129 $ 4,603 $ 4,593 $ 4,691 $ 6,399 $ 6,399 $ 3,122 $ 3,274 $3,274
Capital
expenditures........ 743 769 496 484 1,034 1,034 259 580 580
EBITDA(d)............. 3,216 9,040 17,002 20,400 25,200 25,300 8,586 7,568(b) 7,618(b)
EBITDA margin......... 5.9% 14.5% 24.3% 26.2% 27.6% 27.7% 22.6% 19.8% 19.9%
Gross margin.......... 67.5% 69.8% 75.7% 76.6% 78.7% 78.7% 76.4% 76.0% 76.0%
Bookings(e)........... $54,188 $64,269 $70,013 $75,709 $86,859 $86,859 $44,485 $49,926 $49,926
Advance payments as a
% of net
revenues(f)......... 26.2% 31.8% 36.9% 41.0% 45.1% 45.1% 43.6% 46.6% 46.6%
Number of
accounts(g)......... 69,632 71,832 77,371 84,117 93,157 93,157 37,904 38,025 38,025
Average net revenues
per account(h)...... $ 789 $ 866 $ 903 $ 924 $ 981 $ 981 $ 1,004 $ 1,006 $1,006
Number of
directories......... 90 97 106 118 128 128 49 57 57
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital....... $4,377
Total assets.......... 54,353
Total debt............ 185,430
Member deficit........ (156,005)
</TABLE>
(See footnotes on following page)
10
<PAGE> 16
NOTES TO SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS)
(a) Effective May 1, 1993, an investor group and CIVC formed the Partnership to
acquire the TransWestern business from US West. The results of operations of
the predecessor are not directly comparable to the results of operations of
the Company due to (i) the incurrence of interest expense from borrowings to
finance the acquisition and subsequent distributions, and (ii) the effect of
increased depreciation and amortization expense associated with the
acquisition.
(b) For the six months ended October 31, 1997 consolidated net revenue increased
$204,000 and EBITDA decreased $1.0 million as compared to the six months
ended October 31, 1996 primarily due to changes in the publication schedule
which caused a different mix of directories to be published in the
respective six month periods. EBITDA for the latest twelve months ended
October 31, 1997 and November 30, 1997 was $24,182 and $25,240 respectively.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."
(c) Non-cash interest expense relating to amortization of debt issuance costs
for pro forma fiscal 1997 and the pro forma six months ended October 31,
1997 was $1,023 and $511, respectively.
(d) "EBITDA" is defined as income (loss) before extraordinary item plus interest
expense, non-recurring other expense, discretionary contributions to the
Equity Compensation Plan (as defined herein) and depreciation and
amortization. Non-recurring other expense was $300 in fiscal 1997 and $326
in fiscal 1998. Contributions to the Equity Compensation Plan were $525 in
fiscal 1995, $796 in fiscal 1996 and $5,543 in proforma fiscal 1997 and for
the six months ended October 31, 1997. EBITDA is not a measure of
performance under generally accepted accounting principles ("GAAP"). While
EBITDA should not be considered in isolation or as a substitute for net
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP, management understands that
EBITDA is widely used by certain investors as one measure to evaluate the
financial performance of companies in the yellow pages directory industry.
The Company's definition of EBITDA may not be comparable to that of other
companies.
(e) "Bookings" is defined as the daily advertising orders received from accounts
during a given period and generally occur at a steady pace throughout the
year. In fiscal 1997, net revenues included $4,200 from acquired
directories, while bookings does not reflect this adjustment. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."
(f) "Advance payments as a percentage of net revenues" is defined as, for a
given period, all cash deposits received on advertising orders prior to
revenue recognition as a percentage of net revenues recognized upon
directory distribution.
(g) "Number of accounts" is defined as the total number of advertising accounts
for all directories published during a given period. Customers are counted
as multiple accounts if advertising in more than one directory.
(h) "Average net revenues per account" is defined as net revenues divided by the
number of accounts.
11
<PAGE> 17
RISK FACTORS
This Prospectus, including the documents incorporated by reference herein,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Such forward-looking statements are based on the
beliefs of the Company's management as well as on assumptions made by and
information currently available to the Company at the time such statements were
made. When used in this Prospectus, the words "anticipate," "believe,"
"estimate," "expect," "intend" and similar expressions, as they relate to the
Company, are intended to identify forward-looking statements. Prospective
investors should be aware that actual results could differ materially from those
projected by such forward-looking statements as a result of the risk factors set
forth below or other factors. Prospective investors should consider carefully
the following factors as well as the other information and data included in this
Prospectus in tendering Old Notes in exchange for Exchange Notes. The Issuers
caution the reader, however, that this list of factors may not be exhaustive and
that these or other factors could have an adverse effect on the Company's
ability to service its indebtedness, including principal and interest payments
on the Notes.
SUBSTANTIAL LEVERAGE
The Company incurred significant debt in connection with the
Recapitalization. As of October 31, 1997, after giving pro forma effect to the
Initial Offerings and the Asset Drop-Down, the Company would have had
outstanding indebtedness of approximately $185 million and member deficit of
approximately $156 million. After giving pro forma effect to the Initial
Offerings and the Asset Drop-Down, the Company's ratio of earnings to fixed
charges would have been 1.03 to 1 for the fiscal year ended April 30, 1997, and
the Company's earnings would have been insufficient to cover fixed charges by
approximately $7.6 million for the six-month period ended October 31, 1997. The
Company also has additional borrowing capacity on its Revolving Credit Facility
under the Senior Credit Facility. The lenders under the Senior Credit Facility
have an exclusive security interest in substantially all of the assets of the
Company.
The Company's leveraged financial position poses substantial consequences
to holders of the Notes, including the risks that (i) a substantial portion of
the Company's cash flow from operations will be dedicated to the payment of
interest on the Notes and the payment of principal and interest under the Senior
Credit Facility and other indebtedness, (ii) the Company's leveraged position
may impede its ability to obtain financing in the future for working capital,
capital expenditures, acquisitions and general corporate purposes, and (iii) the
Company's highly leveraged financial position may make it more vulnerable to
economic downturns and may limit its ability to withstand competitive pressures.
Based upon the successful implementation of management's business and operating
strategy, the Company believes it will have sufficient capital to carry on its
business and will be able to meet its scheduled debt service requirements.
However, there can be no assurance that the future cash flow of the Company will
be sufficient to meet the Company's obligations and commitments. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The Company will be required to make quarterly scheduled principal payments
on the Term Loans (as defined herein) under the Senior Credit Facility
commencing on January 1, 1998 and to repay the Term Loans in full in 2004. The
Senior Credit Facility also provides that the Revolving Credit Facility will be
reduced each year commencing on January 1, 2000 and that all borrowings under
the Revolving Credit Facility will become due in 2003. The Company's ability to
make the required scheduled payments will depend on its financial and operating
performance, which is subject to prevailing economic and competitive conditions
and to certain financial, business and other factors beyond its control,
including interest rates, unscheduled shutdowns at the Company's suppliers or
printers, paper prices and other developments. If the Company is unable to
generate sufficient cash flow from operations in the future to service its
indebtedness and to meet its other commitments, the Company will be required to
adopt one or more alternatives, such as refinancing or restructuring its
indebtedness, selling material assets or operations or seeking to raise
additional debt or equity capital. There can be no assurance that any of these
actions could be effected on a timely basis or on satisfactory terms or that
these actions would enable the Company to continue to satisfy its capital
requirements. In addition, the terms of existing or future debt agreements,
including the Indenture and the
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<PAGE> 18
Senior Credit Facility, may prohibit the Company from adopting any of these
alternatives. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources," "Description of
Certain Indebtedness -- Senior Credit Facility" and "Description of the Notes."
SUBORDINATION OF NOTES
The Notes will be unsecured and subordinated to the prior right of payment
of all existing and future Senior Indebtedness of the Issuers, including
obligations under the Senior Credit Facility. The indebtedness under the Senior
Credit Facility will also become due prior to the time the principal obligations
under the Notes become due. Subject to certain limitations, the Indenture will
permit the Issuers to incur and secure additional Senior Indebtedness. See
"Description of the Notes -- Certain Covenants -- Limitation on Additional
Indebtedness." As a result of the subordination provisions contained in the
Indenture, in the event of a liquidation or insolvency, the assets of the
Issuers will be available to pay obligations on the Notes only after all Senior
Indebtedness has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on any or all of the Notes then outstanding. Claims
in respect of the Notes will be effectively subordinated to all liabilities
(including trade payables) of any subsidiary of the Company that is not a
Guarantor (as defined herein) of the Notes. In addition, substantially all of
the assets of the Issuer's future subsidiaries will be pledged to secure other
indebtedness of the Issuers. See "Description of Certain Indebtedness -- Senior
Credit Facility" and "Description of the Notes."
RESTRICTIONS IMPOSED BY CERTAIN COVENANTS
The agreements governing the outstanding indebtedness of the Company impose
certain operating and financial restrictions on the Company. The Senior Credit
Facility requires the Company to comply with financial covenants with respect to
(i) a minimum interest coverage ratio, (ii) a minimum EBITDA (as defined in the
Senior Credit Facility), (iii) a maximum leverage ratio, and (iv) a minimum
fixed charge coverage ratio. In addition, the Senior Credit Facility restricts,
among other things, the Company's ability to (i) declare dividends or redeem or
repurchase capital stock, (ii) prepay, redeem or purchase debt, (iii) incur
liens and engage in sale lease-back transactions, (iv) make loans and
investments, (v) incur additional indebtedness, (vi) amend or otherwise alter
debt and other material agreements, (vii) make capital expenditures, (viii)
engage in mergers, acquisitions and asset sales, (ix) transact with affiliates,
(x) alter the business it conducts, (xi) enter into guarantees of indebtedness,
and (xii) make optional payments on or modify the terms of subordinated debt. A
failure to comply with the restrictions contained in the Senior Credit Facility
could lead to an event of default thereunder which could result in an
acceleration of such indebtedness. Such an acceleration would constitute an
event of default under the Indenture relating to the Notes. See "Description of
Certain Indebtedness -- Senior Credit Facility."
The Indenture contains a number of covenants which restrict, among other
things, the Company's ability to (i) incur additional Indebtedness, (ii) pay
dividends and make distributions, (iii) issue stock of subsidiaries, (iv) make
certain investments, (v) repurchase stock, (vi) create liens, (vii) enter into
transactions with affiliates, (viii) enter into sale lease-back transactions,
(ix) merge or consolidate the Company or any Guarantors, and (x) transfer or
sell assets. A failure to comply with the restrictions in the Indenture could
result in an event of default under the Indenture. See "Description of the
Notes."
VARIATION IN QUARTERLY RESULTS
The Company's net revenues and operating results have exhibited some degree
of variability from quarter to quarter and between periods and some degree of
seasonality. Although the Company records bookings and receives advance payments
at a fairly constant rate, the Company does not recognize net revenues with
respect to bookings or cash receipts for any given directory or the costs
directly related to sales, production, printing and distribution of that
directory until the month in which it is distributed. The actual publication and
distribution dates of individual directories are subject to change and a
significant number of individual directories are not published during the same
month each year, which results in significant monthly fluctuation in the
Company's net revenues and EBITDA. Thus, EBITDA and other financial indicators
generally relied on by investors to evaluate a company's ability to service its
debt may not, in the case of the Company, reflect
13
<PAGE> 19
actual cash received during a given period. Also, changes to the Company's sales
canvassing, production and distribution schedules could have a material adverse
effect on the Company's ability to satisfy certain of the covenants in the
Senior Credit Facility and the Indenture. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Overview."
IMPORTANCE OF ACCOUNT EXECUTIVES
The Company's ability to achieve its business plan depends to a significant
extent on its ability to identify, hire, train and retain qualified sales
personnel in each of the regions in which the Company operates. Historically,
the Company's revenue performance has been closely related to the aggregate
number of the Company's sales people. The Company's aggregate number of
salesperson days increased by approximately 59% from fiscal 1993 to fiscal 1997
and the Company's net revenues increased by approximately 66% over the same
period. However, in each of those five fiscal years, the Company experienced a
turnover of approximately 34% to 73% in its sales force, particularly among new
hires. As a result of these turnover rates, the Company expends a significant
amount of resources and management time on identifying and training its account
executives. While the Company has been able to achieve its objectives for
increasing the number of sales days, the Company's ability to attract and retain
qualified sales personnel depends on numerous factors, including factors out of
the Company's control, such as conditions in the local employment markets in
which the Company operates. The Company's business plan calls for a continued
increase in the number of account executives, and there can be no assurance that
the Company will be able to hire or retain a sufficient number of account
executives to achieve its financial objectives. A decrease in the number of
account executives could have an adverse effect on the Company's ability to
service its indebtedness, including principal and interest payments on the
Notes, and could have a material adverse effect on the Company's business,
operating results or financial condition.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the continued services of its senior management
team, including its regional sales management personnel. In connection with the
Recapitalization, the Company's previous Chairman of the Board and Chief
Executive Officer resigned and was replaced, in his Chief Executive Officer
capacity, by Ricardo Puente, the Company's existing President and, in his
capacity as Chairman of the Board, by Laurence H. Bloch, the Company's previous
Vice Chairman and Chief Financial Officer. Otherwise, the Company has retained
the services of its existing senior management team, all of whom have
significant experience in the yellow pages publishing industry. Messrs. Puente
and Bloch have each entered into an employment contract with the Company which
provides for their continued employment for a five year term. See
"Management -- Employment Agreements." Although the Company believes it could
replace such key employees in an orderly fashion should the need arise, the loss
of such key personnel could have a material adverse effect on the Company's
business, operating results or financial condition. See "Management -- Directors
and Executive Officers."
ACQUISITION AND DEVELOPMENT RISKS
A portion of the Company's growth since the 1993 Acquisition has resulted
from the acquisition of directories from other independent yellow pages
publishers and start-ups of new directories. While one of the Company's
strategies for achieving its financial objectives is increasing the number of
directories it publishes and the local markets which it serves, there can be no
assurance that the Company's historical success with acquisitions or start-ups
will continue. The Company intends to continue to seek out opportunities for
future expansion, but there can be no assurance that the Company will be able to
develop new directories or identify, negotiate and consummate acquisitions on
attractive terms, nor can there be any assurance that new acquisitions or
start-ups can be operated profitably or integrated successfully into the
Company's operations. Furthermore, start-ups and acquisitions both require
substantial attention from and place substantial demands upon the senior
management of the Company, which may divert attention from and adversely impact
their ability to manage the Company's existing businesses. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."
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<PAGE> 20
RISK ASSOCIATED WITH CREDITWORTHINESS OF SMALL BUSINESSES
Approximately 95% of the Company's net revenues come from selling
advertising to local businesses. In the ordinary course of its business, the
Company extends credit to its customers for advertising purchases. Full
collection of delinquent accounts can take up to 18 to 24 months. As a group,
local businesses tend to have fewer financial resources and higher financial
failure rates than larger businesses. Consequently, although the Company
attempts to mitigate this exposure through the size, geographic and industry
diversification of its customer base as well as through collection of advance
payments, there can be no assurance that it will not be adversely affected by
its dependence on local businesses.
SUBSTANTIAL COMPETITION
The yellow pages directory advertising business is highly competitive.
There are over 250 independent publishers operating in competition with the
regional Bell operating companies and other telephone utilities. In most
markets, the Company competes not only with the telephone utilities, but also
with one or more independent yellow pages publishers. Many of these telephone
utility competitors are larger and have greater financial resources than the
Company. Other media in competition with yellow pages for local business and
professional advertising include newspapers, radio, television, billboards and
direct mail. There can be no assurance that the Company will be able to compete
effectively with these other firms for advertising or acquisitions in the
future.
RISK OF CHANGING TECHNOLOGY; NEW PRODUCT DEVELOPMENT
The yellow pages directory advertising business is subject to changes
arising from developments in technology (including information distribution
methods) and users' technological preferences. As a result of these factors, the
Company's growth and future financial performance may depend upon its ability to
develop and market new products and services and create new distribution
channels, while enhancing existing products, services and distribution channels,
in order to accommodate the latest technological advances and user preferences,
including the use of the Internet. The increasing use of the Internet by
consumers as a means to transact commerce may result in new technologies being
developed and services provided that could compete with the Company's products
and services. The Company has entered into a strategic agreement with InfoSpace,
Inc. ("InfoSpace") with respect to its Internet service. However, there can be
no assurance that the Company will be successful in its attempt to provide its
services over the Internet. A failure by the Company to anticipate or respond
adequately to changes in technology and user preferences, or an inability to
finance the necessary capital expenditures, could have a material adverse effect
on the Company's business, operating results or financial condition.
SENSITIVITY OF REVENUE TO ECONOMIC CONDITIONS
The Company derives its net revenues from the sale of advertising in its
directories. Advertising revenues of the Company, as well as those of yellow
pages publishers in general, generally do not fluctuate widely with economic
cycles. However, a prolonged national or regional economic recession could have
a material adverse effect on the Company's business, operating results or
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview" and "Business -- Industry
Overview."
CONTROLLING EQUITYHOLDER
The THL Parties own approximately 59% of TCC's Common Stock. Under the
terms of the Investors Agreement (as defined herein), all of the stockholders of
TCC have agreed to vote in favor of those individuals designated by THL to serve
on the Board of Directors of TCC, and THL has the right to appoint a majority of
the Directors until the occurrence of certain events. As a result, THL has the
ability to control the policies and operations of the Company. Circumstances may
occur in which the interests of THL, as the principal equity holder of the
Company could be in conflict with the interests of the holders of the Notes. In
addition, the equity investors may have an interest in pursuing acquisitions,
divestitures or other transactions
15
<PAGE> 21
that, in their judgment, could enhance their equity investment, even though such
transactions might involve risks to the holders of the Notes. See "Security
Ownership of Certain Beneficial Owners and Management."
LIMITATIONS ON CHANGE OF CONTROL
In the event of a Change of Control, the Issuers will be required to make
an offer for cash to purchase the Notes at 101% of the principal amount thereof,
plus any accrued and unpaid interest, if any, thereon to the purchase date.
Certain events involving a Change of Control may result in an event of default
under the Senior Credit Facility or other indebtedness of the Issuers that may
be incurred in the future. Moreover, the exercise by the holders of the Notes of
their right to require the Issuers to purchase the Notes may cause an event of
default under the Senior Credit Facility or such other indebtedness, even if the
Change of Control does not. The Issuers' obligations under this provision of the
Indenture could delay, deter or prevent a sale of the Company which might
otherwise be advantageous to holders of the Notes. Finally, there can be no
assurance that the Issuers will have the financial resources necessary to
purchase the Notes upon a Change of Control. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and "Description of the Notes -- Change of Control Offer."
RISK ASSOCIATED WITH FLUCTUATIONS IN PAPER COSTS
The Company is dependent upon outside suppliers for all of its raw material
needs and, therefore, is subject to price increases and delays in receiving
supplies of such materials. The Company's principal raw material is paper, and
it used approximately 16.4 million and 17.6 million pounds of directory grade
paper in its fiscal years ended April 30, 1996 and 1997, respectively, resulting
in a total cost of paper during such periods of $6.0 million and $5.8 million,
respectively. Certain commodity grades of paper, including directory grade
paper, have shown considerable price volatility since 1989. Paper prices rose
sharply in 1995 and then fell throughout 1996. The Company does not purchase
paper directly from paper mills; instead, the Company's printers purchase the
paper on behalf of the Company at prices negotiated by the Company. However, the
Company recently entered into a pricing agreement through January 1, 1998, with
the paper mill that supplies the Company's primary printer, which has the effect
of delaying an announced price increase. Changes in the supply of, or demand
for, paper could affect delivery times and prices. No assurances can be given
that the Company will continue to have available necessary raw materials at
reasonable prices or that any increases in paper costs would not have a material
adverse effect on the Company's business, financial condition or results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Result of Operations -- Overview" and "Business -- Raw Materials."
RISK OF FRAUDULENT TRANSFER
Under applicable provisions of the U.S. Bankruptcy Code or comparable
provisions of state fraudulent transfer or conveyance laws, if the Company, at
the time it borrowed under the Senior Credit Facility and the Senior
Subordinated Facility or issued the Notes (i) incurred such indebtedness with
intent to hinder, delay or defraud creditors or (ii)(a) received less than
reasonably equivalent value or fair consideration for incurring such
indebtedness and (b)(1) was insolvent at the time of incurrence, (2) was
rendered insolvent by reason of such incurrence (and the application of the
proceeds thereof), (3) was engaged or was about to engage in a business or
transaction for which the assets remaining with the Company constituted
unreasonably small capital to carry on its businesses or (4) intended to incur,
or believed that it would incur, debts beyond its ability to pay such debts as
they mature, then, in each case, a court of competent jurisdiction could void,
in whole or in part, the Notes, or, in the alternative, subordinate the Notes to
existing and future indebtedness of the Company. The measure of insolvency for
purposes of the foregoing will vary depending upon the law applied in such case.
Generally, however, the Company would be considered insolvent if the sum of its
debts, including contingent liabilities, was greater than all of its assets at
fair valuation or if the present fair saleable value of its assets was less than
the amount that would be required to pay the probable liability on its existing
debts, including contingent liabilities, as they become absolute and matured.
Management believes that, for purposes of the U.S. Bankruptcy Code and
state fraudulent transfer or conveyance laws, the Notes were issued and are
being exchanged without the intent to hinder, delay or defraud
16
<PAGE> 22
creditors and for proper purposes and in good faith and that the Company, after
the issuance and exchange of the Notes and the application of the proceeds
thereof, will be solvent, will have sufficient capital for carrying on its
business and will be able to pay its debts as they mature. There can be no
assurance, however, that a court passing on such questions would agree with
management's view.
ABSENCE OF A PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF EXCHANGE NOTES
The Old Notes were issued to, and the Company believes are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange Offer,
there has not been any public market for the Old Notes. The Old Notes have not
been registered under the Securities Act and will be subject to restrictions on
transferability to the extent that they are not exchanged for Exchange Notes by
holders who are entitled to participate in this Exchange Offer. The holders of
Old Notes (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) who are not eligible to
participate in the Exchange Offer are entitled to certain registration rights,
and the Company is required to file a Shelf Registration Statement with respect
to such Old Notes. The Exchange Notes will constitute a new issue of securities
with no established trading market. The Company does not intend to list the
Exchange Notes on any national securities exchange or seek the admission thereof
to trading in the National Association of Securities Dealers Automated Quotation
System. The Initial Purchasers have advised the Company that they currently
intend to make a market in the Exchange Notes, but they are not obligated to do
so and may discontinue such market making at any time. In addition, such market
making activity will be subject to the limits imposed by the Securities Act and
the Exchange Act and may be limited during the Exchange Offer and the pendency
of the Shelf Registration Statement. Accordingly, no assurance can be given that
an active public or other market will develop for the Exchange Notes or as to
the liquidity of the trading market for the Exchange Notes. If a trading market
does not develop or is not maintained, holders of the Exchange Notes may
experience difficulty in reselling the Exchange Notes or may be unable to sell
them at all. If a market for the Exchange Notes develops, any such market may be
discontinued at any time.
If a public trading market develops for the Exchange Notes, future trading
prices of such securities will depend on many factors including, among other
things, prevailing interest rates, the Company's results of operations and
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the Exchange Notes may trade at a discount from their
principal amount.
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS
Issuance of the Exchange Notes in exchange for the Old Notes pursuant to
the Exchange Offer will be made only after a timely receipt by the Company of
such Old Notes, a properly completed and duly executed Letter of Transmittal and
all other required documents. Therefore, holders of the Old Notes desiring to
tender such Old Notes in exchange for Exchange Notes should allow sufficient
time to ensure timely delivery. The Company is under no duty to give
notification of defects or irregularities with respect to the tender of Old
Notes for exchange. Old Notes that are not tendered or are tendered but not
accepted will, following the consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof, and, upon
consummation of the Exchange Offer certain registration rights under the
Registration Rights Agreement will terminate. In addition, any holder of Old
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities, and if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution." To the
extent that Old Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Old Notes could be
adversely affected. See "The Exchange Offer."
17
<PAGE> 23
THE ISSUERS
TransWestern Publishing Company LLC. In November 1997, the Partnership
formed and contributed substantially all of its assets to TransWestern,
TransWestern assumed or guaranteed all of the liabilities of the Partnership and
the Partnership changed its name to TransWestern Holdings L.P. As a result of
the Asset Drop-Down, TransWestern succeeded to all of the Partnership's
operations and became its wholly-owned subsidiary. The Partnership was formed by
CIVC, the Management Investors and certain other investors in May 1993 to
acquire the TransWestern business from US West. US West assembled the assets and
management team that comprised the TransWestern business through the acquisition
of 15 independent directory companies between 1985 and 1989.
TWP Capital Corp. II. Capital II, a wholly-owned subsidiary of
TransWestern, was incorporated in 1997 for the purpose of serving as a co-issuer
of the Notes in order to facilitate the Senior Subordinated Facility and the
Initial Offering. Capital II will not have substantial operations or assets of
any kind and will not have any revenues. As a result, prospective purchasers of
the Notes should not expect Capital II to participate in servicing the interest
or principal obligations of the Notes. The Indenture will impose substantial
restrictions on the activities of Capital II.
The Company's principal executive offices are located at 8344 Clairemont
Mesa Boulevard, San Diego, California 92111, and its telephone number is (619)
467-2800.
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<PAGE> 24
THE TRANSACTIONS
The Initial Offering was consummated in conjunction with the Partnership's
$312.7 million Recapitalization plan set forth in the Securities Purchase and
Redemption Agreement, dated as of August 27, 1997, as amended, among the THL
Parties, CIBC WG Argosy Merchant Fund 2, L.L.C. ("CIBC Merchant Fund"), an
affiliate of CIBC Oppenheimer, which was one of the Initial Purchasers, the
Partnership and each of the Partnership's existing limited partners (the
"Existing Limited Partners").
In the Recapitalization, the THL Parties, CIBC Merchant Fund and CIVC
Partners III ("CIVC III" and together with the THL Parties and CIBC Merchant
Fund, the "New Investors"), the Management Investors and certain of the other
Existing Limited Partners made the Equity Investment in the Partnership and TCC.
The proceeds of the Equity Investment, together with approximately $182.7
million of aggregate proceeds from the debt financings described below, were
used (i) for $224.5 million of Recapitalization consideration, (ii) to repay
$75.6 million under the Old Credit Facility, (iii) to pay $10.6 million of fees
and expenses and (iv) for $2.0 million for general corporate purposes, including
working capital. The Recapitalization consideration consisted of (a) $174.4
million for redemption of outstanding partnership units, (b) $42.7 million of
capital which was reinvested by the Management Investors and certain other
Existing Limited Partners, (c) $5.5 million reserved for payments pursuant to
the Equity Compensation Plan, (d) $1.4 million for the purchase of TCC common
stock and (e) $0.5 million representing debt assumed.
The Recapitalization was financed with (i) the Equity Investment of $130.0
million, (ii) borrowings of approximately $107.7 million under the Senior Credit
Facility and (iii) borrowings of $75.0 million under the Senior Subordinated
Facility.
The Senior Credit Facility was provided by Canadian Imperial Bank of
Commerce, New York Agency, as lender and administrative agent ("CIBC"), and
First Union National Bank, as lender and documentation agent ("First Union"),
both of which are affiliates of the Initial Purchasers. The Senior Subordinated
Facility was provided by CIBC Oppenheimer and First Union Corporation, an
affiliate of First Union Capital Markets Corp., which is one of the Initial
Purchasers. TCC is owned approximately pro rata by all the equity investors in
the Partnership.
One half of the $5.5 million reserved for payments pursuant to the Equity
Compensation Plan was paid in the Recapitalization and one half remains an
obligation of the Company and was not borrowed concurrently with the other steps
of the Recapitalization. However, the entire $5.5 million for payments pursuant
to the Equity Compensation Plan is included in the sources and uses of funds
outlined below. See "Management -- Equity Compensation Arrangements."
The following table sets forth the sources and uses of funds in the
Recapitalization (dollars in millions):
<TABLE>
<S> <C>
SOURCES:
Senior Credit Facility(a)(b)...................................... $107.7
Senior Subordinated Facility(b)................................... 75.0
Equity Investment(c).............................................. 130.0
------
Total sources............................................. $312.7
======
USES:
Recapitalization consideration(d)................................. $224.5
Repayment of Old Credit Facility(e)............................... 75.6
Fees and expenses................................................. 10.6
Working capital................................................... 2.0
------
Total uses................................................ $312.7
======
</TABLE>
- ---------------
(a) Includes borrowings of $85.0 million in Term Loans and $22.7 million under
the Revolving Credit Facility. Although the Company had actually drawn $17.2
million under the Revolving Credit Facility as of October 1, 1997, this
table reflects an amount, $22.7 million, that would have been borrowed under
the Revolving Credit Facility if all estimated fees and expenses, other debt
assumed and the total amount to be paid under the Equity Compensation Plan
had been paid on that date.
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<PAGE> 25
(b) The net proceeds of the Initial Offering were applied to (i) repay the
Senior Subordinated Facility, (ii) reduce the outstanding balance under the
Revolving Credit Facility, (iii) pay fees and expenses related to the
Initial Offering and (iv) for general corporate purposes, including working
capital.
(c) Includes $87.3 million from the New Investors, comprised of (i) $77.0
million invested by the THL Parties, (ii) $5.0 million invested by the CIBC
Merchant Fund, (iii) $4.5 million invested by CIVC III and (iv) $0.8 million
from new management investors. Also includes $42.7 million from continuing
investors, comprised of (i) $25.5 million from CIVC, (ii) $11.2 million from
the Management Investors, (iii) $5.0 million from First Union Capital
Partners Inc. ("FUCP") and (iv) $1.0 million from the Partnership's former
Chairman.
(d) Includes $174.4 million for redemption of outstanding partnership units,
$1.4 million for the purchase of TCC common stock, $5.5 million reserved for
payments pursuant to the Equity Compensation Plan, $0.5 million representing
debt assumed and $42.7 million of capital which was reinvested by the
Management Investors and certain other Existing Limited Partners.
(e) The Old Credit Facility was provided by First Union, as lender and
administrative agent, and CIBC Inc., an affiliate of CIBC Oppenheimer, as
lender and documentation agent.
In November 1997, the Partnership formed and contributed substantially all
of its assets to Trans-Western, TransWestern assumed or guaranteed all of the
liabilities of the Partnership, and the Partnership changed its name to
TransWestern Holdings L.P. As a result of the Asset Drop-Down, Holdings' only
assets are all of the TransWestern membership interests and all of Capital's
capital stock. All of the operations that were previously conducted by the
Partnership are now being conducted by TransWestern.
Concurrent with the Initial Offering, Holdings and Capital offered $32.5
million in initial aggregate principal amount ($57.9 million principal amount at
maturity) of 11 7/8% Senior Discount Notes due 2008. The Discount Notes are
unsecured obligations of the Discount Notes Issuers and are effectively
subordinated to all liabilities of Holdings' subsidiaries, including the Notes
and trade payables. The net proceeds of the Initial Discount Note Offering were
used to redeem approximately $31.3 million of the Equity Investment. However,
this redemption by Holdings did not reduce the equity capitalization of
TransWestern.
After giving effect to the Initial Offerings and the Asset Drop-Down, the
THL Parties collectively own approximately 59% of the equity of Holdings and the
CIVC Parties and the Management Investors own approximately 23% and 9% of the
equity of Holdings, respectively. The remainder of the equity of Holdings is
held by other investors.
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<PAGE> 26
THE PRINCIPAL INVESTORS
After giving effect to the Initial Offerings and the Asset Drop-Down, the
THL Parties are collectively the principal investors in the Company, owning
approximately 59% of the Preferred Units, the Class A Units and the stock of
TCC. THL, which is the principal THL Party, is managed by THL Co., one of the
oldest and most successful private equity investment firms in the United States.
Founded in 1974, THL Co. focuses on identifying and acquiring ownership stakes
in middle market growth companies. THL Co. currently manages more than $3
billion of capital and has participated in more than 100 acquisitions and
investments.
CIVC and CIVC III (the "CIVC Parties") together own approximately 23% of
the Preferred Units, the Class A Units and the stock of TCC. CIVC is a private
equity firm and a licensed small business investment company. Since 1990, CIVC
has invested approximately $300 million in small and middle market businesses
and was the principal investor in the 1993 Acquisition. CIVC is an indirect
subsidiary of BankAmerica Corporation, an international financial services
organization.
All of the Management Investors, who own in the aggregate approximately 9%
of the Preferred Units, the Class A Units and the stock of TCC, have been
officers and/or senior operational managers of the Company since the 1993
Acquisition. The Management Investors have extensive experience in the yellow
pages publishing business. See "Management."
21
<PAGE> 27
USE OF PROCEEDS
The Partnership and Capital incurred $75.0 million of indebtedness under
the Senior Subordinated Facility on October 1, 1997 in connection with the
Recapitalization. The net proceeds of the Initial Offering, were approximately
$94.5 million (after deduction of estimated discounts to the Initial Purchasers
and other Offering expenses). The Company used (i) $75.0 million to make a
distribution to Holdings which was used to repay the Senior Subordinated
Facility (ii) $16.0 million to repay the Company's outstanding balance and
interest due on the Revolving Credit Facility and (iii) the remaining net
proceeds for general corporate purposes, including working capital. The Initial
Purchasers or their affiliates purchased the notes issued by the Partnership and
Capital under the Senior Subordinated Facility and are lenders, and the agents,
under the Senior Credit Facility.
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Exchange Offer Registration Rights Agreement. The Company
will not receive any cash proceeds from the issuance of the Exchange Notes
offered hereby. In consideration for issuing the Exchange Notes contemplated in
this Prospectus, the Company will receive Old Notes in like principal amount,
the form and terms of which are the same as the form and terms of the Exchange
Notes (which replace the Old Notes), except as otherwise described herein.
22
<PAGE> 28
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
October 31, 1997, after giving effect to the Initial Offerings and the Asset
Drop-Down. The Old Notes surrendered in exchange for Exchange Notes will be
retired and canceled and cannot be reissued. Accordingly, issuance of the
Exchange Notes will not result in any increase or decrease in the indebtedness
of the Company. As such, no effect has been given to the Exchange Offer in the
following capitalization table. The information in this table should be read in
conjunction with "The Transactions," "Unaudited Pro Forma Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and accompanying notes thereto
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
OCTOBER 31, 1997
-----------------------------
PRO FORMA
FOR THE INITIAL
OFFERINGS
AND THE
ACTUAL ASSET DROP-DOWN
--------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Total debt:
Senior Credit Facility:
Revolving Credit Facility(a)................................ $ 16,000 $ --
Term Loans.................................................. 85,000 85,000
Senior Subordinated Facility................................... 75,000 --
Notes.......................................................... -- 100,000
Other debt..................................................... 430 430
--------- ---------
Total debt.................................................. 176,430 185,430
Total member deficit............................................. (152,605) (156,005)
--------- ---------
Total capitalization........................................ $ 23,825 $ 29,425
========= =========
</TABLE>
- ---------------
(a) The Senior Credit Facility consists of a $40 million Revolving Credit
Facility and $85 million in Term Loans. See "Description of Certain
Indebtedness -- Senior Credit Facility." Although the Company had actually
drawn $17.2 million under the Revolving Credit Facility as of October 1,
1997, this table reflects an amount, $22.7 million, that would have been
borrowed under the Revolving Credit Facility if all estimated fees and
expenses, other assumed debt and the total amount to be paid under the
Equity Compensation Plan had been paid on that date. On a pro forma basis,
the Company would have had approximately $40 million of additional borrowing
availability under the Revolving Credit Facility after applying a portion of
the proceeds from the issuance of the Notes to reducing the outstanding
balance under the Revolving Credit Facility.
23
<PAGE> 29
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data are derived from the
Company's financial statements appearing elsewhere in this Prospectus, as
adjusted to give effect to the Transactions. The unaudited pro forma statements
of operations data for the fiscal year ended April 30, 1997 and the six-month
period ended October 31, 1997 give effect to the Transactions as if they had
occurred at the beginning of such periods, and the unaudited pro forma balance
sheet data give effect to the Initial Offerings and the Asset Drop-Down as if
they had occurred on October 31, 1997. The pro forma adjustments are based upon
available data and certain assumptions that the Company believes are reasonable.
The unaudited pro forma financial data do not purport to represent what the
Company's results of operations or financial position would actually have been
had the Transactions in fact occurred at such prior times or to project the
Company's results of operations or financial position for or at any future
period or date. The unaudited pro forma financial data should be read in
conjunction with the financial statements of the Company and the information
contained in "The Transactions," "Use of Proceeds," and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere herein.
24
<PAGE> 30
TRANSWESTERN PUBLISHING COMPANY LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED APRIL 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
TRANSACTIONS
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ---------
<S> <C> <C> <C>
Net revenues............................................. $ 91,414 $ 91,414
Cost of revenues......................................... 19,500 19,500
-------- ---------
Gross profit........................................... 71,914 71,914
Operating expenses:
Sales and marketing.................................... 36,640 36,640
General and administrative............................. 16,821 $ (100)(a) 16,721
Contribution to Equity Compensation Plan............... -- 5,543(b) 5,543
-------- ---------
Total operating expenses................................. 53,461 5,443 58,904
-------- ---------
Income (loss) from operations............................ 18,453 (5,443) 13,010
Other income (expense), net.............................. 48 48
Interest expense......................................... (7,816) (10,223)(c) (18,039)
-------- ---------
Income (loss) before extraordinary item.................. $ 10,685 $ 15,666) $ (4,981)
======== ======== =========
EBITDA data:
Income (loss) before extraordinary item................ $ 10,685 $ (4,981)
Interest expense....................................... 7,816 18,039
Non-recurring other expense............................ 300 300
Contribution to Equity Compensation Plan............... -- 5,543
Depreciation and amortization.......................... 6,399 6,399
-------- ---------
EBITDA................................................. $ 25,200 $ 25,300
======== =========
Ratio of earnings to fixed charges(d).................... 2.29x 1.03x
======== =========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Statements of Operations.
25
<PAGE> 31
TRANSWESTERN PUBLISHING COMPANY LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
TRANSACTIONS
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ---------
<S> <C> <C> <C>
Net revenues............................................... $ 38,254 $ 38,254
Cost of revenues........................................... 9,172 9,172
-------- ----------
Gross profit............................................. 29,082 29,082
Operating expenses:
Sales and marketing...................................... 17,114 17,114
General and administrative............................... 7,893 $ (50)(a) 7,843
Contribution to Equity Compensation Plan................. 5,543(b) -- 5,543
-------- ---------
Total operating expenses................................... 30,550 (50) 30,500
-------- ---------
Income (loss) from operations.............................. (1,468) 50 (1,418)
Other income (expense), net................................ (107) (107)
Interest expense........................................... (4,333) (7,239)(c) (11,572)
-------- ---------
Income (loss) before extraordinary item.................... $ (5,908) $ (7,189) $ (13,097)
======== ======== =========
EBITDA data:
Income (loss) before extraordinary item.................. $ (5,908) $ (13,097)
Interest expense......................................... 4,333 11,572
Non-recurring other expense.............................. 326 326
Contribution to Equity Compensation Plan................. 5,543 5,543
Depreciation and amortization............................ 3,274 3,274
-------- ---------
EBITDA..................................................... $ 7,568 $ 7,618
======== =========
Ratio of earnings to fixed charges(d)...................... -- --
======== =========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Statements of Operations.
26
<PAGE> 32
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31,
1997 1997
---------- ----------------
<S> <C> <C> <C>
(a) Entry records elimination of expenses of former Chairman
net of expenses associated with the Management Fee (as
defined herein)........................................... $ (100) $ (50)
(b) Entry records accrued contribution to Equity Compensation
Plan (see "Management -- Equity Compensation
Arrangements")............................................ 5,543 --
(c) Pro forma adjustments to interest expense as a result of
the Transactions are as follows:
Interest expense:
Term Loans ($85,000 @ 8.50%).............................. 7,191 3,613
Notes ($100,000 @ 9.625%)................................. 9,625 4,813
Unused Revolving Credit Facility fee...................... 200 100
-------- --------
Pro forma cash interest expense........................... 17,016 8,526
Amortization of debt issuance costs (i)................... 1,023 511
-------- --------
Total pro forma interest expense.......................... 18,039 9,037
--------
Less historical interest expense.......................... (7,816) (1,798)
-------- --------
$ 10,223 $ 7,239
======== ========
</TABLE>
(i) It is anticipated that the total amount of the Senior Subordinated
Facility debt issuance costs of $3,400 will be written off upon
consummation of the Offerings.
(d) Earnings consist of income (loss) before extraordinary item plus
contributions to the Equity Compensation Plan plus fixed charges. Fixed
charges consist of (i) interest, whether expensed or capitalized, (ii)
amortization of debt issuance costs, whether expensed or capitalized, and
(iii) an allocation of one-fourth of the rental expense from operating
leases which management considers is a reasonable approximation of the
interest factor of rental expense. Pro forma earnings were insufficient to
cover fixed charges by $7,554 for the six-month period ended October 31,
1997.
27
<PAGE> 33
TRANSWESTERN PUBLISHING COMPANY LLC
UNAUDITED PRO FORMA BALANCE SHEET
OCTOBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
INITIAL
OFFERINGS AND
THE
ASSET DROP-DOWN
HISTORICAL ADJUSTMENTS PRO FORMA
---------- --------------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash............................................. $ 2,223 $ 3,515(a) $ 5,738
Trade receivables................................ 17,230 17,230
Deferred directory costs......................... 8,417 8,417
Other current assets............................. 475 475
---------- ---------
Total current assets............................... 28,345 31,860
Property, equipment and leasehold improvements,
net.............................................. 2,881 2,881
Acquired intangibles, net.......................... 9,281 9,281
Other assets, primarily debt
issuance costs, net.............................. 8,246 5,485(a) 10,331
(3,400)(b)
---------- --------- ---------
$ 48,753 $ 5,600 $ 54,353
========== ========= =========
LIABILITIES AND MEMBER DEFICIT
Current liabilities:
Accounts payable................................. $ 2,925 $ 2,925
Salaries and benefits payable.................... 2,498 2,498
Other accrued liabilities........................ 4,753 4,753
Customer deposits................................ 14,752 14,752
Current portion, long-term debt.................. 2,555 2,555
---------- ---------
Total current liabilities.......................... 27,483 27,483
Long-term debt:
Senior Credit Facility........................... 98,875 $ (16,000)(a) 82,875
Senior Subordinated Facility..................... 75,000 (75,000)(a) --
Notes............................................ -- 100,000(a) 100,000
Member deficit..................................... (152,605) (3,400)(b) (156,005)
---------- --------- ---------
$ 48,753 $ 5,600 $ 54,353
========== ========= =========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Balance Sheet.
28
<PAGE> 34
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) Reflects the actual sources and uses of funds for the Recapitalization
through October 31, 1997 and the estimated pro forma sources and uses for
the Initial Offering as if it had occurred as of October 31, 1997:
<TABLE>
<CAPTION>
INITIAL
RECAPITALIZATION OFFERING
--------------------- --------
<S> <C> <C> <C>
SOURCES OF FUNDS:
New Investors(i):
THL Parties............................................... $75,674
CIVC III.................................................. 4,422
CIBC Merchant Fund ....................................... 4,914
Management Investors...................................... 738 $ 85,748
-------
Continuing investors(i)(ii):
CIVC ..................................................... 25,061
Management Investors and the former Chairman.............. 12,048
FUCP...................................................... 4,914 42,023
New financing:
Senior Credit Facility(iii):
Revolving Credit Facility............................... 22,716
Term Loans.............................................. 85,000
Senior Subordinated Facility.............................. 75,000 182,716
-------
Notes..................................................... $100,000
-------- --------
$310,487(v) $100,000
======== ========
USES OF FUNDS:
Repay Old Credit Facility .................................. $ 75,600
Repay amount due General Partner............................ 833
Redemption of partnership units............................. 174,381
Continuing investors(ii).................................... 42,023
Repay Revolving Credit Facility............................. $ 16,000
Repay Senior Subordinated Facility.......................... 75,000
Contribution to Equity Compensation Plan.................... 5,543
Transaction costs and fees(iv):
Senior Credit Facility.................................... $ 3,319
Senior Subordinated Facility.............................. 3,428
Transaction costs......................................... 3,858 10,605 5,485
Prepaid offering costs.................................... 1,000
Funds available for working capital......................... 502 3,515
-------- --------
$310,487(v) $100,000
======== ========
</TABLE>
29
<PAGE> 35
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(i) The table below sets forth the Equity Investment from New Investors and
continuing investors and TCC's partnership interests as of the
Recapitalization and as adjusted to reflect the Initial Discount Note
Offering and the redemption of the Preferred Units.
<TABLE>
<CAPTION>
AS ADJUSTED
PREFERRED FOR THE
AS OF THE UNIT INITIAL
RECAPITALIZATION REDEMPTIONS OFFERINGS
---------------- ----------- -----------
<S> <C> <C> <C>
New Investors:
THL Parties................................... $ 75,674 $ (18,191) $57,483
CIVC III...................................... 4,422 (1,063) 3,359
CIBC Merchant Fund............................ 4,914 (1,182) 3,732
Management Investors.......................... 738 (177) 561
Continuing investors:
CIVC.......................................... 25,061 (6,024) 19,037
Management Investors and the former
Chairman.................................... 12,048 (2,894) 9,154
FUCP.......................................... 4,914 (1,181) 3,733
TCC............................................. 2,238 (538) 1,700
-------- --------- -------
$130,009 $ (31,250) $98,759
======== ========= =======
</TABLE>
(ii) Based on the purchase price per unit for the New Investors, multiplied
by the number of units retained by the continuing investors in the
Recapitalization. See "The Transactions." This implied value does not
represent (a) a purchase, sale or other change in such equity
investment for accounting or tax purposes or (b) any funds or proceeds
paid to or used by the Company in the Recapitalization.
(iii) The Senior Credit Facility makes available up to $40,000 under the
terms of the Revolving Credit Facility. The terms of the Term Loans
require annual principal payments of $2,125 (in years one through
five), $27,625 in year six and $46,750 in year seven.
(iv) The transaction costs and fees and the allocation to the various
components of the Recapitalization and the Initial Offering have been
estimated by management and may be subject to change.
(v) Does not include approximately $2.2 million expended by the New
Investors to purchase common stock of TCC directly from the holders
thereof in connection with the Recapitalization.
(b) Entry records write-off of debt issuance costs:
<TABLE>
<CAPTION>
OFFERING
--------
<S> <C>
Senior Subordinated Facility...................................................... $3,400
</TABLE>
30
<PAGE> 36
SELECTED HISTORICAL FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS)
The following tables present selected historical financial data and,
insofar as they relate to each of the five fiscal years in the period ended
April 30, 1997, have been derived from the audited financial statements of the
Company and the TransWestern business. The audited statements of operations of
the Company for each of the three years in the period ended April 30, 1997 and
the audited balance sheet of the Company as of April 30, 1996 and 1997 and the
notes thereto appear elsewhere in this Prospectus. The balance sheet data at
April 30, 1993, 1994 and 1995 and the statement of operations data for each of
the years ended April 30, 1993 and 1994 have been derived from the audited
financial statements of the Company and the TransWestern business which do not
appear in this Prospectus. The selected historical statement of operations and
balance sheet data of the Company as of and for the six months ended October 31,
1996 and 1997 have been derived from unaudited financial statements of the
Company included elsewhere in this Prospectus, which, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such information. Results for
the six months ended October 31, 1997 are not necessarily indicative of results
that may be expected for the entire year. See "Unaudited Pro Forma Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations," and the financial statements of the Company and notes thereto
appearing elsewhere herein.
<TABLE>
<CAPTION>
YEARS ENDED APRIL 30, SIX MONTHS ENDED
------------------------------------------------------------------ OCTOBER 31,
PREDECESSOR ---------------------
1993(A) 1994 1995 1996 1997 1996 1997
----------- ------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues................ $54,949 $62,219 $ 69,845 $ 77,731 $ 91,414 $38,050 $38,254(b)
Cost of revenues............ 17,839 18,788 16,956 18,202 19,500 8,996 9,172
------- ------- -------- -------- -------- ------- -------
Gross profit.............. 37,110 43,431 52,889 59,529 71,914 29,054 29,082
Operating expenses:
Selling and marketing..... 26,473 26,301 27,671 29,919 36,640 15,888 17,114
General and
administrative.......... 8,793 13,037 13,804 15,072 16,821 7,870 13,436
------- ------- -------- -------- -------- ------- -------
Total operating expenses.... 35,266 39,338 41,475 44,991 53,461 23,758 30,550
------- ------- -------- -------- -------- ------- -------
Income (loss) from
operations................ 1,844 4,093 11,414 14,538 18,453 5,296 (1,468)
Other income(expense),
net....................... 243 344 470 375 48 18 (107)
Interest expense............ (342) (2,951) (4,345) (6,630) (7,816) (4,029) (4,333)
------- ------- -------- -------- -------- ------- -------
Income (loss) before
extraordinary item........ 1,745 1,486 7,539 8,283 10,685 1,285 (5,908)
Extraordinary item(c)....... 296 -- 392 1,368 -- -- 1,391
------- ------- -------- -------- -------- ------- -------
Net (loss) income........... $ 1,449 $ 1,486 $ 7,147 $ 6,915 $ 10,685 $ 1,285 $(7,299)
======= ======= ======== ======== ======== ======= =======
OTHER DATA:
Depreciation and
amortization.............. $ 1,129 $ 4,603 $ 4,593 $ 4,691 $ 6,399 $ 3,122 $ 3,274
Capital expenditures........ 743 769 496 484 1,034 259 580
EBITDA(d)................... 3,216 9,040 17,002 20,400 25,200 8,586 7,568(b)
EBITDA margin............... 5.9% 14.5% 24.3% 26.2% 27.6% 22.6% 19.8%
Gross margin................ 67.5% 69.8% 75.7% 76.6% 78.7% 76.4% 76.0%
Bookings(e)................. $54,188 $64,269 $ 70,013 $ 75,709 $ 86,859 $44,485 $49,926
Advance payments as a % of
net revenues(f)........... 26.2% 31.8% 36.9% 41.0% 45.1% 43.6% 46.6%
Number of accounts(g)....... 69,632 71,832 77,371 84,117 93,157 37,904 38,025
Average net revenues per
account(h)................ $ 789 $ 866 $ 903 $ 924 $ 981 $ 1,004 $ 1,006
Number of directories....... 90 97 106 118 128 49 57
Ratio of earnings to fixed
charges(i)................ 3.55x 1.44x 2.69x 2.28x 2.29x 1.17x --
BALANCE SHEET DATA (AT END
OF PERIOD):
Working capital............. $10,436 $12,034 $ 3,496 $ 2,088 $ 24 ($1,522) $862
Total assets................ 46,594 43,879 41,831 47,423 48,231 47,975 48,753
Total debt.................. 28,921 25,724 47,961 84,410 78,435 84,335 176,430
Member equity (deficit)..... 5,850 4,458 (22,721) (55,606) (50,722) (57,675) (152,605)
</TABLE>
See accompanying Notes to Selected Historical Financial and Other Data.
31
<PAGE> 37
NOTES TO SELECTED HISTORICAL FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS)
(a) Effective May 1, 1993, an investor group and CIVC formed the Partnership to
acquire the Transwestern business from US West. The results of operations
of the predecessor are not directly comparable to the results of operations
of the Company due to (i) the incurrence of interest expense from
borrowings to finance the acquisition and subsequent distributions, and
(ii) the effect of increased depreciation and amortization expense
associated with the acquisition.
(b) For the six months ended October 31, 1997 consolidated net revenue
increased $204,000 and EBITDA decreased $1.0 million as compared to the six
months ended October 31, 1996 primarily due to changes in the publication
schedule which caused a different mix of directories to be published in the
respective six month periods. EBITDA for the latest twelve months ended
October 31, 1997 and November 30, 1997 was $24,182 and $25,240
respectively. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(c) "Extraordinary item" represents the write-off of unamortized debt issuance
costs related to the repayment of debt prior to maturity. See Note 4 of the
Notes to the Financial Statements.
(d) "EBITDA" is defined as income (loss) before extraordinary item plus
interest expense, non-recurring other expense, discretionary contributions
to the Equity Compensation Plan and depreciation and amortization.
Non-recurring other expense was $300 in fiscal 1997. Contributions to the
Equity Compensation Plan were $525 in fiscal 1995 and $796 in fiscal 1996
and $5,543 for the six months ended October 31, 1997. EBITDA is not a
measure of performance under GAAP. While EBITDA should not be considered in
isolation or as a substitute for net income, cash flows from operating
activities and other income or cash flow statement data prepared in
accordance with GAAP, management understands that EBITDA is widely used by
certain investors as one measure to evaluate the financial performance of
companies in the yellow pages directory industry. The Company's definition
of EBITDA may not be comparable to that of other companies.
(e) "Bookings" is defined as the daily advertising orders received from
accounts during a given period and generally occur at a steady pace
throughout the year. In fiscal 1997, net revenues included $4,200 from
acquired directories, while bookings does not reflect this adjustment. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."
(f) "Advance payments as a percentage of net revenues" is defined as, for a
given period, all cash deposits received on advertising orders prior to
revenue recognition as a percentage of net revenues recognized upon
directory distribution.
(g) "Number of accounts" is defined as the total number of advertising accounts
for all directories published during a given period. Customers are counted
as multiple accounts if advertising in more than one directory.
(h) "Average net revenues per account" is defined as net revenues divided by
the number of accounts.
(i) Earnings consist of income (loss) before extraordinary item plus
contributions to the Equity Compensation Plan plus fixed charges. Fixed
charges consist of (i) interest, whether expensed or capitalized, (ii)
amortization of debt issuance costs, whether expensed or capitalized, and
(iii) an allocation of one-fourth of the rental expense from operating
leases which management considers is a reasonable approximation of the
interest factor of rental expense.
32
<PAGE> 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Partnership was formed in May 1993 to acquire the TransWestern business
from US West. In November 1997, the Partnership formed and contributed
substantially all of its assets to TransWestern, TransWestern assumed or
guaranteed all of the liabilities of the Partnership, and the Partnership
changed its name to TransWestern Holdings L.P. All of the operations that were
previously conducted by the Partnership are now being conducted by TransWestern.
Revenue Recognition. The Company recognizes net revenues from the sale of
advertisements placed in each directory when the completed directory is
distributed. Costs directly related to sales, production, printing and
distribution of each directory are capitalized initially as deferred directory
costs and then matched against related net revenues upon distribution. All other
operating costs are recognized during the period when incurred. As the number of
directories grows, the publication schedule is periodically adjusted to
accommodate new books. In addition, changes in distribution dates are affected
by market and competitive conditions and the staffing level required to achieve
the individual directory revenue goals. As a result, the Company's directories
may be published in a month earlier or later than the previous year and may move
from one fiscal quarter or year to another. Year to year results depend on both
timing and performance factors.
Notwithstanding significant monthly fluctuation in net revenues recognized
based on actual distribution dates of individual directories, the Company's
bookings and cash collection activities generally occur at a steady pace
throughout the year. The table below demonstrates that quarterly bookings,
collection of advance payments and total cash receipts vary less than net
revenues or EBITDA:
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1997 FISCAL 1998
----------------------------- ----------------------------- -------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues(a).... $20.7 $14.7 $20.9 $21.4 $23.3 $14.7 $23.5 $29.9 $19.2 $19.1
EBITDA............. 5.5 2.4 7.0 5.5 5.9 2.7 7.0 9.6 4.0 3.6
Bookings(b)........ 18.1 20.0 17.6 20.0 20.5 23.9 21.4 21.1 22.7 27.2
Advance payments... 8.0 8.0 8.2 9.6 8.8 10.1 10.4 12.2 11.1 11.8
Total cash
receipts(c)...... 17.7 18.0 17.4 19.5 18.5 20.9 20.0 22.6 22.6 24.1
</TABLE>
- ---------------
(a) Fiscal 1997 includes $4.2 million of net revenues from contracts acquired
by the Company in connection with directory acquisitions.
(b) Excludes $4.2 million from contracts booked before the related directories
were acquired by the Company.
(c) Includes both advance payments and collection of accounts receivable.
Revenue Growth. Since the 1993 Acquisition, the Company's total number of
directories increased by 52, from 90 to 142, and the Company increased its total
number of accounts from nearly 70,000 to more than 93,000. Four acquisitions
completed since May 1995 expanded the Company's presence in northern California,
upstate New York, western Massachusetts, southern Indiana, Kentucky and
Tennessee and accounted for the addition of 24 directories and approximately
$9.2 million of net revenues in fiscal 1997. In addition, the Company started 26
new directories since fiscal 1993 which accounted for $5.2 million of net
revenues in fiscal 1997. Excluding these new and acquired directories, the
Company's net revenues grew 9.0% in fiscal 1995, 7.2% in fiscal 1996 and 6.7% in
fiscal 1997 with average revenue per account increasing from $919 in fiscal 1995
to $959 in fiscal 1996 and $1,017 in fiscal 1997. The Company's overall revenue
renewal and account retention rates have averaged 86% and 76%, respectively,
over the last five years.
Bookings. The length of the measurement periods for revenues and bookings
are the same; however, the measurement period for bookings for each month is the
thirty-day period ending on the twentieth of that month. Consequently, the
measurement period for bookings lags the measurement period for revenue and
other items by 10 days. Growth in bookings, which is closely correlated with the
number of account
33
<PAGE> 39
executives, has been 9.7% through the seven months ended November 30, 1997
versus the same period in 1996. Through November 30, 1997, the Company has
recognized net revenues of $42.8 million and has account bookings of $39.9
million for directories scheduled but not yet published in fiscal 1998, compared
to $42.0 million of net revenues and $37.4 million of bookings recognized
through November 30, 1996. To facilitate future growth, the Company increased
the size of its sales force by approximately 12.0%, increasing the number of
account executives from 400 as of November 30, 1996 to 448 as of November 30,
1997. Average bookings per week has grown from approximately $1.6 million for
the 12-month period ended November 30, 1996 to $1.8 million for the 12-month
period ended November 30, 1997, an increase of approximately 12.5%.
Cost of Revenues. The Company's principal operating costs are production,
paper and printing. Total operating costs represented 21.3% of net revenues in
fiscal 1997. At the individual directory level, production, printing,
distribution and licensing costs are largely fixed for an established
circulation, resulting in high marginal profit contribution from incremental
advertising sales into an existing directory. Since fiscal 1995, the Company's
constant focus on process improvement and increased productivity has enabled it
to minimize additional production and administrative costs while increasing the
number of its directories. Despite the addition of 52 directories and an
approximately 34% increase in the total number of accounts since fiscal 1993,
improved production and administrative processing has enabled the Company to
reduce total non-sales staffing from 214 in fiscal 1993 to 148 in fiscal 1997
and to improve the proportion of account executives to total employees from
43.1% in fiscal 1993 to 64.3% in fiscal 1997.
The Company's principal raw material is paper. The Company used
approximately 16.4 million and 17.6 million pounds of directory grade paper in
fiscal 1996 and 1997, respectively, resulting in a total cost of paper during
such periods of approximately $6.0 million and $5.8 million, respectively. White
pages listings are licensed from telephone utilities for a set fee per name and
the number of listings correspond directly to planned circulation and does not
fluctuate. Total licensing fees incurred by the Company in fiscal 1997 were $1.1
million. Distribution is provided by two third-party vendors at a fixed delivery
cost per directory as established by individual market.
Selling and Marketing Expenses. Direct sales expense correlates closely
with the size of the Company's sales force. As the Company continues to increase
the number of directories and to expand its total customer base, the number of
account executives required to complete the annual selling cycle grows
accordingly. The Company's ability to complete selling each directory within a
prescribed time frame depends on account executive staffing levels and
productivity. Historically, the Company has experienced a high turnover rate
among its account executives, particularly among new hires, and therefore
continues to invest in recruiting and training account executives to build the
size of its sales force and to continue to grow revenue. The number of account
executives has grown from 296 at the end of fiscal 1995 to 433 at the end of
fiscal 1997 and 448 as of November 30, 1997. However, as a result of a
significantly increased percentage of revenue attributable to new accounts,
revenue per account executive has decreased from $236,000 in fiscal 1995 to
$211,000 in fiscal 1997. Revenue per account executive has decreased because the
selling time required to develop a new account typically exceeds the time
required to service a renewal account and new accounts typically commit to
smaller advertising programs than do established renewal accounts. Although the
account renewal rate is typically lower for newer accounts than for established
accounts, as new accounts renew and mature, the net revenues from such accounts
generally increase, while the cost of revenues for such accounts decreases.
Direct sales expense accounted for approximately 19% of net revenues in fiscal
1997, 18% of net revenues in fiscal 1996 and 17% of net revenues in fiscal 1995.
Cash Flow Management. The Company has instituted several policies to
accelerate customer payments including (i) requiring customers to make minimum
deposits on their annual purchase at the time of contract signing, (ii)
requiring customers with small advertising purchases to pay 100% at the time of
contract signing, (iii) offering a cash discount to customers who pay 100% at
the time of contract signing, (iv) providing commission incentives to account
executives to collect higher customer deposits earlier in the sales process, (v)
shortening customer payment terms from 12 months to eight months or less, and
(vi) requiring new customers to begin payments immediately after contract
signing rather than waiting for the directory to be
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<PAGE> 40
distributed. As a result of these initiatives, advance payments received prior
to directory publication as a percentage of net revenues has increased from
26.2% in fiscal 1993 to 45.1% in fiscal 1997.
Although the Company generally collects an advance payment from all
advertisers, credit is extended based upon the size of the advertising program
and customer collection history. While the Company's accounts receivable are not
subject to any concentrated credit risk, credit losses represent a cost of doing
business due to the nature of the Company's customer base, largely local
businesses, and the use of extended credit terms. Generally, for larger and
established accounts, credit may be extended under eight to 12 month installment
payment terms. In addition, customers are given credits for the current year
when errors occur in their advertisements. A reserve for bad debt and errors is
established when revenue is recognized for individual directories. The estimated
bad debt expense is determined on a market by market basis taking into account
prior years' collection history. Actual write-offs are taken against the reserve
when management determines that an account is uncollectible, which typically
will be determined after completion of the next annual selling cycle. Therefore,
actual account write-offs may not occur until 18 to 24 months after a directory
has been published. The estimated provision for bad debt equaled 9.2%, 9.1% and
9.8% of net revenues for fiscal years 1995, 1996 and 1997, respectively.
Management regularly reviews actual write-offs of accounts receivable as
compared to the reserve estimates made at the time individual directories are
published. During fiscal 1997, the Company's provision for bad debt included
approximately $600,000 more than management expects to write-off with respect to
fiscal 1997 directories. This addition was made to offset lower realized
collections with respect to the fiscal 1995 directories.
Recapitalization Accounting and Tax Effects. The Company believes the
Recapitalization qualifies for recapitalization accounting treatment, pursuant
to which the Company has incurred substantial negative net worth. For tax
purposes the Company's basis in its assets is increased to approximately $225
million. This step-up in the basis of its assets will increase the Company's
amortization expense for tax purposes by approximately $15 million per year over
the next 15 years. Under current federal tax laws, Holdings' partners, not
Holdings, pay federal income taxes with respect to Holdings' net income.
RESULTS OF OPERATIONS
The following table summarizes the Company's historical results of
operations as a percentage of net revenues for the fiscal years ended April 30,
1995, 1996 and 1997 and for the six month periods ended October 31, 1996 and
1997:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED OCTOBER
YEAR ENDED APRIL 30, 31,
------------------------- ---------------
1995 1996 1997 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net revenues............................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues........................... 24.3 23.4 21.3 23.6 24.0
----- ----- ----- ----- -----
Gross profit............................... 75.7 76.6 78.7 76.4 76.0
Selling and marketing...................... 39.6 38.5 40.1 41.8 44.7
General and administrative................. 19.8 19.4 18.4 20.7 35.1
----- ----- ----- ----- -----
Income (loss) from operations.............. 16.3% 18.7% 20.2% 13.9% (3.8)%
===== ===== ===== ===== =====
EBITDA..................................... 24.3% 26.2% 27.6% 22.6% 19.8%
</TABLE>
SIX MONTHS ENDED OCTOBER 31, 1997 COMPARED TO SIX MONTHS ENDED OCTOBER 31,
1996
The Company's financial results were affected by changes in the publishing
schedule during the first six months of fiscal 1998 compared to the same period
in fiscal 1997, resulting in differences in the number and mix of directories
published. As a result, interim results are not indicative of results that may
be expected for the entire year, as the impact of changes in the Company's
publishing schedule is diminished over longer reporting periods.
On October 1, 1997 the Company consummated the Recapitalization, the
effects of which are included in the financial results of the six month period
ending October 31, 1997.
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<PAGE> 41
Net revenues increased $204,000, from $38.1 million for the first six
months of fiscal 1997 to $38.3 million during the first six months of fiscal
1998. The Company published 57 directories during the first six months of fiscal
1998 and 49 directories during the first six months of fiscal 1997. The increase
in net revenue consisted of $2.0 million from year to year growth of the same 43
directories published during both periods, $0.6 million from four new
directories and $3.6 million from directories for which the publication date
moved into the period offset by $6.0 million from directories for which the
publication date moved out of the period.
Same book revenue growth for the 43 directories published in both periods
was 6.1% and the average revenue per account was 6.4% higher in the first six
months of fiscal 1998 than in the first six months of fiscal 1997.
Cost of revenues for the first six months of fiscal 1998 increased $176,000
from $9.0 million to $9.2 million for the same period in fiscal 1997, primarily
due to changes in the mix of publications. Cost of revenues for the same 43
directories published in both periods decreased by $426,000, from 20.3% of
revenue to 17.9% and was attributable to a reduction in printing and
distribution expenses.
Gross profit for the six months ended October 31, 1997 remained flat at
$29.1 million compared to the same period in fiscal 1997. Timing changes led to
the publication during the first six months of fiscal 1998 of more directories
with lower profit contributions than those published during the same period in
fiscal 1997, the effect of which was partially offset by an increase in gross
profit of $2.2 million, or 9.2%, for the same 43 directories published in both
periods and $266,000 of gross profit associated with four new directories. Gross
margin decreased slightly from 76.4% during the first six months of fiscal 1997
to 76.0% during the same period in fiscal 1998.
Selling and marketing expense increased $1.2 million from $15.9 million for
the first six months of fiscal 1997 to $17.1 million for the same period in
fiscal 1998. This increase in selling and marketing costs was attributable to
increased selling costs of $0.7 million for the same 43 directories published in
both periods, $0.4 million for the four new directories and $0.1 million from an
increase in sales management costs. The provision for bad debt as a percentage
of net revenues increased from 8.7% to 9.1% due to the change in the mix of
directories published. Selling and marketing expense as a percentage of net
revenues increased from 41.8% during the first six months of fiscal 1997 to
44.7% during the same period in fiscal 1998 due to an increase in the number of
sales representatives selling advertising for the same 43 books and higher
start-up selling costs for the four new directories.
General and administrative expense increased $5.5 million from $7.9 million
in the first six months of fiscal 1997 to $13.4 million in the same period of
fiscal 1998 as a result of a contribution to the Equity Compensation Plan of
$5.5 million made on October 1, 1997 in connection with the Recapitalization.
There were no such contributions made in the first six months of fiscal 1997.
General and administrative expenses as a percentage of net revenues increased
from 20.7% for the first six months of fiscal 1997 to 35.1% during the same
period in fiscal 1998.
As a result of the above factors, income (loss) from operations decreased
$6.8 million, from $5.3 million for the first six months of fiscal 1997 to
($1.5) million for the same period in fiscal 1998. Income (loss) from operations
as a percentage of net revenues decreased from 13.9% during the first six months
of fiscal 1997 to (3.8%) during the same period of fiscal 1998.
The foregoing factors, exclusive of the contributions to the Equity
Compensation Plan, caused a decrease in EBITDA of $1.0 million from $8.6 million
for the first six months of fiscal 1997 to $7.6 million for the same period in
fiscal 1998. EBITDA margin decreased from 22.6% during the first six months of
fiscal 1997 to 19.8% during the same period in fiscal 1998.
Depreciation and amortization increased $152,000 from $3.1 million for the
first six months of fiscal 1997 to $3.3 million in fiscal 1998.
Interest expense increased $304,000 from $4.0 million for the first six
months of fiscal 1997 to $4.3 million in fiscal 1998.
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<PAGE> 42
Income (loss) before extraordinary item decreased $7.2 million from $1.3
million in the first six months of fiscal 1997 to ($5.9) million in fiscal 1998.
Extraordinary item charges of $1.4 million in the six month period ended
October 31, 1997 were in connection with the Recapitalization and consisted of
write-off of unamortized debt issuance costs related to the repayment of debt
prior to maturity.
YEAR ENDED APRIL 30, 1997 COMPARED TO YEAR ENDED APRIL 30, 1996
Net revenues increased $13.7 million, or 17.6%, from $77.7 million in
fiscal 1996 to $91.4 million in fiscal 1997. The Company published 128
directories in fiscal 1997 as compared to 118 directories in fiscal 1996. The
net revenue growth was due to (i) $9.5 million from 21 new directories published
in fiscal 1997, (ii) an increase in net revenues of $5.6 million in the same 106
directories published in both periods, and (iii) $2.0 million from the second
publication of the Tyler, Texas directory during fiscal 1997, offset by $3.4
million of net revenues associated with 12 directories published in fiscal 1996
but not in fiscal 1997.
Same book revenue growth for the 106 directories published in both periods
was 7.8%, and was the result of 74.2% of accounts representing 85.3% of the
fiscal 1996 net revenues renewing their advertising program in fiscal 1997, with
new accounts contributing to the balance of the growth. In addition, the average
revenue per account was 4.8% higher in fiscal 1997 than in fiscal 1996.
Cost of revenues increased $1.3 million, or 7.1%, from $18.2 million in
fiscal 1996 to $19.5 million in fiscal 1997. The increase was the result of (i)
$2.7 million of costs associated with 21 new directories published in fiscal
1997 and (ii) $0.5 million of additional production and distribution overhead
costs, offset by (a) $1.0 million of lower costs for the same 106 directories
published in both fiscal years and (b) $0.9 million of costs associated with 12
directories published during fiscal 1996, but not in fiscal 1997. For the same
106 directories that were published in both fiscal years, cost of revenues as a
percentage of net revenues improved from 23.4% in fiscal 1996 to 21.3% in fiscal
1997, primarily due to a decrease in printing and production costs and license
fees.
As a result of the above factors, gross profit increased $12.4 million, or
20.8%, from $59.5 million in fiscal 1996 to $71.9 million in fiscal 1997. Gross
margin increased from 76.6% in fiscal 1996 to 78.7% in fiscal 1997 as a result
of reduced printing and production costs and license fees and increased sales on
a same directory basis.
Selling and marketing expense increased $6.7 million, or 22.5%, from $29.9
million in fiscal 1996 to $36.6 million in fiscal 1997. The majority of the
increase was attributable to increased sales staffing for new and acquired
directories, the establishment of a permanent sales office in the Nashville,
Tennessee market and an increase in the provision for bad debt for write-offs
expected on fiscal 1995 directories. Selling and marketing expense as a
percentage of net revenues increased from 38.5% in fiscal 1996 to 40.1% in
fiscal 1997.
General and administrative expense increased $1.7 million, or 11.6%, from
$15.1 million in fiscal 1996 to $16.8 million in fiscal 1997, primarily as a
result of increased depreciation and amortization. General and administrative
expense as a percentage of net revenues decreased from 19.4% in fiscal 1996 to
18.4% in fiscal 1997.
As a result of the above factors, income from operations increased $3.9
million, or 26.9%, from $14.5 million in fiscal 1996 to $18.5 million in fiscal
1997. Income from operations as a percentage of net revenues increased from
18.7% in fiscal 1996 to 20.2% in fiscal 1997.
The foregoing factors caused an increase in EBITDA of $4.8 million, or
23.5%, from $20.4 million in fiscal 1996 to $25.2 million in fiscal 1997. EBITDA
margin increased from 26.2% in fiscal 1996 to 27.6% in fiscal 1997.
Depreciation and amortization expense increased $1.7 million, or 37.2%,
from $4.7 million in fiscal 1996 to $6.4 million in fiscal 1997.
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<PAGE> 43
Interest expense increased $1.2 million, or 17.9%, from $6.6 million in
fiscal 1996 to $7.8 million in fiscal 1997.
Income before extraordinary item increased $2.4 million, or 29.0%, from
$8.3 million in fiscal 1996 to $10.7 million in fiscal 1997.
YEAR ENDED APRIL 30, 1996 COMPARED TO YEAR ENDED APRIL 30, 1995
Net revenues increased $7.9 million, or 11.3%, from $69.8 million in fiscal
1995 to $77.7 million in fiscal 1996. The Company published 118 directories in
fiscal 1996 as compared to 106 directories in fiscal 1995. The growth in net
revenues was the result of (i) $2.7 million from the addition of 15 new
directories, (ii) $5.4 million of increased net revenues from the same 103
directories published in both periods, partially offset by $209,000 from the
discontinuation of three Oklahoma directories.
Same book revenue growth for the 103 directories published in both periods
was 7.8%, and was the result of 76.3% of accounts accounting for 87.5% of the
fiscal 1995 net revenues renewing their advertising program in fiscal 1996, with
new accounts contributing to the balance of the growth. In addition, the average
revenue per account was 4.0% higher in fiscal 1996 than in fiscal 1995.
Cost of revenues increased $1.2 million, or 7.3%, from $17.0 million in
fiscal 1995 to $18.2 million in fiscal 1996. The increase was the result of $1.2
million for new directories, $0.5 million from an increase in paper prices and
distribution costs for the same 103 directories published in both fiscal 1996
and 1995, offset by $323,000 associated with the discontinuation of three
Oklahoma directories and $200,000 of production cost savings. For the same 103
directories that were published in both fiscal years, cost of revenues as a
percentage of net revenues improved from 19.4% in fiscal 1995 to 18.6% to fiscal
1996, primarily due to a decrease in printing and production costs and license
fees.
As a result of the above factors, gross profit increased $6.6 million, or
12.6%, from $52.9 million in fiscal 1995 to $59.5 million in fiscal 1996. Gross
profit margin grew from 75.7% in fiscal 1995 to 76.6% in fiscal 1996, primarily
due to improved margins on the same 103 directories published during both fiscal
1995 and 1996, new directories and from improvements in production processing.
Selling and marketing expense increased $2.2 million, or 8.1%, from $27.7
million in fiscal 1995 to $29.9 million in fiscal 1996. The bulk of this
increase was due to increased sales staffing for the 15 new directories
introduced in 1996 as well as the same 103 directories published during both
fiscal years. Selling and marketing expense as a percentage of net revenues
decreased from 39.6% in fiscal 1995 to 38.5% in fiscal 1996.
General and administrative expense increased $1.3 million, or 9.2%, from
$13.8 million in fiscal 1995 to $15.1 million in fiscal 1996. This increase was
due to higher salaries and benefits, additional costs associated with travel and
recruiting and an increase in incentives paid for the collection of advance
payments. General and administrative expense as a percentage of net revenues
decreased from 19.8% in fiscal 1995 to 19.4% in fiscal 1996.
As a result of the above factors, income from operations increased $3.1
million, or 27.4%, from $11.4 million in fiscal 1995 to $14.5 million in fiscal
1996. Income from operations as a percentage of net revenues increased from
16.3% in fiscal 1995 to 18.7% in fiscal 1996.
The foregoing factors caused an increase in EBITDA of $3.4 million, or
20.0%, from $17.0 million in fiscal 1995 to $20.4 million in fiscal 1996. EBITDA
margin increased from 24.3% in fiscal 1995 to 26.2% in fiscal 1996.
Depreciation and amortization expense increased $98,000, or 2.1%, from $4.6
million in fiscal 1995 to $4.7 million in fiscal 1996.
Interest expense increased $2.3 million, or 52.6%, from $4.3 million in
fiscal 1995 to $6.6 million in fiscal 1996. This increase in interest expense
was due to a refinancing of the Partnership that was consummated in November
1995.
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<PAGE> 44
Income before extraordinary item increased $0.7 million, or 9.9%, from $7.5
million in fiscal 1995 to $8.3 million in fiscal 1996 due to Equity Compensation
Plan expenses.
LIQUIDITY AND CAPITAL RESOURCES
Capital Expenditures. The Company's operations are not capital intensive.
Capital expenditures were $496,000, $484,000 and $1.0 million in fiscal 1995,
1996 and 1997, respectively. Capital spending is largely for computer hardware
and software upgrades for the maintenance of its production and operating
systems. The increase of $0.5 million in fiscal 1997 was related to the purchase
of graphics workstations that will allow the Company to produce color
advertisements in-house and avoid the high cost for color processing charged by
third-party vendors. As of the end of fiscal 1997 and October 31, 1997, the
Company did not have any material commitments for capital expenditures.
Working Capital. Through its focus on increasing customer advance payments
and the acceleration of cash receipts, the Company has been able to reduce
working capital requirements despite strong revenue growth. Several factors have
contributed to this reduction, including (i) programs designed to accelerate
advance payments, (ii) shortening billing options for credit payments, (iii)
improved production and administrative processing to reduce non-sales staffing
and the elimination of costly third party vended services, and (iv) consistent
earnings growth. Net accounts receivable, which represents the largest component
of working capital, increased to $23.3 million in fiscal 1997 compared to $17.5
million in fiscal 1993. This increase of $5.7 million, or 32.8%, compares
favorably to the net revenue growth of $36.5 million, or 66.4%, over the same
period. In addition, advance payments as a percentage of net revenues increased
from 26.2% in fiscal 1993 to 45.1% in fiscal 1997.
Liquidity. The Company's principal sources of funds following the
Transactions are anticipated to be cash flows from operating activities and
borrowings under the Revolving Credit Facility. See "Description of Certain
Indebtedness -- Senior Credit Facility." Based upon the successful
implementation of management's business and operating strategy, the Company
believes that these funds will provide it with sufficient liquidity and capital
resources to meet current and future financial obligations, including the
payment of principal and interest on the Notes, as well as to provide funds for
the Company's working capital, capital expenditures and other needs. The
Company's future operating performance and ability to service or refinance the
Notes and to repay, extend or refinance the Senior Credit Facility will be
subject to future economic conditions and to financial, businesses and other
factors, many of which are beyond the Company's control. There can be no
assurance that such sources of funds will be adequate and that the Company will
not require additional capital from borrowings or securities offerings to
satisfy such requirements. In addition, the Company may require additional
capital to fund future acquisitions and there can be no assurance that such
capital will be available. See "Risk Factors."
Upon the occurrence of a Change of Control, the Company will be required to
make an offer for cash to purchase the Notes at a purchase price equal to 101%
of the principal amount thereof, together with accrued and unpaid interest, if
any, thereon to the purchase date. Certain events involving a Change of Control
may result in an event of default under the Senior Credit Facility or other
indebtedness of the Company that may be incurred in the future. Moreover, the
exercise by the holders of the Notes of their right to require the Company to
purchase the Notes may cause an event of default under the Senior Credit
Facility or such other indebtedness, even if the Change of Control does not.
Finally, there can be no assurance that the Company will have the financial
resources necessary to purchase the Notes upon a Change of Control. See "Risk
Factors -- Limitations on Change of Control" and "Description of the
Notes -- Change of Control Offer."
FINANCING ACTIVITIES RELATING TO THE RECAPITALIZATION
The Company applied the net proceeds of the Initial Offering to the
repayment of the Senior Subordinated Facility and to reduce indebtedness
outstanding under the Revolving Credit Facility. See "The Transactions" and "Use
of Proceeds."
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<PAGE> 45
BUSINESS
The Company is one of the largest independent yellow pages directory
publishers in the United States. The Company's 142 directories serve communities
in the 12 states of California, Connecticut, Indiana, Kansas, Kentucky,
Louisiana, Massachusetts, New York, Ohio, Oklahoma, Tennessee and Texas. The
Company's presence in its markets is well-established; more than 70% of its
directories have been in publication for more than 10 years. The Company's
revenues are derived from the sale of advertising to a diversified base of over
93,000 accounts consisting primarily of small to medium-sized local businesses.
Yellow pages are an important advertising medium for local businesses due to
their low advertising cost, widespread distribution, lasting presence, and high
consumer usage. The strength of the Company's directories is evidenced by high
revenue renewal and account retention rates, which have averaged 86% and 76%,
respectively, during the last five years.
Since the 1993 Acquisition, the Company's management team has successfully
executed its strategy of growing revenues from existing directories, improving
operating efficiency, accelerating cash flows and starting and acquiring new
directories. Over this period, the Company increased average revenue per account
from $789 to $981 and increased its number of directories from 90 to 142,
driving the Company's net revenues from $54.9 million to $91.4 million. The
Company achieved this growth without significantly increasing working capital or
capital expenditures, while leveraging its existing cost structure and creating
a platform for future growth. As a result, the Company's EBITDA increased from
$3.2 million to $25.2 million and its EBITDA margin increased from 5.9% to
27.6%.
INDUSTRY OVERVIEW
The United States yellow pages directory industry generated revenues of
approximately $10.8 billion in 1996, with circulation of approximately 316
million directories. Yellow pages directories are published by both telephone
utilities and, in many markets, independent directory publishers, such as the
Company, which are not affiliated with the telephone service provider. More than
250 independent directory publishers circulated over 77 million directories and
generated an estimated $677 million in revenues during 1996. Between 1991 and
1996, while industry-wide yellow pages advertising revenues grew at a compound
annual rate of 3.5%, advertising revenues of independent directories grew at a
compound annual rate of approximately 6.9%. Concurrent with the overall
expansion of the yellow pages advertising market, independent directory
publishers have steadily increased their market share from 5.5% in 1991 to 6.5%
in 1996. This has occurred because the diverse needs of both consumers and
advertisers are often not satisfied by a single utility directory.
Yellow pages directories accounted for approximately 6.0% of total
advertising spending in 1996 and compete with all other forms of media
advertising, including television, radio, newspapers and direct mail. In
general, media advertising may be divided into three categories: (i) market
development or image advertising (e.g., television, radio and newspapers), (ii)
direct response sales promotion (e.g., direct mail), and (iii) point of purchase
or directional advertising (e.g., classified directories). Yellow pages
directories are primarily directional advertising because they are used either
at home or in the workplace when consumers are contemplating a purchase or in
need of a service.
Yellow pages advertising expenditures tend to be more stable than other
forms of media advertising and do not fluctuate widely with economic cycles.
Yellow pages directory advertising is considered a "must buy" by many small and
medium-sized businesses since it is often their principal means of soliciting
customers. The strength of the yellow pages as compared to other forms of
advertising lies in its consumer reach, lasting presence and cost-effectiveness.
Yellow pages are present in nearly every household and business in the United
States. Once an advertisement is placed in a directory, it remains within reach
of its target audience until the directory is replaced with the next annual
edition or discarded.
The independent publisher segment of the yellow pages industry is highly
fragmented and growing. There are approximately 250 independent yellow pages
publishers in the United States and the five largest independent publishers
accounted for 63% of 1996 revenues in the independent publisher segment.
Successful independent publishers effectively compete with telephone utilities
by differentiating their product based on geographical market segmentation,
pricing strategy and enhanced product features. To maximize both
40
<PAGE> 46
advertiser value and consumer usage, independent directory publishers target
their directory coverage areas based on consumer shopping patterns. In contrast,
most directories published by telephone utilities coincide with their telephone
service territories, which may incorporate multiple local markets or only
portions of a single market. Also, independent publishers generally offer yellow
pages advertisements at a significant discount to the price that competing
telephone utilities usually charge. As a result, independent yellow pages
directories allow local advertisers to better target their desired market and
are often more useful for consumers.
Independent yellow pages publishers generally compete in rural and suburban
markets and not major urban markets, where the high distribution quantities for
each edition create a barrier to entry. In most markets, independent directory
publishers compete with the telephone utility and with one or more independent
yellow pages publishers. In markets where two or more directory publishers
compete, advertisers frequently purchase advertisements in multiple directories.
In some markets, independent directory publishers compete by "overscoping"
multiple telephone utilities. Overscoping refers to publishing a directory which
encompasses the service territories of two or more telephone utilities. For
example, an independent publisher may publish a single overscoped directory
which provides coverage of an entire county that also contains three smaller
utility books corresponding to different telephone service territories. The
overscoped directory provides advertisers with a lower cost, more efficient
means to reach the entire area, and provides consumers with the most complete
yellow pages resource for the area.
In other markets, independent directory publishers compete by
"underscoping" a utility company's directory. For example, an independent
publisher may publish multiple smaller community directories which provide
targeted local coverage in an area in which a utility publishes a single
directory to cover an entire county consisting of many discrete communities.
Underscoping provides more efficient advertising for certain types of local
businesses for whom advertising outside the immediate community is unproductive,
and for consumers interested in local services, the community directory
frequently represents a more convenient and relevant source of information than
the county-wide directory.
Independent directory publishers also distinguish their directories from
the telephone utility directories on the basis of advertisement pricing. The
independents typically price advertising at a significantly lower rate than the
utility directories in the same market areas. Advertising rates are specifically
tailored to reflect the different size, market position, stage of development
and penetration rate of each directory. As a result, businesses generally are
able to place either multiple advertisements or a larger advertisement in an
independent directory for the same price as a single advertisement with the
telephone utility's directory.
OPERATING STRENGTHS
The Company believes that it benefits from the following operating
strengths:
High Revenue Stability and Account Renewal Rates. The Company's high
revenue renewal and account retention rates (averaging 86% and 76%,
respectively, during the last five fiscal years) have provided considerable
revenue and profit stability and form a strong base of business from which to
grow. For many local businesses, yellow pages directory advertising is their
principal form of advertising and provides an effective means of reaching their
potential customers. Also, advertisement placement within a directory is based
on size and seniority, and therefore advertisers have a strong incentive to
increase the size of their advertisements and to renew their advertising
program. In addition, advertisers are reluctant to cancel their advertising
programs when their local competition is well-represented in that directory.
Geographic, Directory, Industry and Account Diversity. The Company's 142
directories serve communities in 12 states across the country. No single
directory accounted for more than 5% of net revenues, and the top five
directories accounted for less than 19% of net revenues in fiscal 1997. The
Company's 93,000 accounts represent a wide variety of service, retailing and
other businesses and its top 1,000 accounts represented less than 12% of the
Company's fiscal 1997 net revenues. This high level of diversification reduces
the Company's exposure to adverse regional economic conditions and enhances
revenue and cash flow stability.
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<PAGE> 47
Favorable Cash Flow Characteristics. The Company's favorable cash flow
characteristics result from its stable revenues, high level of advance payments,
predictable cost structure, low working capital investment and minimal capital
expenditure needs. During fiscal 1997, the Company collected approximately 45%
of its net revenues prior to publication of its directories, up from
approximately 26% in fiscal 1993. In addition to collecting higher levels of
advance payments, the Company shortened customer payment terms and reduced
credit exposure to its smallest customers. Further, the Company's capital
expenditures have averaged less than $750,000 per year over the last five fiscal
years.
Proven, Experienced Management. The Company has a proven senior management
team with extensive experience in the yellow pages business. Since the 1993
Acquisition, management has demonstrated the ability to grow the Company
profitably while the Company has had significant financial leverage.
Collectively, management owns approximately 9% of Holdings and also participates
in a substantial equity-based incentive program tied to the successful long-term
performance of the Company.
BUSINESS STRATEGY
The Company's strategy is to capitalize on its operating structure,
consisting of a decentralized sales force and centralized production and
administrative operations, in order to grow its position as a leading
independent yellow pages publisher. This strategy recognizes the inherent
operating leverage of established directories where production and
administrative costs are largely fixed, resulting in high marginal profit from
incremental sales. At the same time, the Company's focus on continuous process
improvements has significantly expanded capacity without increasing production
costs, establishing a platform to start and acquire directories in a highly
profitable manner. Specific elements of the Company's business strategy are as
follows:
Grow Revenues from Existing Directories. Management believes there are
opportunities to increase revenues from both existing advertisers and new
accounts. Specific initiatives include (i) cross-selling advertisers into
multiple directories, (ii) encouraging customers to purchase larger
advertisements or advertisements under multiple headings within the same
directory, (iii) introducing new premium advertising features, including color,
at premium prices, and (iv) offering Internet directory listings.
The Company also utilizes its proprietary database to increase its customer
penetration by systematically targeting potential customers and converting them
into new advertisers. To support this strategy, the Company has expanded its
sales force from 223 employees at the end of fiscal 1993 to 448 as of November
30, 1997, representing an increase of approximately 101%. Management believes
that new account growth drives long term profitability and improves the quality
of its directories.
Improve Operating Efficiency. The Company works to continuously improve
its production processes and systems in order to increase its operating
efficiency. Management has created a team-oriented environment focused on
managing costs, streamlining processes and cross-training personnel to adjust to
fluctuations in production levels. These efforts have resulted in increased
capacity and lower production costs.
Accelerate Cash Flows. The Company continues to focus on increasing the
amount of cash it collects from advertisers prior to the publication of each
directory. Increasing advance payments and shortening customer payment terms (i)
reduces the Company's investment in working capital, (ii) decreases collection
and bad debt costs and (iii) permits the Company to finance the introduction of
new directories from internally generated funds.
New Directory Growth. The Company's strategy includes growth through new
directory start-ups and selective acquisitions. The Company minimizes start-up
risks by launching new directories in areas contiguous to the Company's existing
markets where the Company has existing sales infrastructure and local
recognition and where existing customers can provide an initial revenue base.
Since the 1993 Acquisition, the Company has introduced 26 new "fill-in"
directory start-ups in California, Connecticut, Indiana, Louisiana, New York,
Oklahoma and Texas.
Since the 1993 Acquisition, the Company has acquired 24 directories in
California, Indiana, Kentucky, Massachusetts, New York and Tennessee. Although
the Company has no current acquisition commitments,
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<PAGE> 48
management continuously reviews acquisition opportunities and believes it can
successfully acquire and integrate additional directories into its existing
production and administrative infrastructure.
MARKETS SERVED
The Company publishes 142 yellow pages directories serving distinct
communities in 12 states, including California, Connecticut, Indiana, Kansas,
Kentucky, Louisiana, Massachusetts, New York, Ohio, Oklahoma, Tennessee and
Texas. The Company's directories are generally well-established in their local
communities and are clustered in contiguous geographic areas to create a strong
local market presence and to achieve selling efficiencies.
The Company's net revenues are not materially concentrated in any single
directory, industry, geographic region or customer. In fiscal 1997, the Company
served approximately 93,000 active accounts with its top 1,000 accounts
representing less than 12% of net revenues and no single directory accounting
for more than 5% of net revenues. Approximately 95% of the Company's net
revenues are derived from local accounts with the remaining 5% coming from
national companies advertising locally. The Company's high level of
diversification reduces exposure to adverse regional economic conditions and
provides additional stability in operating results. During fiscal 1997, the
Company published 128 directories with a total circulation of approximately 7.0
million copies. The Company's geographic diversity is evidenced in the table
below:
<TABLE>
<CAPTION>
NUMBER OF DIRECTORIES NET REVENUES
--------------------------------------------- ---------------------------------------------
REGION F'93 F'94 F'95 F'96 F'97 F'93 F'94 F'95 F'96 F'97
- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northeast.. 34 37 39 42 45 $23.9 $26.2 $29.2 $33.1 $38.0
Central.. 25 26 28 35 42 9.9 11.2 12.5 14.8 19.7
Southwest.. 16 19 22 23 23 13.1 16.0 18.2 19.7 22.0
West... 15 15 17 18 18 8.0 8.8 9.9 10.1 11.7
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total.. 90 97 106 118 128 $54.9 $62.2 $69.8 $77.7 $91.4
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
PRODUCTS
The Company's yellow pages directories are designed to meet the
informational needs of consumers and the advertising needs of local businesses.
Each directory consists of (i) a yellow pages section containing display
advertisements and a listing of businesses by various headings, (ii) a white
pages section listing the names, addresses, and phone numbers of residences and
businesses in the area served, (iii) a community information section providing
reference information about general community services such as listings for
government offices, schools and hospitals, and (iv) a map of the geographic area
covered by the directory.
Advertising space is sold throughout the directory including in-column and
display advertising space in the yellow pages, bold listings and business card
listings in the white pages, banner advertising in the community pages, and
image advertisements on the front, back, inside, and outside covers. The Company
is also currently in the process of upgrading its production capacity to include
options such as full color advertisements which generate significantly higher
advertising rates. This diversity of product offerings enables the Company to
create customized advertising programs that are responsive to specific customer
needs and financial resources.
The Company's directories are an efficient source of information for
consumers. With over 2,000 headings in its directories and an expansive list of
businesses by heading in each local market, the Company's directories are both
comprehensive and conveniently organized. The Company's management believes that
the completeness and accuracy of the data in a directory is essential to
consumer acceptance.
Although the Company remains primarily focused on its printed directories,
it has recently initiated an Internet directory service. The Company has entered
into a strategic alliance with InfoSpace to offer electronic directory services
in each of its local markets. Under this strategic alliance, InfoSpace is
responsible for the technical aspects of the alliance and the Company is
providing local content and selling advertisement
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<PAGE> 49
space in this electronic directory. This arrangement enables the Company to
avoid technical risks which it is not presently staffed to manage and permits
the Company to participate in any opportunities that develop through the
Internet. Management believes that the Company's experience, reputation and
account relationships within its local markets will help it successfully market
this service. Although the growing use of the Internet has not had any
appreciable impact on the Company to date, management has not yet determined
how, if at all, the Internet will impact its performance, prospects or
operations. The Company cross promotes its Internet service and its printed
directories. The Company's web site is at http://www.transwesternpub.com.
SALES AND MARKETING
Yellow pages marketing is a direct sales business which requires both
servicing existing accounts and developing new customers. Repeat customers
comprise the Company's core account base and a number of these customers have
advertised in the Company's directories for many years. On average, since fiscal
1993, accounts representing 86% of the prior year's net revenues for each
directory have renewed their advertising program in the current edition of each
directory. Management believes that this high revenue renewal rate reflects the
importance of the Company's directories to its local accounts for whom yellow
pages directory advertising is a principal form of advertising. In addition,
yellow pages advertising often comprises an integral part of the local
advertising strategy for larger national companies operating at the local level.
Advertisers have a strong incentive to increase the size of their advertisement
and to renew their advertising programs because advertisements are placed within
each heading of a directory based first on size then on seniority. Generally,
larger advertisements are more effective than smaller advertisements and
advertisements placed near the beginning of a heading generate more responses
than similarly sized advertisements placed further back in the heading.
The Company also builds on its account base by generating new business
leads from multiple sources including a comprehensive compilation of data about
individual company advertising expenditures in competitive yellow page
directories. The Company has developed a proprietary database of high potential
customers based on each individual customer's yellow page advertising
expenditures and focuses its sales resources on those potential customers. In
support of this strategy, the Company has expanded its sales force from 223
employees at the end of fiscal 1993 to 448 employees as of November 30, 1997,
representing an increase of approximately 101%. Management has observed a direct
correlation between adding new sales force employees and revenue growth.
The Company employs seven regional vice presidents and 49 area and district
sales managers who, together, are responsible for supervising the activities of
the account executives. The Company's 448 account executives generate virtually
all of the Company's revenues and are responsible for servicing existing
advertising accounts and developing new accounts within their assigned service
areas.
The Company has well-established practices and procedures to manage the
productivity and effectiveness of its sales force. All new account executives
complete a formal two-week training program and receive continuous on-the-job
training through the regional sales management structure. Each account executive
has a specified account assignment consisting of both new business leads and
renewal accounts and is accountable for daily, weekly and monthly sales and
advance payment goals. Account executives are compensated in the form of base
salary, commissions and car allowance. Approximately 50% of total account
executive compensation is in the form of commissions, such that sales force
compensation is largely tied to sales performance and account collection. As of
November 30, 1997, the Company employed approximately 690 people, 536 of whom
were engaged in sales and sales support functions.
The sales cycle of a directory varies based on the size of the revenue base
and can extend from a few weeks to as long as six months. Once the canvass of
customers for a directory is completed, the directory is "closed" and the
advertisements are assembled into directories in the production cycle.
PRODUCTION AND DISTRIBUTION
The Company develops a production planning guide for each directory, which
is a comprehensive planning tool setting forth production specifications and the
cost structure for that directory. Each production
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<PAGE> 50
planning guide is incorporated into the Company's annual production schedule and
serves as the foundation for the Company's annual budgeting process. Although
the Company views its directories as annual publications, the actual interval
between publications may vary from 11 to 13 months. New directory starts can be
incorporated into the production schedule without significant disruption because
directory production is staggered throughout the year. As of November 30, 1997,
the Company had a production staff of approximately 90 full-time employees.
The production process includes post-sales, national sales order
processing, advertisement design and manufacturing, white pages licensing and
production, yellow pages production, community pages production and pagination.
Production operations are primarily managed in-house to minimize costs and to
assure a high level of accuracy.
Prior to fiscal 1995, the Company purchased specialized yellow pages data
processing services from a third-party provider to supplement its own internal
information processing and management functions. In fiscal 1995, the Company
began eliminating a substantial portion of third-party information processing
services by internally generating leads and processing white pages and yellow
pages with its own management information systems.
Major production initiatives since fiscal 1994 which have resulted in
significant savings, include (i) the conversion of yellow pages processing from
a third-party vendor to an internal process, (ii) the internal production of all
in-column and display advertising graphics and elimination of all third-party
vendor graphic costs, (iii) internal processing of sales leads and elimination
of third-party lead processing costs, (iv) the re-negotiation and reduction of
third-party charges for keying data, (v) the internal typesetting of pages, (vi)
the internal production of community pages, and (vii) direct production cost
reductions for white pages processing and cover graphics.
After the in-house production process is complete, the directories are then
sent to outside vendors to be printed. The Company does not print any of its
directories but instead contracts with a limited number of printers to print and
bind its directories. The Company contracts with two outside vendors to
distribute its directories to each business and residence in its markets.
RAW MATERIALS
The Company's principal raw material is paper. The Company used
approximately 17.6 and 16.4 million pounds of directory grade paper in its
fiscal years ended April 30, 1997 and 1996, respectively, resulting in a total
cost of paper during such periods of approximately $5.8 million and $6.0
million, respectively. The Company does not purchase paper directly from the
paper mills; instead, the Company's printers purchase the paper on behalf of the
Company at prices negotiated by the Company. The Company recently entered into a
pricing agreement with the mill that supplies the Company's primary printer
pursuant to which the mill agreed to a set price through the end of December
1997.
COMPETITION
The yellow pages directory advertising business is highly competitive.
There are over 250 independent publishers operating in competition with the
regional Bell operating companies and other telephone utilities. In most
markets, the Company competes not only with the local utilities, but also with
one or more independent yellow pages publishers. Other media in competition with
yellow pages for local business and professional advertising include newspapers,
radio, television, billboards and direct mail.
INTELLECTUAL PROPERTY
The Company has registered one trademark and one service mark used in its
business. In addition, each one of the Company's publications is protected under
Federal copyright laws. Telephone utilities are required to license directory
listings of names and telephone numbers that the Company then licenses for a set
fee per name for use in its white pages listings. Total licensing fees paid by
the Company were $1.1 million in fiscal 1997. In addition, the Company believes
that the phrase "yellow pages" and the walking fingers logo are in the
45
<PAGE> 51
public domain in the United States. Otherwise, the Company believes that it owns
or licenses the intellectual property rights necessary to conduct its business.
PROPERTIES
The Company houses its corporate, administrative and production staff at
its headquarters located at 8344 Clairemont Mesa Boulevard, San Diego,
California. Information relating to the Company's corporate headquarters and
other regional sales offices is set forth in the following table:
<TABLE>
<CAPTION>
SQUARE TERM
LOCATION ADDRESS FOOTAGE EXPIRATION DESCRIPTION OF USE
- -------------------------- -------------------------------- ------- ---------- ------------------
<S> <C> <C> <C> <C>
San Diego, CA............. 8344 Clairemont Mesa Boulevard 35,824 10/31/03 Corporate Office/
Sales/Production
Houston, TX............... 11243 Fuqua 9,600 3/31/01 Sales Office
Elmsford, NY.............. 150 Clearbrook Road 8,775 12/31/00 Sales Office
Albany, NY................ 501 New Karner Road, Suite 1 7,565 3/31/99 Sales Office
Bedford, TX............... 4001 Airport Fwy., Suite 230 5,697 7/31/00 Sales Office
Louisville, KY............ 2300 Envoy Circle, #2301 5,600 3/31/02 Sales Office
Highland, NY.............. 7-9 Cummings Lane 5,000 4/30/99 Sales Office
Stamford, CT.............. 333 Ludlow Street 4,895 8/31/02 Sales Office
Nashville, TN............. 2525 Perimeter Drive, Suite 105 3,637 5/31/01 Sales Office
Oklahoma City, OK......... 4901 W. Reno, Suite 800 2,931 6/30/02 Sales Office
</TABLE>
The Company leases 24 other sales offices for more remote sales areas and
periodically leases small facilities for temporary storage of directories.
EMPLOYEES
As of November 30, 1997, the Company employed approximately 690 full-time
employees, none of whom are members of a union. The Company believes that it has
good relations with its employees.
LEGAL PROCEEDINGS
The Company is a party to various litigation matters incidental to the
conduct of its business. Management does not believe that the outcome of any of
the matters in which it is currently involved will have a material adverse
effect on the financial condition or results of operations of the Company.
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<PAGE> 52
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information (ages as of November 30,
1997) with respect to the persons who are members of the Board of Directors (the
"Board") of TCC or executive officers of Holdings or TransWestern. TCC controls
the policies and operations of Holdings and TransWestern. See "Limited
Partnership Agreement." THL has the ability to appoint a majority of the members
of the Board of TCC pursuant to the Investors Agreement. See "Certain
Transactions -- Investors Agreement."
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES
- ---------------------------------- --- -------------------------------------------------
<S> <C> <C>
Laurence H. Bloch................. 44 Chairman of the Board, Secretary and Director
Ricardo Puente.................... 44 President, Chief Executive Officer and Director
Joan M. Fiorito................... 43 Vice President, Chief Financial Officer and
Assistant Secretary
Marybeth Brennan.................. 41 Vice President - Operations
Joseph L. Wazny................... 52 Vice President - Information Services
Robert Bambace.................... 56 Regional Vice President - Sales
Richard Beck...................... 52 Regional Vice President - Sales
Michael Bynum..................... 42 Regional Vice President - Sales
Steve Cartlidge................... 47 Regional Vice President - Sales
Kim Kaznowski..................... 42 Regional Vice President - Sales
Richard Mellert................... 53 Regional Vice President - Sales
Ita Shea-Oglesby.................. 40 Regional Vice President - Sales
C. Hunter Boll.................... 42 Director
Terrence M. Mullen................ 30 Director
Christopher J. Perry.............. 42 Director
Scott A. Schoen................... 40 Director
Marcus D. Wedner.................. 34 Director
</TABLE>
Laurence H. Bloch is Chairman and Secretary of TransWestern and Holdings
and has been a Director of TCC since 1993. Prior to the Recapitalization, Mr.
Bloch served as Vice Chairman and Chief Financial Officer of the Company. Before
joining the Company, Mr. Bloch was Senior Vice President and Chief Financial
Officer of Lanxide Corporation, a materials technology company. Mr. Bloch was a
Vice President, then Managing Director of Smith Barney from 1985 to 1990, prior
to which he was Vice President, Corporate Finance with Thomson McKinnon
Securities, Inc. Mr. Bloch received a BA from the University of Rochester and an
MBA from Wharton Business School. Mr. Bloch also serves as a Director of The
Petersen Companies, Inc.
Ricardo Puente has been President of TransWestern and Holdings and a
Director of TCC since 1993 and became Chief Executive Officer as of the
Recapitalization. Previously, he held the positions of Vice President of Sales
and Controller of the TransWestern business which he joined in 1988. Before
joining US West, Mr. Puente held various financial positions with the Pillsbury
Company for nine years. After receiving his MS in Accounting from the University
of Miami, Mr. Puente was a senior auditor with Touche Ross & Co. Mr. Puente
earned a BS in Accounting from Florida State University.
Joan M. Fiorito is the Vice President, Chief Financial Officer and
Assistant Secretary of TransWestern and Holdings and prior to the
Recapitalization was Vice President and Controller. Ms. Fiorito joined the
TransWestern business in 1989 as Manager, Financial Planning & Analysis and
subsequently was promoted to Controller. Prior to joining the TransWestern
business, Ms. Fiorito was Controller of Coastal Office Products. Ms. Fiorito
received a BS in Management from Dominican College and an MBA in Finance from
Fordham University.
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<PAGE> 53
Marybeth Brennan has been the Company's Vice President of Operations since
its formation in 1993. Ms. Brennan joined the TransWestern business in 1987 as
Production Manager, prior to which Ms. Brennan was Director of Publications for
Maynard-Thomas Publishing. Ms. Brennan received a BA in English from Stonehill
College.
Joseph L. Wazny has been the Vice President, Management Information Systems
of the Company since its formation in 1993. Before joining the Company, Mr.
Wazny was Director of Systems Development and Director, Information Systems with
R.H. Donnelley Corp. Mr. Wazny graduated with a degree in Business
Administration and Computer Sciences from Roosevelt University.
Robert Bambace has been a Regional Vice President of the Company since
1993. Mr. Bambace oversees the Downstate New York Region. Mr. Bambace joined the
TransWestern business as a District Sales Manager in 1983, and was promoted to
his current position in 1993. Mr. Bambace holds a BA in Business Administration
from the State University of New York.
Richard Beck has been a Regional Vice President of the Company since 1993.
Mr. Beck oversees the Kentucky/Ohio/Indiana Region. Mr. Beck joined the
TransWestern business in 1980 in a sales position. He holds an AA in Business
Administration from the University of Kentucky.
Michael Bynum has been a Regional Vice President of the Company since 1993.
Mr. Bynum oversees the Oklahoma/Kansas/Tennessee Region. Mr. Bynum joined the
TransWestern business in 1985 as a sales associate and holds a BA in Management
from Cameron University.
Steve Cartlidge has been a Regional Vice President of the Company since
1993. Mr. Cartlidge oversees the North Texas Region. Mr. Cartlidge joined the
TransWestern business from Donnelley Publishing in 1989 as an Area Sales Manager
and shortly thereafter was promoted to District Sales Manager. Mr. Cartlidge
earned a BA from Howard Payne University.
Kim Kaznowski has been a Regional Vice President of the Company since 1993.
Ms. Kaznowski oversees the Midstate New York Region. Ms. Kaznowski joined the
TransWestern business as a Sales Associate in 1980 and became a District Sales
Manager in 1991. Ms. Kaznowski earned a BS from the University of Rhode Island.
Richard Mellert has been a Regional Vice President of the Company since
1993. Mr. Mellert oversees the Upstate New York Region. Mr. Mellert joined the
TransWestern business in 1980. Mr. Mellert was promoted to District Sales
Manager in 1991. Mr. Mellert holds an AA degree from Dutchess Community College.
Ita Shea-Oglesby has been a Regional Vice President of the Company since
1993. Ms. Shea-Oglesby oversees the South Texas, Louisiana Region and the
Northern California Region. Ms. Shea-Oglesby joined the TransWestern business in
1983 and previously held the positions of Area Sales Manager, Sales Trainer and
District Sales Manager. Ms. Shea-Oglesby earned a BA from Louisiana State
University.
C. Hunter Boll became a Director of TCC upon the consummation of the
Recapitalization. Mr. Boll is a Managing Director of Thomas H. Lee Company where
he has been employed since 1986. Mr. Boll is also a Trustee of THL Equity Trust
III, the General Partner of THL Equity Advisors Limited Partnership III, which
is the General Partner of Thomas H. Lee Equity Fund III, L.P. Mr. Boll also
serves as a Director of Stanley Furniture Company, Inc., New York Restaurant
Group, Inc., Freedom Securities Corporation and Select Beverages, Inc. Mr. Boll
holds an MBA from Stanford University and a BA from Middlebury College.
Terrence M. Mullen became a Director of TCC upon consummation of the
Recapitalization. Mr. Mullen is currently an Associate of the Thomas H. Lee
Company. Mr. Mullen worked at the Thomas H. Lee Company from 1992 to 1994 and
rejoined in 1996. From 1990 to 1992, Mr. Mullen worked in the Corporate Finance
Department of Morgan Stanley & Co., Incorporated. Mr. Mullen also serves as a
Director of Anchor Advanced Products, Inc. Mr. Mullen received a BBA in Finance
and Economics from the University of Notre Dame and an MBA from the Harvard
Graduate School of Business Administration.
Christopher J. Perry has been a Director of TCC since 1994. Mr. Perry is
currently Managing Director and President of Continental Illinois Venture
Corporation, a position he has held since 1994, and is also a
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<PAGE> 54
Managing Partner of CIVC Partners III. Mr. Perry has been at Bank of America or,
prior to its merger with Bank of America, Continental Bank, since 1985. Prior
positions with Bank of America or Continental Bank include Managing Director and
head of the Mezzanine Investments Group and Managing Director and head of the
Chicago Structured Finance Group. Prior to joining Continental Bank, Mr. Perry
was in the Corporate Finance Department of Northern Trust. In addition to being
a Director of TCC, Mr. Perry is a Director of Teletouch Communications. Mr.
Perry received a BS from the University of Illinois and an MBA from Pepperdine
University and is a certified public accountant.
Scott A. Schoen became a Director of TCC upon consummation of the
Recapitalization. Mr. Schoen is a Managing Director of the Thomas H. Lee Company
where he has been employed since 1986. Mr. Schoen is also a Trustee of THL
Equity Trust III, the General Partner of THL Equity Advisors Limited Partnership
III, which is the General Partner of Thomas H. Lee Equity Fund III, L.P. Mr.
Schoen also serves as Vice President of Thomas H. Lee Advisors I and Thomas H.
Lee Advisors II. Mr. Schoen is a director of Anchor Advanced Products, Inc.,
First Alert, Inc., Signature Brands USA, Inc., Rayovac Corporation and Syratech
Corporation. Mr. Schoen received a BA in History from Yale University, a JD from
Harvard Law School and an MBA from the Harvard Graduate School of Business
Administration. Mr. Schoen is a member of the New York Bar.
Marcus D. Wedner has been a Director of TCC since its formation in 1993.
Mr. Wedner is currently a Managing Director of Continental Illinois Venture
Corporation, a position he has held since 1992, and is also a Managing Partner
of CIVC Partners III. Mr. Wedner joined Continental Illinois Venture Corporation
in 1988. Previously, Mr. Wedner held marketing and sales management positions at
Pacific Telesis Group and as an associate with Goldman, Sachs & Co. In addition
to being a Director of the TCC, Mr. Wedner is a Director of Teletouch
Communications. Mr. Wedner holds a BA from the University of California at Los
Angeles and received an MBA from Harvard Graduate School of Business
Administration.
COMPENSATION OF DIRECTORS
TransWestern is a limited liability company and Holdings is a limited
partnership, both of which are controlled by TCC. See "Limited Partnership
Agreement" and "Limited Liability Company Agreement." The Directors of TCC will
not be paid for their services, although Directors are reimbursed for
out-of-pocket expenses incurred in connection with attending Board meetings.
COMPENSATION OF EXECUTIVE OFFICERS
The compensation of executive officers of TransWestern will be determined
by the Board of TCC. The following Summary Compensation Table includes
individual compensation information for the former Chairman and Chief Executive
Officer, the current President and Chief Executive Officer and each of the three
other most highly compensated executive officers of the Company in fiscal 1997
(collectively, the "Named Executive Officers") for services rendered in all
capacities to the Company during fiscal 1997. There were no stock options
exercised during the Company's last fiscal year nor were there any options
outstanding at the end of the Company's last fiscal year.
49
<PAGE> 55
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION(a)
- ------------------------------------------------------- -------- -------- ---------------
<S> <C> <C> <C>
James D. Dunning, Jr.(b)............................... $277,709 $277,709 $20,510
Former Chairman and Chief Executive Officer
Laurence H. Bloch(c)................................... 222,167 222,167 11,998
Chairman of the Board and Secretary
Ricardo Puente......................................... 199,519 171,822 21,360
President, Chief Executive Officer(d)
Marybeth Brennan....................................... 132,698 120,030 20,405
Vice President -- Operations
Joan M. Fiorito(e)..................................... 119,460 105,649 21,049
Vice President, Chief Financial Officer and Assistant
Secretary
</TABLE>
- ---------------
(a) Includes auto allowance, long-term disability insurance, personal life
insurance, profit sharing, tax preparation and bonuses paid pursuant to the
Equity Compensation Plan.
(b) Mr. Dunning resigned as Chairman of the Board and Chief Executive Officer
upon consummation of the Recapitalization.
(c) Mr. Bloch served as Vice Chairman until consummation of the
Recapitalization, at which time he became Chairman.
(d) Mr. Puente served as President until consummation of the Recapitalization,
at which time he became President and Chief Executive Officer.
(e) Ms. Fiorito served as Vice President-Controller until consummation of the
Recapitalization, at which time she became Vice President, Chief Financial
Officer and Assistant Secretary.
EQUITY COMPENSATION ARRANGEMENTS
Holdings' Class B Units are designed to encourage performance by providing
the members of management the opportunity to participate in the equity growth of
TransWestern. There are 10,000 Class B Units authorized, 8,500 of which were
issued to the Management Investors and 1,500 of which were issued to the Equity
Compensation Plan discussed below. See "Limited Partnership Agreement" and
"Certain Transactions -- Executive Agreements."
In fiscal 1994, the Company established the TransWestern Publishing
Company, L.P. Equity Compensation Plan (the "Equity Compensation Plan") to
provide approximately 60 of the Company's managers (other than Messrs. Dunning,
Bloch and Puente) the opportunity to participate in the equity growth of the
Company without having direct ownership of the Company's securities. In
connection with the Recapitalization, the Company reserved $5.5 million for
distributions to participants in the Equity Compensation Plan, one half of which
was distributed in October 1997, and one half of which will be distributed in
October 1998 to participants employed by the Company at the time the
distribution is made. The Equity Compensation Plan was terminated upon the
consummation of the Recapitalization; however, a new plan has been established
on terms substantially the same as those of the Equity Compensation Plan which
also requires that participants must be employees of the Company on the date of
any distribution. Special distributions made pursuant to the Equity Compensation
Plan were recorded as an expense in the Company's financial statements when
declared by the Board of Directors. Employees participating in the Equity
Compensation Plan were eligible to receive a ratable per unit share of cash
distributions made pursuant to the Equity Compensation Plan, if and when,
declared. In fiscal 1997, distributions totaling $411,000 were paid and at April
30, 1997, there were no undistributed proceeds under the Equity Compensation
Plan.
50
<PAGE> 56
EMPLOYMENT AGREEMENTS
Messrs. Bloch and Puente have each entered into an Employment Agreement
(each, an "Employment Agreement") with the Company. The Employment Agreements
provide for the employment of Mr. Bloch as the Chairman of the Board of
Directors of TCC and Chairman of the Partnership and Mr. Puente as the President
and Chief Executive Officer of the Partnership and TCC until October 1, 2002
unless terminated earlier as provided in the respective Employment Agreement.
The Employment Agreements of Messrs. Bloch and Puente provide for (i) an annual
base salary of $222,167 and $199,519 ($235,500 effective May 1, 1998),
respectively (subject to annual increases based on the consumer price index) and
(ii) annual bonuses based on the achievement of certain EBITDA (as defined in
each Employment Agreement) targets of up to 100% of their base salary. Each
executive's employment may be terminated by the Company at any time with cause
or without cause. If such executive is terminated by the Company with cause or
resigns other than for good reason, the executive will be entitled to his base
salary and fringe benefits until the date of termination, but will not be
entitled to any unpaid bonus. Messrs. Bloch and Puente will be entitled to their
base salary and fringe benefits and any accrued bonus for a period of 12 months
following their termination in the event such executive is terminated without
cause or resigns with good reason. The Employment Agreements also provide each
executive with customary fringe benefits and vacation periods. "Cause" is
defined in the Employment Agreements to mean (i) the commission of a felony or a
crime involving moral turpitude or the commission of any other act or omission
involving dishonesty, disloyalty or fraud, (ii) conduct tending to bring the
Company or any of its subsidiaries into substantial public disgrace or
disrepute, (iii) the substantial and repeated failure to perform duties as
reasonably directed by TCC or the Company, (iv) gross negligence or willful
misconduct with respect to the Company or any subsidiary, or (v) any other
material breach of the Employment Agreement or Company policy established by the
Board, which breach, if curable, is not cured within 15 days after written
notice thereof to the executive. "Good Reason" is defined to mean the
occurrence, without such executive's consent, of (i) a reduction by the Company
of the executive's annual base salary by more than 20%, (ii) any reduction in
the executive's annual base salary (in effect immediately prior to such
reduction) if in the fiscal year prior to such reduction the EBITDA for such
prior fiscal year was equal to or greater than 80% of the target EBITDA for such
prior year, (iii) any willful action by the Company that is intentionally
inconsistent with the terms of the Employment Agreement or the executive's
Executive Agreement (as defined herein), or (iv) any material reduction in the
powers, duties or responsibilities which the executive was entitled to exercise
as of the date of the Employment Agreement. Messrs. Bloch and Puente have also
entered into Executive Agreements with the Company pursuant to which they
purchased Class B Units of the Partnership. See "Certain
Transactions -- Executive Agreements."
401(K) AND PROFIT SHARING PLAN
The Company has a 401(k) and profit-sharing retirement plan (the "Profit
Sharing Plan") for the benefit of substantially all of its employees, which was
qualified for tax exempt status by the Internal Revenue Service. Employees can
make contributions to the plan up to the maximum amount allowed by federal tax
code regulations. The Company may match the employee contributions, up to 83% of
the first 6% of annual earnings per participant. The Company may also make
annual discretionary profit sharing contributions. The Company's contributions
to the Profit Sharing Plan for the years ended April 30, 1995, 1996 and 1997
were approximately $0.6 million, $0.8 million and $0.8 million, respectively.
51
<PAGE> 57
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of TransWestern's membership interests are owned by Holdings. The
following table sets forth certain information regarding the beneficial
ownership of the equity securities of Holdings by: (i) each of the Directors of
TCC and the executive officers of TransWestern; (ii) all Directors of TCC and
executive officers of TransWestern as a group; (iii) all Management Investors as
a group and (iv) each owner of more than 5% of any class of equity securities of
the Partnership ("5% Owners"). Unless otherwise noted, the address for each
executive officer of TransWestern and the Directors of TCC is c/o TransWestern,
8344 Clairemont Mesa Boulevard, San Diego, California 92111. All of Capital's
issued and outstanding capital stock is owned by Holdings. All of Capital II's
issued and outstanding capital stock is owned by TransWestern.
<TABLE>
<CAPTION>
CLASS A
COMMON PERCENT PREFERRED PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER UNITS(A) OF CLASS UNITS OF CLASS
- -------------------------------------------------- --------- -------- --------- --------
<S> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Laurence H. Bloch(b).............................. 19,209 1.51% 9,974 1.51%
Ricardo Puente(c)................................. 28,813 2.27 14,961 2.27
Joan M. Fiorito(d)................................ 5,282 * 2,743 *
Marybeth Brennan(d)............................... 5,282 * 2,743 *
Joseph L. Wazny(d)................................ 5,282 * 2,743 *
C. Hunter Boll(e)................................. 715,193 56.29 371,351 56.29
Terrence M. Mullen(e)............................. 712,231 56.06 369,813 56.06
Christopher J. Perry(f)........................... 288,134 22.68 149,608 22.68
Scott A. Schoen(e)................................ 715,193 56.29 371,351 56.29
Marcus D. Wedner(f)............................... 288,134 22.68 149,608 22.68
All Directors and executive officers as a group
(10 persons).................................... 1,070,551 84.27 555,862 84.27
All Management Investors as a group............... 115,250 9.07 59,841 9.07
5% OWNERS:
Thomas H. Lee Equity Fund III, L.P.(g)............ 712,034 56.05 369,710 56.05
Thomas H. Lee Foreign Fund III, L.P.(h)........... 712,034 56.05 369,710 56.05
THL-CCI Limited Partnership(i).................... 712,034 56.05 369,710 56.05
Continental Illinois Venture Corporation(j)....... 288,134 22.68 149,608 22.68
CIVC Partners III(k).............................. 288,134 22.68 149,608 22.68
</TABLE>
- ---------------
* Represents less than one percent.
(a) Holders of Class A Units are entitled to share in any distribution on a pro
rata basis, but only if the holders of the Preferred Units have received
the Preference Amount (as defined herein). The Partnership also issued
Class B Units to the Management Investors. The Class B Units will be
entitled to share in any such distributions only if the holders of the
Preferred Units and Class A Units have achieved an internal rate of return
on their total investment of 12%. The percentage of such distributions that
the Class B Units will be entitled to receive will range from 10% to 20%,
based on the internal rate of return achieved by the holders of the
Preferred and Class A Units. All Common Units listed in the table represent
Class A Units unless otherwise noted. See "Limited Partnership Agreement."
(b) Does not include 800 Class B Units which are subject to vesting in equal
installments over a five year period.
(c) Does not include 2,500 Class B Units which are subject to vesting in equal
installments over a five year period.
(d) Does not include 352 Class B Units which are subject to vesting in equal
installments over a five year period.
52
<PAGE> 58
(e) Includes 712,034 Class A Units and 369,710 Preferred Units beneficially
owned by Thomas H. Lee Equity Fund III, L.P. Such persons disclaim
beneficial ownership of all such interests. Such person's address is c/o
Thomas H. Lee Company, 75 State Street, Suite 2600, Boston, Massachusetts
02109.
(f) Includes 244,914 Class A Units and 127,167 Preferred Units owned by CIVC
and 43,220 Class A Units and 22,441 Preferred Units owned by CIVC Partners
III. Such persons disclaim beneficial ownership of all such interests. Such
person's address is c/o Continental Illinois Venture Corporation, 231 South
LaSalle Street, Chicago, Illinois 60697.
(g) Includes 39,259 Class A Units and 20,385 Preferred Units owned by Thomas H.
Lee Foreign Fund III, L.P. and 38,305 Class A Units and 19,889 Preferred
Units owned by THL-CCI Limited Partnership. Such person disclaims
beneficial ownership of all such interests. Such person's address is c/o
Thomas H. Lee Company, 75 State Street, Suite 2600, Boston, Massachusetts
02109.
(h) Includes 634,470 Class A Units and 329,437 Preferred Units owned by Thomas
H. Lee Equity Fund III, L.P. and 38,305 Class A Units and 19,889 Preferred
Units owned by THL-CCI Limited Partnership. Such person disclaims
beneficial ownership of all such interests. Such person's address is c/o
Thomas H. Lee Company, 75 State Street, Suite 2600, Boston, Massachusetts
02109.
(i) Includes 634,470 Class A Units and 329,437 Preferred Units owned by Thomas
H. Lee Equity Fund III, L.P. and 39,259 Class A Units and 20,385 Preferred
Units owned by Thomas H. Lee Foreign Fund III, L.P. Such person disclaims
beneficial ownership of all such interests. Such person's address is c/o
Thomas H. Lee Company, 75 State Street, Suite 2600, Boston, Massachusetts
02109.
(j) Includes 43,220 Class A Units and 22,441 Preferred Units owned by CIVC
Partners III. Such person disclaims beneficial ownership of such interests.
Such person's address is c/o Continental Illinois Venture Corporation, 231
South LaSalle Street, Chicago, Illinois 60697.
(k) Includes 244,914 Class A Units and 127,167 Preferred Units owned by CIVC.
Such person disclaims beneficial ownership of all such interests. Such
person's address is c/o Continental Illinois Venture Corporation, 231 South
LaSalle Street, Chicago, IL 60697.
53
<PAGE> 59
CERTAIN TRANSACTIONS
MANAGEMENT AGREEMENT
Effective upon the Recapitalization, the Company entered into a Management
Agreement with THL Co. pursuant to which THL Co. agreed to provide (i) general
executive and management services, (ii) identification, negotiation and analysis
of financial and strategic alternatives, and (iii) other services agreed upon by
the Company and THL Co. On the Recapitalization closing date, THL Co. and the
other equity investors in the Company each received their pro rata portion of a
$5.0 million transaction fee. In addition, THL and all other equity investors
will receive a pro rata portion of the $500,000 annual management fee (the
"Management Fee"), plus THL will be reimbursed for all reasonable out-of-pocket
expenses (payable monthly in arrears). The Management Agreement has an initial
term of one year, subject to automatic one-year extensions, unless the Company
or THL Co. provides written notice of termination no later than 30 days prior to
the end of the initial or any successive period.
INVESTORS AGREEMENT
Pursuant to the Recapitalization, Holdings, TCC, the New Investors and the
reinvesting Existing Limited Partners (together with the New Investors, the "New
Partners") entered into an Investors Agreement (the "Investors Agreement"). The
Investors Agreement requires that each of the parties thereto vote all of his or
its voting securities and take all other necessary or desirable actions to cause
the size of the Board of Directors of TCC to be established at nine members and
to cause the election to the Board of five representatives designated by THL
(the "THL Designees"), each of the then current chairman and president of the
Partnership (the "Executive Directors") and two representatives designated by
the CIVC Parties (the "CIVC Designees"), of which one CIVC Designee will at all
times serve on the Board's compensation committee, audit committee and executive
committee. Currently, however, only three of the THL Designees have been
appointed to TCC's Board of Directors. The respective rights of THL and the CIVC
Parties to designate representatives to the Board terminates at such time when
such party owns less than 30% of the Common Units held by such party as of the
Recapitalization closing date. If at any time THL and its permitted transferees
own less partnership interests in Holdings or less equity securities in TCC than
the amount of such partnership interests or such equity securities, as the case
may be, owned by the CIVC Parties and the Management Investors, taken as a
group, then the number of THL Designees will be reduced automatically from five
to three and the number of CIVC Designees will be increased automatically from
two to three. The Investors Agreement provides that certain significant actions
may not be taken without the express approval of the at least one of the CIVC
Designees and at least one of the Executive Directors.
In addition to the foregoing, the Investors Agreement (i) requires the
holders of interests in Holdings and common stock of TCC (other than THL and
CIVC) to obtain the prior written consent of THL prior to transferring any
interests in Holdings or TCC stock (other than interests or securities held by
the Management Investors pursuant to Executive Agreements), (ii) grants in
connection with the sale of interests in Holdings or TCC stock by the Management
Investors certain preemptive rights with respect to such sale first to Holdings,
then to the limited partners, (iii) grants the New Partners certain
participation rights in connection with certain transfers made by THL, (iv)
grants the New Partners certain preemptive rights in connection with certain
issuances, sales or other transfers for consideration of any securities by
Holdings or TCC, (v) requires the holders of shares of TCC's common stock to
consent to a sale of TCC to an independent third party if such sale is approved
by the Board and the holders of a majority of the shares of TCC's common stock,
and (vi) requires the holders of interests in Holdings to consent to the sale of
Holdings in the event TCC and the holders of a majority of Class A Units approve
a sale of Holdings. The foregoing agreements terminate on the earlier of October
1, 2007 and the date on which the Partnership consummates a public offering of
$40 million or more of its equity securities (a "Qualified Public Offering").
The agreements with respect to the participation rights and preemptive rights
described above continue with respect to each security until the earlier of (i)
October 1, 2007, (ii) a Qualified Public Offering, (iii) the transfer in a
public sale of such security, (iv) with respect to equity securities of
Holdings, upon the sale of the Holdings, and (v) with respect to equity
securities of TCC, upon the sale of TCC.
54
<PAGE> 60
REGISTRATION AGREEMENT
Pursuant to the Recapitalization, Holdings, TCC, and the New Partners
entered into a registration agreement (the "Registration Agreement"). Under the
Registration Agreement, the holders of a majority of registrable securities
owned by the THL Parties and the CIVC Parties have the right at any time,
subject to certain conditions, to require Holdings to register any or all of
their interests in Holdings' under the Securities Act on Form S-1 (a "Long-Form
Registration") on three occasions at Holdings' expense and on Form S-2 or Form
S-3 (a "Short-Form Registration") on three occasions at Holdings' expense.
Holdings is not required, however, to effect any such Long-Form Registration or
Short-Form Registration within six months after the effective date of a prior
demand registration. In addition, all holders of registrable securities are
entitled to request the inclusion of such securities in any registration
statement at Holdings' expense whenever Holdings proposes to register any of its
securities under the Securities Act (other than pursuant to a demand
registration). In connection with such registrations, Holdings has agreed to
indemnify all holders of registrable securities against certain liabilities,
including liabilities under the Securities Act. In addition, Holdings has the
one-time right to preempt a demand registration with a piggyback registration.
EXECUTIVE AGREEMENTS
Each Management Investor has entered into an Executive Agreement with
Holdings and TCC (each, an "Executive Agreement"), pursuant to which such
Management Investor purchased Class B Units which are subject to a five-year
vesting period, which vesting schedule accelerates upon a sale of Holdings.
Under each Management Investor's Executive Agreement, in the event that such
Management Investor's employment with the Company is terminated for any reason,
Holdings has the option to repurchase all of such Management Investor's vested
Class B Units and all other of such Management Investor's interests in Holdings
and TCC. In addition, in the event of a termination of the Management Investor's
employment by Holdings without "cause" or by such Management Investor for "good
reason" or such Management Investor's death or disability, such Management
Investor may require Holdings or TCC to repurchase his or her vested Class B
Units and all other interests of such Management Investor in Holdings and TCC.
RECAPITALIZATION AGREEMENT
The Recapitalization Agreement contained customary provisions for such
agreements, including representations and warranties with respect to the
condition and operations of the business, covenants with respect to the conduct
of the business prior to the Recapitalization closing date and various closing
conditions, including the continued accuracy of representations and warranties.
The representations and warranties made by Holdings and the Existing Limited
Partners do not survive the Recapitalization closing date; except that no party
is prevented from bringing a claim or action against any other person for any
fraud or intentional tort committed directly by such person.
Pursuant to the Recapitalization Agreement, each Existing Limited Partner
that reinvested in Holdings has agreed that for a period ending on the later of
the second anniversary of the Recapitalization closing date and the one year
anniversary of the termination of such Reinvesting Manager's employment with the
Company not to own, control, participate or engage in any yellow pages directory
publishing directory business or any business competing for the same customers
as the businesses of the Company as such businesses exist or are in process
during such period in any markets (or markets contiguous thereto) in which the
Company engages or plans to engage during such period.
James D. Dunning, Jr., the Partnership's and TCC's former Chairman and
Chief Executive Officer, has agreed that for the three-year period commencing on
the Recapitalization closing date not to participate, directly or indirectly, in
any yellow pages directory publishing business in the United States or any
business competing for the same customers as the Company in the geographic areas
in which the Company is engaged in the local or national yellow pages directory
publishing business as of August 27, 1997; provided that Mr. Dunning may
participate in any industry specific yellow pages business or any trade or
industry publications.
55
<PAGE> 61
In addition, each Existing Limited Partner that reinvested in Holdings has
agreed that for the two-year period commencing on the Recapitalization closing
date not to solicit the employment of or hire any employee of the Company (other
than Laurence Bloch), and further, under the Recapitalization Agreement, during
such two-year period, each Existing Limited Partner that reinvested in Holdings
is subject to a confidentiality agreement with respect to all information
concerning the business of the Company and TCC of which such person has
knowledge and which is not in the public domain.
BENEFITS OF THE RECAPITALIZATION TO CERTAIN EXISTING SECURITY OWNERS AND
MANAGEMENT INVESTORS
Pursuant to the Recapitalization, Holdings redeemed a portion of the
limited partnership interests held by Existing Limited Partners and the New
Investors purchased a portion of TCC's common stock from the Existing Limited
Partners. In the Recapitalization, the Company's Named Executive Officers
received approximately $50 million and exchanged their remaining limited
partnership interests, valued at approximately $7 million in the
Recapitalization, for newly issued Preferred and Class A Units. As a group, the
Named Executive Officers continuing with the Company received an aggregate of
approximately $24 million in the Recapitalization and exchanged their remaining
limited partnership interests, valued at approximately $6 million in the
Recapitalization, for newly issued Preferred and Class A Units. All Management
Investors as a group received an aggregate of approximately $38 million in the
Recapitalization and exchanged their remaining limited partnership interests,
valued at approximately $11 million in the Recapitalization, for newly issued
Preferred and Class A Units. CIVC and its affiliates, including Christopher J.
Perry and Marcus D. Wedner, received an aggregate of approximately $70 million
in the Recapitalization and exchanged their remaining limited partnership
interests, valued at approximately $25 million in the Recapitalization, for
newly issued Preferred and Class A Units. In addition, CIVC III, an affiliate of
CIVC, contributed $4.4 million at the closing of the Recapitalization in
exchange for newly issued Preferred and Class A Units and paid approximately
$78,000 to certain of the Existing Limited Partners to purchase TCC common
stock.
Affiliates of the Initial Purchasers also participated in the equity
component of the Recapitalization. FUCP received an aggregate of approximately
$178,000 in the Recapitalization and exchanged its remaining limited partnership
interests, valued at approximately $5 million in the Recapitalization, for newly
issued Preferred and Class A Units of Holdings. CIBC Merchant Fund contributed
approximately $5 million at the closing of the Recapitalization in exchange for
newly issued Preferred and Class A Units and paid approximately $87,000 to
certain of the Existing Limited Partners to purchase TCC common stock.
PAYMENTS ON TCC NOTE
Since the 1993 Acquisition, TCC loaned to the Company all amounts
distributed to TCC in connection with the periodic and special distributions
made by the Company to its partners (the "TCC Loans"). As of September 1, 1997,
the aggregate amount of principal and interest due under the TCC Loans was
$833,419. Shortly before the consummation of the Recapitalization, the Company
repaid in full the outstanding balance of all TCC Loans.
TCC used the proceeds received from the TCC Loans to (i) pay $500,000 to
First Union Capital Markets Corp. for certain advisory services rendered in
advance of the Recapitalization, (ii) pay $100,000 to Kirkland & Ellis, counsel
to the Company, for certain services rendered in advance of the
Recapitalization, (iii) pay $143,419 for miscellaneous expenses and (iv) pay a
dividend immediately prior to the Recapitalization to TCC's stockholders of
$90,000 in the aggregate.
REDEMPTION OF PREFERRED UNITS
Holdings used $31.3 million of the proceeds of the Initial Discount Note
Offering to redeem a portion of the Equity Investment. Holdings' limited
partners received the following amounts as a result of the redemption of
approximately one half of the Preferred Units: THL Parties $18.6 million; Named
Executive Officers $1.7 million; Named Executive Officers continuing with the
Company $1.5 million; Management Investors $2.9 million; CIVC $6.1 million; CIVC
III $1.1 million; FUCP $1.2 million; CIBC Merchant Fund $1.2 million.
56
<PAGE> 62
CERTAIN OTHER FEES IN CONNECTION WITH THE TRANSACTIONS
Upon issuing the notes under the Senior Subordinated Facility, the Company
paid CIBC Oppenheimer and First Union Corporation customary commitment and
funding fees for committing to provide, and providing, the Senior Subordinated
Facility. In addition, upon consummation of the Recapitalization, the Company
paid CIBC Oppenheimer a financial advisory fee of $2 million for advisory
services rendered in connection with the Recapitalization. In addition, upon
issuance of the Old Discount Notes, the Company paid CIBC Oppenheimer and First
Union Capital Markets Corp. customary underwriting fees.
57
<PAGE> 63
LIMITED PARTNERSHIP AGREEMENT
Holdings is a limited partnership formed under the Delaware Revised Uniform
Limited Partnership Act (as amended from time to time, the "Delaware Limited
Partnership Act"). Holdings is governed by its Third Amended and Restated
Agreement of Limited Partnership, as amended (the "Partnership Agreement"),
between Holdings and each of the New Investors. Interests in Holdings are owned
98.3% by the New Investors and 1.7% by TCC. TCC is a corporation organized under
the Delaware General Corporation Law. The Partnership Agreement governs the
relative rights and duties of its limited partners and its general partner with
respect to Holdings.
TCC controls, directs and exercises full control over all of Holdings
activities and the Partnership Agreement vests all management powers over the
business and affairs of Holdings exclusively in TCC. Holdings' limited partners
have no right of control or management power over the business and affairs of
Holdings except in their various capacities as an officer or director of
Holdings or TCC, as the case may be. Any change affecting the rights and
liabilities of any of Holdings' limited partners requires the consent of such
limited partner.
TCC may not withdraw as Holdings' general partner without the consent of
the holders of a majority of the Class A Units, except that TCC shall be deemed
to have withdrawn as Holdings' general partner upon the effective date of the
transfer of all of its interests in Holdings. See "Certain
Transactions -- Investors Agreement."
The ownership interests in Holdings consist of Preferred Units and Common
Units. The Preferred Units are entitled to a preferred yield of 12.0% per annum,
compounded quarterly, and an amount equal to their original investment in such
Preferred Units (net of any prior repayments of Preferred Units) plus any
accrued and unpaid preferred yield (collectively, the "Preference Amount") on
any liquidation or other distribution by Holdings. The Common Units represent
the common equity of Holdings and consist of Class A Units and Class B Units.
After payment of the Preference Amount, partners holding Class A Units are
entitled to share in any remaining proceeds of any liquidation or other
distribution by Holdings pro rata according to the number of Class A Units held
by such partners. Holders of Class B Units will also be entitled to share in any
such distributions, but only if the holders of the Preferred Units and the Class
A Units have achieved an internal rate of return on their total investment of
12.0% (the "Target 1 IRR"). After the achievement of the Target 1 IRR, the
holders of Class B Units will be entitled to share in 10.0% of any distributions
made after payment of the Preference Amount. The holders of Class B Units will
be entitled to share in 15.0% of any distributions, pro rata, according to the
number of Class B Units held by such partners if the holders of the Preferred
Units and the Class A Units achieve the second target internal rate of return
and 20.0% of any distributions if such holders achieve the third target internal
rate of return during the periods set forth below.
<TABLE>
<CAPTION>
TIME PERIOD SECOND TARGET THIRD TARGET
- ------------------------- ------------- ------------
<S> <C> <C>
10/1/97 through 9/30/98 32.500% 45%
10/1/98 through 9/30/99 29.375 40
10/1/99 through 9/30/00 26.250 35
10/1/00 through 9/30/01 23.125 30
after 9/30/01 20.000 25
</TABLE>
Both the Senior Credit Facility and the Indenture generally limit Holdings'
ability to pay cash distributions to its partners other than distributions in
amounts approximately equal to the income tax liability of the partners of
Holdings resulting from the taxable income of Holdings (the "Tax
Distributions"). Tax Distributions will be based on the approximate highest
combined tax rate that applies to any one of Holdings' partners.
The Partnership Agreement, and therefore Holdings' existence, will continue
in effect until the earlier to occur of (i) December 31, 2043, (ii) the
withdrawal of TCC if Holdings' limited partners to do not elect a successor
general partner, and (iii) the occurrence of an act that results in TCC ceasing
to be general partner under the Delaware Limited Partnership Act.
58
<PAGE> 64
LIMITED LIABILITY COMPANY AGREEMENT
TransWestern is a limited liability company formed under the Delaware
Limited Liability Company Act (as amended from time to time, the "Limited
Liability Act") and is governed by the Limited Liability Company Agreement of
TransWestern Publishing Company LLC (the "LLC Agreement") executed by its
manager, TCC.
The membership interests of TransWestern's members consists of a single
class of common units (the "Member Units"). Holdings is the sole initial member
of TransWestern and currently holds 100% of the Member Units. Distributions to
TransWestern's members are in the sole discretion of the manager. However, the
Senior Credit Facility and the Indenture generally limit TransWestern's ability
to pay cash distributions to its members other than distributions in amounts
equal to the tax liability of the partners of Holdings resulting from the
taxable income of TransWestern (the "Tax Distributions"). The Tax Distributions
will be based on the approximate highest combined tax rate that applies to any
one of Holdings' limited partners.
TCC has the sole right to make decisions regarding the management and
affairs of TransWestern and has all the powers and rights necessary or
appropriate to effectuate and carry out the purposes and business of
TransWestern, including the authority to act for and bind TransWestern.
The LLC Agreement provides that TransWestern's existence shall continue
until such time as the manager determines it is appropriate to dissolve, windup
and terminate TransWestern or, if earlier, upon the occurrence of (i) the entry
of judicial dissolution in accordance with the Limited Liability Act or (ii) the
expulsion, bankruptcy, dissolution or withdrawal of Holdings. In the event of a
termination of TransWestern, after satisfaction of all of TransWestern's debts
and liabilities, all of the assets of TransWestern would be distributed to
Holdings or if TransWestern then has more than one member, pro rata based on the
relative percentage interests in TransWestern of its members.
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<PAGE> 65
DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR CREDIT FACILITY
In connection with the Recapitalization, the Issuers entered into the
Senior Credit Facility, among CIBC, First Union (together with CIBC and the
several banks and other financial institutions from time to time parties
thereto, the "Lenders") and the Issuers, pursuant to which the Lenders will lend
to the Company up to $125.0 million consisting of a revolving credit facility of
up to $40.0 million (the "Revolving Credit Facility") and term loans in
aggregate principal amount of $85.0 million (the "Term Loans").
Repayment. Commitments under the Revolving Credit Facility will be reduced
on a quarterly basis commencing on January 1, 2000 and the Term Loans will be
amortized on a quarterly basis commencing January 1, 1998 each in accordance
with the following schedule:
<TABLE>
<CAPTION>
REVOLVING
DATE TERM LOANS CREDIT FACILITY
--------------------------------------------------- ---------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
1998............................................... $ 2,125 $ 0
1999............................................... 2,125 0
2000............................................... 2,125 6,000
2001............................................... 2,125 6,000
2002............................................... 2,125 6,000
2003............................................... 27,625 22,000
2004............................................... 46,750 0
------- -------
Total.............................................. $ 85,000 $40,000
======= =======
</TABLE>
Security; Guaranty. The Revolving Credit Facility and the Term Loans will
be secured by a first priority lien on substantially all of the properties and
assets of the Company and its future subsidiaries, including a pledge of all of
the shares of the Company's future subsidiaries. Future subsidiaries of the
Company will be required to guarantee the Revolving Credit Facility and the Term
Loans.
Interest. At the Company's option, the interest rates per annum applicable
to the Revolving Credit Facility and the Term Loans will be a fluctuating rate
of interest measured by reference to (i) LIBOR plus the applicable borrowing
margin, or (ii) a rate per annum equal to the higher of the published prime rate
of the Agent Bank or the Federal Funds Rate (as defined in the Senior Credit
Facility) as quoted by the Agent Bank plus 1/2 of 1% (the "ABR") plus the
applicable borrowing margin. The applicable borrowing margin for the Revolving
Credit Facility will range from 1.375% to 2.500% for LIBOR based borrowings and
0.375% to 1.500% for ABR based borrowings. The applicable borrowing margin for
the Term Loans will range from 1.875% to 2.750% for LIBOR based borrowings and
0.875% to 1.750% for ABR based borrowings.
Fees. The Company has agreed to pay customary fees with respect to the
Senior Credit Facility including upfront facility fees, agent and arrangement
fees and commitment fees on the unused portion of the Revolving Credit Facility.
Use of Proceeds. The entire amount of the Term Loans and $22.7 million of
the Revolving Credit Facility were made available to the Company at the time of
the Recapitalization and the remainder of the Revolving Credit Facility will be
made available to finance certain permitted acquisitions, working capital
requirements and general corporate purposes of the Company.
Prepayments; Reductions of Commitments. The Term Loans are required to be
prepaid and commitments under the Revolving Credit Facility are required to be
permanently reduced with: (i) 100% of the net cash proceeds of asset sales or
other dispositions of property if such proceeds are not used to purchase or
acquire other assets within 180 days of the original asset sale, subject to
limited exceptions, (ii) 50% of excess cash flow for a fiscal year if the
Company's total leverage ratio determined as of the last day of such fiscal year
equals or exceeds 5.0 to 1, (iii) 100% of excess insurance proceeds and (iv)
100% of the net proceeds of issuances of equity securities or debt obligations
of the Company, subject to limited exceptions, and subject to reduction to 50%
of such proceeds if the Company's total leverage ratio is less than 5.0 to 1.
Such mandatory
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<PAGE> 66
prepayments and reductions will first be applied to the permanent reduction of
the Term Loans and second to the permanent reduction of the Revolving Credit
Facility. Within the Term Loans, prepayments with proceeds described in clause
(i) or (iii) above will be applied pro rata to the remaining installments of the
Term Loans and prepayments with proceeds described in clause (ii) or (iv) above
will be applied to each remaining installment of the Term Loans in inverse order
of maturity. The Company may make voluntary prepayments in minimum principal
amounts of $50,000 or a whole multiple thereof.
Covenants. The Senior Credit Facility contains covenants restricting the
ability of the Company and its subsidiaries to, among others (i) declare
dividends or redeem or repurchase capital stock, (ii) prepay, redeem or
repurchase debt, (iii) incur liens and engage in sale lease-back transactions,
(iv) make loans and investments, (v) incur additional indebtedness, (vi) amend
or otherwise alter debt and other material agreements, (vii) make capital
expenditures, (viii) engage in mergers, acquisitions and asset sales, (ix)
transact with affiliates, (x) alter its line of business, (xi) enter into
guarantees of indebtedness, and (xii) make optional payments on or modify the
terms of subordinated debt. The Company must also make certain customary
indemnifications of the Lenders and their agents and will also be required to
comply with financial covenants with respect to: (a) a minimum interest coverage
ratio, (b) a minimum EBITDA (as defined in the Senior Credit Facility), (c) a
maximum leverage ratio, and (d) a minimum fixed charge coverage ratio. The
Senior Credit Facility also contains certain customary affirmative covenants.
Events of Default. Events of default under the Senior Credit Facility
include (i) the Company's failure to pay principal or interest when due, (ii)
the Company's material breach of any covenant, representation or warranty
contained in the loan documents, (iii) customary cross-default provisions, (iv)
events of bankruptcy, insolvency or dissolution of the Company, (v) the levy of
certain judgements against the Company, (vi) certain adverse events under ERISA
plans of the Company, (vii) the actual or asserted invalidity of security
documents or guarantees of the Company or its subsidiaries, and (viii) a change
of control of the Company.
DISCOUNT NOTES
Concurrent with the Initial Offering, the Discount Note Issuers offered
$32.5 million initial aggregate principal amount ($57.9 million principal amount
at maturity) of their 11 7/8% Senior Discount Notes due 2008. The Discount Notes
are joint and several obligations of Holdings and Capital.
The Discount Notes were issued at a substantial discount to their principal
amount at maturity. The issue price to investors per Discount Note was $561.16,
which represents a yield to maturity on the Discount Notes of 11 7/8% per annum
(computed on a semi-annual bond equivalent basis and assuming no Discount Notes
were issued in lieu of cash interest thereon). A holder of Discount Notes will
be required to include the accretion of the original issue discount as gross
income for U.S. federal income tax purposes prior to the receipt of the cash
payments to which such income is attributable.
Interest on the Discount Notes will not accrue or be payable prior to
November 15, 2002. Thereafter, interest on the Discount Notes will accrue on the
principal amount at maturity at a rate of 11 7/8% per annum, and will be payable
semiannually on each May 15 and November 15, commencing May 15, 2003. Interest
will be payable at the option of Holdings at a rate of 13 3/8% per annum by the
issuance of additional Discount Notes (valued at 100% of the face amount
thereof) in lieu of cash interest.
The Discount Notes are senior unsecured obligations of the Discount Note
Issuers and rank senior in right of payment to any subordinated indebtedness of
the Discount Note Issuers. The Discount Notes are effectively subordinated in
right of payment to all existing and future indebtedness and other liabilities,
including trade payables, of subsidiaries of Holdings. As of October 31, 1997,
after giving effect to the consummation of the Initial Offerings and the Asset
Drop-Down, such subsidiaries would have had approximately $185.0 million
aggregate principal amount of Indebtedness outstanding. In addition, such
subsidiaries would have had $40.0 million of additional borrowing availability
under the Senior Credit Facility.
The Discount Notes are redeemable at the option of the Discount Note
Issuers, in whole or in part, at any time on or after November 15, 2002, at the
redemption prices set forth in the Discount Note indenture,
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<PAGE> 67
together with accrued and unpaid interest thereon, if any, to the redemption
date. In addition, the Discount Note Issuers, at their option, may redeem all,
but not less than all, of the principal amount of the Discount Notes outstanding
at any time on or prior to November 15, 2002 at a redemption price equal to
111.875% of the Accreted Value (as defined in the Discount Note indenture)
thereof, out of the net proceeds of one or more public equity offerings,
provided, however, that any such redemption occurs within 90 days following the
closing of any such public equity offering.
Upon the occurrence of a Change of Control, each holder of the Discount
Notes will be entitled to require the Discount Note Issuers to purchase such
holder's Discount Notes at a purchase price equal to (i) 101% of the Accreted
Value thereof, if the repurchase date is on or prior to November 15, 2002 or
(ii) 101% of the principal amount at maturity thereof, together with accrued and
unpaid interest thereon, if any, to the repurchase date, if such date is after
November 15, 2002.
The Discount Note Issuers will be obligated in certain instances to make an
offer to repurchase the Discount Notes at a purchase price equal to (i) 100% of
the Accreted Value thereof, if the repurchase date is on or prior to November
13, 2002, or (ii) 100% of the principal amount at maturity thereof, together
with accrued and unpaid interest thereon to the purchase date, with the net cash
proceeds of certain asset sales.
The Discount Note indenture contains covenants for the benefit of the
holders of the Discount Notes that, among other things, restrict the ability of
the Discount Note Issuers and any of their Restricted Subsidiaries (including
the Company) to (i) incur additional Indebtedness, (ii) pay dividends and make
distributions, (iii) issue stock of subsidiaries, (iv) make certain investments,
(v) repurchase stock, (vi) enter into transactions with affiliates, (vii) enter
into sale lease-back transactions and (viii) merge or consolidate the Company.
The Discount Note Issuers are also limited in their ability to create liens and
transfer or sell assets. These covenants are subject to a number of important
exceptions, including the allowance of Permitted Tax Distributions as a result
of Holdings' status as a limited partnership.
Pursuant to a registration rights agreement among the Discount Note Issuers
and the Initial Purchasers, the Discount Note Issuers must use their reasonable
best efforts to file within 45 days, and cause to become effective within 135
days, of the Issue Date an Exchange Offer Registration Statement (as defined in
such agreement) with respect to an offer to exchange the Discount Notes (the
"Discount Note Exchange Offer") for notes of the Discount Note Issuers with
terms substantially identical to the Discount Notes (the "Exchange Discount
Notes"). In addition, under certain circumstances the Discount Note Issuers may
be required to file a Shelf Registration Statement (as defined in such
agreement). Among other provisions, in the event that (i) the Exchange Offer
Registration Statement or Shelf Registration Statement has not been filed with
the Commission within 45 days after the Issue Date, or (ii) the Exchange Offer
Registration Statement or Shelf Registration Statement is not declared effective
within 135 days after the Issue Date, or (iii) the Discount Note Exchange Offer
is not consummated within 180 days after the Issue Date (each such event
referred to in clauses (i) through (iii) above is a "Discount Note Registration
Default"), the sole remedy available to holders of the Discount Notes will be
immediate assessment of additional amounts (the "Damage Amount") as follows:
equal to 0.50% per annum of the average Accreted Value of the Discount Notes
during the first 90 days when any such default exists and increased by an
additional 0.25% per annum of the average Accreted Value of the Discount Notes
for each subsequent 90-day period during which the Discount Note Registration
Default remains uncured, up to a maximum rate of 2.0% per annum. All Damage
Amounts will be payable to holders of the Discount Notes in cash on each May 15
and November 15, commencing with the first such date occurring after any such
Damage Amount commences to accrue, and continuing until such Discount Note
Registration Default is cured. Damage Amounts will be payable in cash regardless
of whether cash interest is accruing or payable with respect to the Discount
Notes. After the date on which such Discount Note Registration Default is cured,
Damage Amounts will cease to accrue.
The net proceeds from the sale of the Discount Notes were used to redeem
approximately one-half of the existing Preferred Units of Holdings held by its
limited partners.
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<PAGE> 68
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Issuers on November 12, 1997 to
the Initial Purchasers pursuant to the Purchase Agreement. The Initial
Purchasers subsequently resold the Old Notes to qualified institutional buyers
in reliance on Rule 144A under the Securities Act. As a condition of the
Purchase Agreement, the Issuers entered into the Exchange Offer Registration
Rights Agreement with the Initial Purchasers pursuant to which the Issuers have
agreed, for the benefit of the holders of the Old Notes, at the Issuers' cost,
(i) to use their reasonable best efforts to file the Exchange Offer Registration
Statement within 45 days after the date of the original issue of the Old Notes
with the Commission with respect to the Exchange Offer for the Exchange Notes;
(ii) use their reasonable best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act within 135 days
after the date of the original issuance of the Old Notes and (iii) unless the
Exchange Offer would not be permitted by applicable law or Commission policy,
commence the Exchange Offer and use their reasonable best efforts to issue the
Exchange Notes on or prior to 60 days after the date on which the Exchange Offer
Registration statement was declared effective by the Commission. Upon the
Exchange Offer Registration Statement being declared effective, the Issuers will
offer the Exchange Notes in exchange for surrender of the Old Notes. The Issuers
will keep the Exchange Offer open for not less than 30 days (or longer if
required by applicable law) after the date on which notice of the Exchange Offer
is mailed to the holders of the Old Notes. For each Old Note surrendered to the
Issuers pursuant to the Exchange Offer, the holder of such Old Note will receive
an Exchange Note having a principal amount equal to that of the surrendered Old
Note. Interest on each Old Note will accrue from the last interest payment date
on which interest was paid on the Old Note surrendered in exchange therefor or,
if no interest has been paid on such Old Note, from the date of its original
issue. Interest on each Exchange Note will accrue from the date of its original
issue.
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the Issuers believe that the
Exchange Notes will in general be freely tradeable after the Exchange Offer
without further registration under the Securities Act. However, any purchaser of
Old Notes who is an "affiliate" of the Issuers or who intends to participate in
the Exchange Offer for the purpose of distributing the Exchange Notes (i) will
not be able to rely on the interpretation of the staff of the Commission, (ii)
will not be able to tender its Old Notes in the Exchange Offer and (iii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of the Old Notes, unless
such sale or transfer is made pursuant to an exemption from such requirements.
As contemplated by these no-action letters and the Exchange Offer
Registration Rights Agreement, each holder accepting the Exchange Offer is
required to represent to the Issuers in the Letter of Transmittal that (i) the
Exchange Notes are to be acquired by the holder or the person receiving such
Exchange Notes, whether or not such person is the holder, in the ordinary course
of business, (ii) the holder or any such other person (other than a
broker-dealer referred to in the next sentence) is not engaging and does not
intend to engage, in distribution of the Exchange Notes, (iii) the holder or any
such other person has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iv) neither the holder
nor any such other person is an "affiliate" of the Issuers within the meaning of
Rule 405 under the Securities Act, and (v) the holder or any such other person
acknowledges that if such holder or any other person participates in the
Exchange Offer for the purpose of distributing the Exchange Notes it must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale of the Exchange Notes and cannot rely on those
no-action letters. As indicated above, each Participating Broker-Dealer that
receives Exchange Notes for its own account in exchange for Old Notes must
acknowledge that it (i) acquired the Old Notes for its own account as a result
of market-making activities or other trading activities, (ii) has not entered
into any arrangement or understanding with the Issuers or any "affiliate" of the
Issuers (within the meaning of Rule 405 under the Securities Act) to distribute
the Exchange Notes to be received in the Exchange Offer and (iii) will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes. For a description of the procedures for resales
by Participating Broker-Dealers, see "Plan of Distribution."
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<PAGE> 69
In the event that changes in the law or the applicable interpretations of
the staff of the Commission do not permit the Issuers to effect such an Exchange
Offer, or if for any other reason the Exchange Offer is not consummated within
180 days of the date of the original issuance of the Old Notes, the Issuers will
(i) file the Shelf Registration Statement covering the resale of the Old Notes,
(ii) use their reasonable best efforts to cause the Shelf Registration Statement
to be declared effective under the Securities Act and (iii) use their reasonable
best efforts to keep effective the Shelf Registration Statement for two years
after its effective date. The Issuers will, in the event of the filing of the
Shelf Registration Statement, provide to each applicable holder of the Old Notes
copies of the prospectus which is a part of the Shelf Registration Statement,
notify each such holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to permit unrestricted
resale of the Old Notes. A holder of the Old Notes that sells such Old Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Exchange Offer Registration Rights Agreement
which are applicable to such a holder (including certain indemnification
obligations). In addition, each holder of the Old Notes will be required to
deliver information to be used in connection with the Shelf Registration
Statement and to provide comments on the Shelf Registration Statement within the
time periods set forth in the Exchange Offer Registration Rights Agreement in
order to have their Old Notes included in the Shelf Registration Statement and
to benefit from the provisions set forth in the following paragraph.
The Exchange Offer Registration Rights Agreement provides that (i) the
Issuers will use their reasonable best efforts to file an Exchange Offer
Registration Statement with the Commission on or prior to 45 days after the date
of the original issue of the Old Notes with the Commission, (ii) the Issuers
will use their reasonable best efforts to have the Exchange Offer Registration
Statement declared effective by the Commission on or prior to 135 days after the
date of the original issue of the Old Notes, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Issuers will
commence the Exchange Offer and use their reasonable best efforts to issue on or
prior to 60 days after the Exchange Offer Effectiveness Date, Exchange Notes in
exchange for all Old Notes tendered prior thereto in the Exchange Offer and (iv)
if obligated to file the Shelf Registration Statement, the Issuers will use
their reasonable best efforts to file the Shelf Registration Statement with the
Commission in a timely fashion. If (a) the Issuers fail to file any of the
Registration Statements required by the Registration Rights Agreement on or
before the date specified for such filing, (b) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness, (c) the Issuers fail to consummate the
Exchange Offer within 180 days of the date of the original issuance of the Old
Notes, or (d) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the period specified in the Exchange Offer Registration Rights Agreement
(each such event referred to in clauses (a) through (d) above a "Registration
Default"), the sole remedy available to holders of the Old Notes will be the
immediate assessment of Additional Interest as follows: the per annum interest
rate on the Old Notes will increase by .50% and the per annum interest rate will
increase by an additional .25% for each subsequent 90-day period during which
the Registration Default remains uncured, up to a maximum additional interest
rate of 2% per annum in excess of 9 5/8% per annum. All Additional Interest will
be payable to holders of the Old Notes in cash on each May 15 and November 15,
commencing with the first such date occurring after any such Additional Interest
commences to accrue, until such Registration Default is cured. After the date on
which such Registration Default is cured, the interest rate on the Old Notes
will revert to 9 5/8% per annum.
Holders of Old Notes will be required to make certain representations to
the Issuers (as described in the Exchange Offer Registration Rights Agreement)
in order to participate in the Exchange Offer and will be required to deliver
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Exchange Offer Registration Rights Agreement in order to have
their Old Notes included in the Shelf Registration Statement and benefit from
the provisions regarding Additional Interest set forth above.
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<PAGE> 70
The summary herein of certain provisions of the Exchange Offer Registration
Rights Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by, all the provisions of the Exchange Offer
Registration Rights Agreement, a copy of which is filed as an exhibit to the
Exchange Offer Registration Statement of which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Old Notes except that (i) the Exchange Notes bear a Series B designation
and a different CUSIP Number from the Old Notes, (ii) the Exchange Notes have
been registered under the Securities Act and hence will not bear legends
restricting the transfer thereof and (iii) the holders of the Exchange Notes
will not be entitled to certain rights under the Exchange Offer Registration
Rights Agreement, including the provisions providing for an increase in the
interest rate on the Old Notes in certain circumstances relating to the timing
of the Exchange Offer, all of which rights will terminate when the Exchange
Offer is terminated. The Exchange Notes will evidence the same debt as the Old
Notes and will be entitled to the benefits of the Indenture.
As of the date of this Prospectus, $100,000,000 aggregate principal amount
of Old Notes were outstanding. The Company has fixed the close of business on
, 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware, the Delaware Limited Liability Company
Act or the Indenture in connection with the Exchange Offer. The Company intends
to conduct the Exchange Offer in accordance with the applicable requirements of
the Exchange Act and the rules and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Exchange Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
1998, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
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<PAGE> 71
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "-- Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from their date of issuance. Holders
of Old Notes that are accepted for exchange will receive, in cash, accrued
interest thereon to, but not including, the date of issuance of the Exchange
Notes. Such interest will be paid with the first interest payment on the
Exchange Notes on May 15, 1998 to persons who are registered holders of the
Exchange Notes on May 1, 1998. Interest on the Old Notes accepted for exchange
will cease to accrue upon issuance of the Exchange Notes.
Interest on the Exchange Notes is payable semi-annually on each May 15 and
November 15 commencing on May 15, 1998.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal or transmit an Agent's
Message in connection with a book-entry transfer, and mail or otherwise deliver
such Letter of Transmittal or such facsimile or Agent's Message, together with
the Old Notes and any other required documents, to the Exchange Agent prior to
5:00 p.m., New York City time, on the Expiration Date. To be tendered
effectively, the Old Notes, Letter of Transmittal or Agent's Message and other
required documents must be completed and received by the Exchange Agent at the
address set forth below under "Exchange Agent" prior to 5:00 p.m., New York City
time, on the Expiration Date. Delivery of the Old Notes may be made by book-
entry transfer in accordance with the procedures described below. Confirmation
of such book-entry transfer must be received by the Exchange Agent prior to the
Expiration Date.
The term "Agent's Message" means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent forming a part of a
confirmation of a book-entry, which states that such book-entry transfer
facility has received an express acknowledgment from the participant in such
book-entry transfer facility tendering the Old Notes that such participant has
received and agrees: (i) to participate in the Automated Tender Option Program
("ATOP"); (ii) to be bound by the terms of the Letter of Transmittal; and (iii)
that the Company may enforce such agreement against such participant.
By executing the Letter of Transmittal or Agent's Message, each holder will
make to the Company the representations set forth above in the third paragraph
under the heading "--Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal or Agent's Message.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMIT-
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TAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO
EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Old Notes at the book-entry transfer facility, The Depository Trust Company
(the "Book-Entry Transfer Facility"), for the purpose of facilitating the
Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of Old Notes by causing such Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account with
respect to the Old Notes in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. Although delivery of the Old Notes may be effected
through book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility, unless an Agent's Message is received by the Exchange Agent
in compliance with ATOP, an appropriate Letter of Transmittal properly completed
and duly executed with any required signature guarantee and all other required
documents must in each case be transmitted to and received or confirmed by the
Exchange Agent at its address set forth below on or prior to the Expiration
Date, or, if the guaranteed delivery procedures described below are complied
with, within the time period provided under such procedures. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right in their sole discretion to waive
any defects, irregularities or conditions of tender as to particular Old Notes.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Issuers shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Issuers, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tender of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or
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<PAGE> 73
waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate
number(s) of such Old Notes and the principal amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within five New York Stock Exchange trading days after the
Expiration Date, the Letter of Transmittal (or facsimile thereof) (or,
in the case of a book-entry transfer, an Agent's Message) together with
the certificate(s) representing the Old Notes (or a confirmation of
book-entry transfer of such Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility), and any other documents required by
the Letter of Transmittal will be deposited by the Eligible Institution
with the Exchange Agent; and
(c) the certificate(s) representing all tendered Old Notes in proper form
for transfer (or a confirmation of a book-entry transfer of such Old
Notes into the Exchange Agent's account at the Book Entry Transfer
Facility), together with a Letter of Transmittal (of facsimile thereof),
properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and all other documents required by the Letter of Transmittal
are received by the Exchange Agent within five New York Stock Exchange
trading days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number(s) and principal amount of such Old Notes, or, in the case of
Old Notes transferred by book-entry transfer, the name and number of the account
at the Book-Entry Transfer Facility to be credited), (iii) be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
by which such Old Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the Old Notes register the transfer of such Old Notes
into the name of the person withdrawing the tender and (iv) specify the name in
which any such Old Notes are to be registered, if different from that of the
Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
Notes may be retendered by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the Expiration Date.
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CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Notes for, any Old Notes, and
may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer, or any
material adverse development has occurred in any existing action or
proceeding with respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the sole
judgment of the Company, might materially impair the ability of the
Company to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders to withdraw such Old Notes (see
"--Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed
as follows:
By Mail: Overnight Courier:
Wilmington Trust Company Wilmington Trust Company
Rodney Square North Rodney Square North
1100 North Market Street 1100 North Market Street
Wilmington, Delaware 10890 Wilmington, Delaware 10890
Attention: Corporate Trust Operations Attention: Corporate Trust Operations
By Hand: Facsimile Transmission:
Wilmington Trust Company (302) 651-1576
Rodney Square North
1100 North Market Street
Wilmington, Delaware 10890
Attention: Corporate Trust Operations
Confirm by Telephone:
(302) 651-8869
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
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The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, which is face value, as reflected in the Company's accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized by the Company. The expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Old Notes
may be resold only (i) to the Company (upon redemption thereof or otherwise),
(ii) so long as the Old Notes are eligible for resale pursuant to Rule 144A, to
a person inside the United States whom the seller reasonably believes is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, in
accordance with Rule 144 under the Securities Act, or pursuant to another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel reasonably acceptable to the Company), (iii) outside
the United States to a foreign person in a transaction meeting the requirements
of Rule 904 under the Securities Act, or (iv) pursuant to an effective
registration statement under the Securities Act, in each case in accordance with
any applicable securities laws of any state of the United States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that a holder or other person who receives Exchange Notes,
whether or not such person is the holder (other than a person that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), in exchange for Old Notes in the ordinary course of business and who is
not participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the
Exchange Notes, will be allowed to resell the Exchange Notes to the public
without further registration under the Securities Act and without delivering to
the purchasers of the Exchange Notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
As contemplated by these no-action letters and the Exchange Offer
Registration Rights Agreement, each holder accepting the Exchange Offer is
required to represent to the Company in the Letter of Transmittal that (i) the
Exchange Notes are to be acquired by the holder or the person receiving such
Exchange Notes, whether or not such person is the holder, in the ordinary course
of business, (ii) the holder or any such other person (other than a
broker-dealer referred to in the next sentence) is not engaging and does not
intend to engage, in the distribution of the Exchange Notes, (iii) the holder or
any such other person has no
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arrangement or understanding with any person to participate in the distribution
of the Exchange Notes, (iv) neither the holder nor any such other person is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act, and (v) the holder or any such other person acknowledges that if such
holder or other person participates in the Exchange Offer for the purpose of
distributing the Exchange Notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the Exchange Notes and cannot rely on those no-action letters. As
indicated above, each Participating Broker-Dealer that receives Exchange Notes
for its own account in exchange for Old Notes must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. For a
description of the procedures for such resales by Participating Broker-Dealers,
see "Plan of Distribution."
DESCRIPTION OF THE NOTES
The Exchange Notes will be issued under an Indenture, dated as of November
12, 1997 among the Issuers and Wilmington Trust Company, as trustee (the
"Trustee"). The terms of the Exchange Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") as in effect on
the date of the Indenture. The Exchange Notes are subject to all such terms, and
holders of the Exchange Notes are referred to the Indenture and the Trust
Indenture Act for a statement of them. The form and terms of the Exchange Notes
are the same as the form and terms of the Old Notes (which they replace) except
that (i) the Exchange Notes bear a Series B designation, (ii) the Exchange Notes
have been registered under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof, and (iii) the holders of Exchange
Notes will not be entitled to certain rights under the Exchange Offer
Registration Rights Agreement, including the provisions providing for an
increase in the interest rate on the Old Notes in certain circumstances relating
to the timing of the Exchange Offer, which rights will terminate when the
Exchange Offer is consummated. The following is a summary of the material terms
and provisions of the Exchange Notes. This summary does not purport to be a
complete description of the Exchange Notes and is subject to the detailed
provisions of, and qualified in its entirety by reference to, the Exchange Notes
and the Indenture (including the definitions contained therein). A copy of the
form of Indenture may be obtained from the Issuers by any holder or prospective
investor upon request. Definitions relating to certain capitalized terms are set
forth under "-- Certain Definitions" and throughout this description.
Capitalized terms that are used but not otherwise defined herein have the
meanings assigned to them in the Indenture and such definitions are incorporated
herein by reference. For purposes of this "Description of the Notes," the term
"Company" means TransWestern Publishing Company LLC.
GENERAL
The Notes will be limited in aggregate principal amount to $100.0 million.
The Notes will be general unsecured obligations of the Issuers, subordinated in
right of payment to all existing and future Senior Indebtedness of the Issuers,
pari passu in right of payment to all senior subordinated indebtedness of the
Issuers and senior in right of payment to all subordinated indebtedness of the
Issuers. The Notes will be joint and several obligations of the Issuers.
The Notes will be unconditionally guaranteed, on a senior subordinated
basis, as to payment of principal, premium, if any, and interest, jointly and
severally, by each Restricted Subsidiary which guarantees payment of the Notes
pursuant to the covenant described under "Limitation on Creation of
Subsidiaries" (the "Guarantors").
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on November 15, 2007. The Notes will bear interest at
a rate of 9 5/8% per annum from the date of original issuance until maturity.
Interest is payable semiannually in arrears on each May 15 and November 15,
commencing May 15, 1998, to holders of record of the Notes at the close of
business on the immediately preceding May 1 and November 1, respectively. The
interest rate on the Notes is subject to increase, and such Additional Interest
will be payable on the payment dates set forth above, in certain
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circumstances, if the Notes (or other securities substantially similar to the
Notes) are not registered with the Commission within the prescribed time periods
set forth in the Exchange Offer Registration Rights Agreement.
OPTIONAL REDEMPTION
The Notes will be redeemable at the option of the Issuers, in whole or in
part, at any time on or after November 15, 2002 at the following redemption
prices (expressed as a percentage of principal amount), together, in each case,
with accrued interest to the redemption date, if redeemed during the
twelve-month period beginning on November 15 of each year listed below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
----- ----------
<S> <C>
2002.............................................. 104.813%
2003.............................................. 103.208%
2004.............................................. 101.604%
2005 and thereafter............................... 100.000%
</TABLE>
Notwithstanding the foregoing, the Issuers, at their option, may redeem in
the aggregate up to 35% of the original principal amount of the Notes at any
time and from time to time prior to November 15, 2000 at a redemption price
equal to 109.625% of the aggregate principal amount so redeemed, together with
accrued interest thereon to the redemption date, out of the Net Proceeds of one
or more Public Equity Offerings; provided, however, that at least $65.0 million
of the principal amount of the Notes remains outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 90
days following the closing of any such Public Equity Offering.
In the event of redemption of fewer than all of the Notes, the Trustee
shall select, if the Notes are listed on a national securities exchange, in
accordance with the rules of such exchange or, if the Notes are not so listed,
either on a pro rata basis or by lot or in such other manner as it shall deem
fair and equitable the Notes to be redeemed; provided, that if a partial
redemption is made with the proceeds of a Public Equity Offering, selection of
the Notes or portion thereof for redemption will be made by the Trustee on a pro
rata basis, unless such method is prohibited. The Notes will be redeemable in
whole or in part upon not less than 30 nor more than 60 days' prior written
notice, mailed by first class mail to a holder's last address as it shall appear
on the register maintained by the Registrar of the Notes. On and after any
redemption date, interest will cease to accrue on the Notes or portions thereof
called for redemption unless the Issuers shall fail to redeem any such Note.
SUBORDINATION
The indebtedness represented by the Notes is, to the extent and in the
manner provided in the Indenture, subordinated in right of payment to the prior
indefeasible payment and satisfaction in full in cash of all existing and future
Senior Indebtedness of the Issuers. As of October 31, 1997, after giving pro
forma effect to the Initial Offerings and the Asset Drop-Down, the principal
amount of outstanding Senior Indebtedness of the Issuers, on a consolidated
basis, would have been $85.0 million. In addition, the Issuers would have had
$40.0 million of undrawn commitments available under the Senior Credit Facility.
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, arrangement, reorganization or other similar case or
proceeding in connection therewith, relative to the Issuers or to their
creditors, as such, or to their assets, whether voluntary or involuntary, or any
liquidation, dissolution or other winding-up of the Issuers, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or any
general assignment for the benefit of creditors or other marshalling of assets
or liabilities of the Issuers (except in connection with the merger or
consolidation of the Issuers or their liquidation or dissolution following the
transfer of substantially all of their assets, upon the terms and conditions
permitted under the circumstances described under "-- Merger, Consolidation or
Sale of Assets") (all of the foregoing referred to herein individually as a
"Bankruptcy Proceeding" and collectively as "Bankruptcy Proceedings"), the
holders of Senior Indebtedness of the Issuers will be entitled to receive
payment and satisfaction in full in cash of all amounts due on or in respect of
all Senior Indebtedness of the Issuers before the holders of the
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Notes are entitled to receive or retain any payment or distribution of any kind
on account of the Notes. In the event that, notwithstanding the foregoing, the
Trustee or any holder of Notes receives any payment or distribution of assets of
the Issuers of any kind, whether in cash, property or securities, including,
without limitation, by way of set-off or otherwise, in respect of the Notes
before all Senior Indebtedness of the Issuers is paid and satisfied in full in
cash, then such payment or distribution will be held by the recipient in trust
for the benefit of holders of Senior Indebtedness and will be immediately paid
over or delivered to the holders of Senior Indebtedness or their representative
or representatives to the extent necessary to make payment in full in cash of
all Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution, or provision therefor, to or for the holders of Senior
Indebtedness. By reason of such subordination, in the event of liquidation or
insolvency, creditors of the Issuers who are holders of Senior Indebtedness may
recover more, ratably, than other creditors of the Issuers, and creditors of the
Issuers who are not holders of Senior Indebtedness or of the Notes may recover
more, ratably, than the holders of the Notes.
No payment or distribution of any assets or securities of the Issuers or
any Restricted Subsidiary of any kind or character (including, without
limitation, cash, property and any payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of the Issuers
being subordinated to the payment of the Notes by the Issuers) may be made by or
on behalf of the Issuers or any Restricted Subsidiary, including, without
limitation, by way of set-off or otherwise, for or on account of the Notes, or
for or on account of the purchase, redemption or other acquisition of the Notes,
and neither the Trustee nor any holder or owner of any Notes shall take or
receive from the Issuers or any Restricted Subsidiary, directly or indirectly in
any manner, payment in respect of all or any portion of Notes following the
delivery by the representative of the holders of Designated Senior Indebtedness
under or in respect of the Senior Credit Facility, for so long as there shall
exist any Designated Senior Indebtedness under or in respect of the Senior
Credit Facility, and thereafter, the holders of Designated Senior Indebtedness
(in either such case, the "Representative") to the Trustee of written notice of
(i) the occurrence of a Payment Default on Designated Senior Indebtedness or
(ii) the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness and the acceleration of the maturity of Designated Senior
Indebtedness in accordance with its terms, and, in any such event, such
prohibition shall continue until such Payment Default is cured, waived in
writing or ceases to exist or such acceleration has been rescinded or otherwise
cured. At such time as the prohibition set forth in the preceding sentence shall
no longer be in effect, subject to the provisions of the following paragraph,
the Issuers shall resume making any and all required payments in respect of the
Notes, including any missed payments.
Upon the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness, no payment or distribution of any assets or securities of the
Issuers of any kind or character (including, without limitation, cash, property
and any payment or distribution which may be payable or deliverable by reason of
the payment of any other Indebtedness of the Issuers being subordinated to the
payment of the Notes by the Issuers) may be made by or on behalf of the Issuers,
including, without limitation, by way of set-off or otherwise, for or on account
of the Notes, or for on account of the purchase, redemption, defeasance or other
acquisition of Notes, and neither the Trustee nor any holder or owner of Notes
shall take or receive from the Issuers or any Restricted Subsidiary, directly or
indirectly in any manner, payment in respect of all or any portion of the Notes
for a period (a "Payment Blockage Period") commencing on the date of receipt by
the Trustee of written notice from the Representative of such Non-Payment Event
of Default unless and until (subject to any blockage of payments that may then
be in effect under the preceding paragraph) the earliest of (x) more than 179
days shall have elapsed since receipt of such written notice by the Trustee, (y)
such Non-Payment Event of Default shall have been cured or waived in writing or
shall have ceased to exist or such Designated Senior Indebtedness shall have
been paid in full or (z) such Payment Blockage Period shall have been terminated
by written notice to the Issuers or the Trustee from the Representative, after
which, in the case of clause (x), (y) or (z), the Issuers shall resume making
any and all required payments in respect of the Notes, including any missed
payments. Notwithstanding any other provision of the Indenture, in no event
shall a Payment Blockage Period commenced in accordance with the provisions of
the Indenture described in this paragraph extend beyond 179 days from the date
of the receipt by the Trustee of the notice referred to above (the "Initial
Blockage Period"). Any number of additional Payment Blockage Periods may be
commenced
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during the Initial Blockage Period; provided, however, that no such additional
Payment Blockage Period shall extend beyond the Initial Blockage Period. After
the expiration of the Initial Blockage Period, no Payment Blockage Period may be
commenced until at least 180 consecutive days have elapsed from the last day of
the Initial Blockage Period. Notwithstanding any other provision of the
Indenture, no event of default with respect to Designated Senior Indebtedness
(other than a Payment Default) which existed or was continuing on the date of
the commencement of any Payment Blockage Period initiated by the Representative
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period initiated by the Representative, whether or not within the
Initial Blockage Period, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days.
Each Guarantee will, to the extent set forth in the Indenture, be
subordinated in right of payment to the prior indefeasible payment and
satisfaction in full in cash of all Senior Indebtedness of the respective
Guarantor, including obligations of such Guarantor with respect to the Senior
Credit Facility (including any guarantee thereof), and will be subject to the
rights of holders of Designated Senior Indebtedness of such Guarantor to
initiate blockage periods, upon terms substantially comparable to the
subordination of the Notes to all Senior Indebtedness of the Issuers.
If the Issuers or any Guarantor fails to make any payment on the Notes or
any Guarantee, as the case may be when due or within any applicable grace
period, whether or not on account of payment blockage provisions, such failure
would constitute an Event of Default under the Indenture and would enable the
holders of the Notes to accelerate the maturity thereof. See "Events of
Default."
A holder of Notes by his acceptance of Notes agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purpose.
CERTAIN COVENANTS
The Indenture will contain, among others, the following covenants. Except
as otherwise specified, all of the covenants described below will appear in the
Indenture.
Limitation on Additional Indebtedness
The Issuers will not, and will not permit any Restricted Subsidiary of the
Issuers to, directly or indirectly, incur (as defined) any Indebtedness
(including Acquired Indebtedness) unless (a) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the ratio of the total Indebtedness of the Issuers and their Restricted
Subsidiaries (excluding any Indebtedness owed to a Restricted Subsidiary by any
other Restricted Subsidiary or the Issuers and any Indebtedness owed to the
Issuers by any Restricted Subsidiary) to the Issuers' EBITDA (determined on a
pro forma basis for the last four fiscal quarters of the Issuers and their
consolidated Restricted Subsidiaries for which financial statements are
available at the date of determination) is less than (i) 6.25 to 1 if the
Indebtedness is incurred prior to November 15, 2000 and (ii) 6.0 to 1 if the
Indebtedness is incurred on or after November 15, 2000; provided, however, that
if the Indebtedness which is the subject of a determination under this provision
is Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, property or assets, then such
ratio shall be determined by giving effect to (on a pro forma basis, as if the
transaction had occurred at the beginning of the four-quarter period) both the
incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Issuers or any Restricted Subsidiary (together with any
other Acquired Indebtedness or other Indebtedness incurred or assumed by the
Issuers and Restricted Subsidiaries in connection with acquisitions consummated
by the Issuers during such four-quarter period) and the inclusion in the
Issuers' EBITDA of the EBITDA of the acquired Person, business, property or
assets and any pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act as in effect and as
applied as of the Issue Date (together with the EBITDA of, and pro forma expense
and cost reductions relating to, any other Person, business, property or assets
acquired by the Issuers or any Restricted Subsidiary during such four-quarter
period), and (b) no Default or Event of
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Default shall have occurred and be continuing at the time or as a consequence of
the incurrence of such Indebtedness.
Notwithstanding the foregoing, the Issuers and their Restricted
Subsidiaries may incur Permitted Indebtedness.
Limitation on Restricted Payments
The Issuers will not make, and will not permit any of their Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment, unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving pro forma effect to such Restricted
Payment, the Issuers could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the covenant set forth under "Limitation
on Additional Indebtedness"; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
does not exceed the sum of (1) 50% of the cumulative Consolidated Net
Income of the Company subsequent to the Issue Date (or minus 100% of any
cumulative deficit in Consolidated Net Income during such period) plus (2)
100% of the aggregate Net Proceeds and the fair market value of securities
or other property received by the Company from the issue or sale, after the
Issue Date, of Capital Stock (other than Disqualified Capital Stock or
Capital Stock of the Company issued to any Subsidiary of the Company) of
the Company or any Indebtedness or other securities of the Company
convertible into or exercisable or exchangeable for Capital Stock (other
than Disqualified Capital Stock) of the Company which have been so
converted or exercised or exchanged, as the case may be, plus (3) without
duplication of any amounts included in clauses (1) and (2) above, 100% of
the aggregate net proceeds of any equity contribution received by the
Company from a holder of the Company's Capital Stock plus (4) $5,000,000.
For purposes of determining under this clause (c) the amount expended for
Restricted Payments, cash distributed shall be valued at the face amount
thereof and property other than cash shall be valued at its fair market
value determined, in good faith, by the Board of Directors of the Company.
The provisions of this covenant shall not prohibit (i) the payment of any
distribution within 60 days after the date of declaration thereof, if at such
date of declaration such payment would comply with the provisions of the
Indenture, (ii) the retirement of any shares of Capital Stock of the Company or
subordinated Indebtedness by conversion into, or by or in exchange for, shares
of Capital Stock (other than Disqualified Capital Stock), or out of, the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of other shares of Capital Stock of the Company (other than
Disqualified Capital Stock), (iii) the redemption or retirement of Indebtedness
of the Issuers subordinated to the Notes in exchange for, by conversion into, or
out of the Net Proceeds of a substantially concurrent sale or incurrence of
Indebtedness (other than any Indebtedness owed to a Subsidiary) of the Issuers
that is contractually subordinated in right of payment to the Notes to at least
the same extent as the subordinated Indebtedness being redeemed or retired, (iv)
the retirement of any shares of Disqualified Capital Stock by conversion into,
or by exchange for, shares of Disqualified Capital Stock, or out of the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of other shares of Disqualified Capital Stock, (v) so long as no
Default or Event of Default shall have occurred and be continuing, at the time
of or immediately after giving effect to such payment, the purchase, redemption
or other acquisition for value of shares of Capital Stock (other than
Disqualified Capital Stock) or options on such shares held by the Issuers' or
their Subsidiaries' officers or employees or former officers or employees (or
their estates or beneficiaries under their estates) upon the death, disability,
retirement or termination of employment of such current or former officers or
employees pursuant to the terms of an employee benefit plan or any other
agreement pursuant to which such shares of Capital Stock or options were issued
or pursuant to a severance, buy-sale or right of first refusal agreement with
such current or former officer or employee and payments of principal and
interest on the Management Subordinated Notes in accordance with the terms
thereof; provided that the aggregate cash consideration paid,
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or distributions or payments made, pursuant to this clause (v) shall not exceed
$2,000,000 in any fiscal year or $10,000,000 in the aggregate from and after the
Issue Date, (vi) payments by the Company to the Equity Compensation Trust, in an
aggregate amount not to exceed $3,100,000, to be paid up to 12 months after the
Issue Date in connection with the Recapitalization, (vii) the payment of
management fees under the management agreement with THL and its Affiliates and
successors and assigns that do not exceed $500,000 per year and the
reimbursement of expenses pursuant thereto, (viii) distributions to Holdings
solely for the purpose of enabling Holdings to pay its, Capital's or TCC's
reasonable operating and administrative expenses (including professional fees
and expenses), the amount of which in any fiscal year will not exceed 0.2% at
the Company's consolidated net revenues for such fiscal year, (ix) distributions
not to exceed $100,000 in the aggregate to Holdings to make payments as
liquidated damages to the holders of the Discount Notes under the registration
rights agreement relating to the Discount Notes, (x) the distribution of the
proceeds of the Offering to Holdings on the Issue Date to the extent necessary
to repay outstanding Indebtedness under the Senior Subordinated Facility and
(xi) the redemption on the Issue Date of approximately one-half of the
outstanding Preferred Units with the proceeds from the sale of the Discount
Notes. Notwithstanding the foregoing, the amount of any payments made in
reliance on clause (v) above shall reduce the amount otherwise available for
Restricted Payments pursuant to subparagraph (c) above.
Not later than the date of making any Restricted Payment, the Issuers shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this covenant "Limitation on Restricted Payments" were computed,
which calculations may be based upon the Issuers' latest available financial
statements, and, to the extent that the absence of a Default or an Event of
Default is condition to the making of such Restricted Payment, that no Default
or Event of Default exists and is continuing and no Default or Event of Default
will occur immediately after given effect to any Restricted Payments.
Limitation on Other Senior Subordinated Debt
The Issuers will not, and will not permit any of their Restricted
Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness (other than the Notes and the Guarantees, as the case may be) that
is both (i) subordinate in right of payment to any Senior Indebtedness of the
Issuers or their Restricted Subsidiaries, as the case may be, and (ii) senior in
right of payment to the Notes and the Guarantees, as the case may be. For
purposes of this covenant, Indebtedness is deemed to be senior in right of
payment to the Notes and the Guarantees, as the case may be, if it is not
explicitly subordinate in right of payment to Senior Indebtedness at least to
the same extent as the Notes and the Guarantees, as the case may be, are
subordinate to Senior Indebtedness.
Limitations on Investments
The Issuers will not, and will not permit any of their Restricted
Subsidiaries to, make any Investment other than (i) a Permitted Investment or
(ii) an Investment that is made as a Restricted Payment in compliance with the
"Limitation on Restricted Payments" covenant, after the Issue Date.
Limitations on Liens
The Issuers will not, and will not permit any of their Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Issuers or any Restricted Subsidiary or any shares of stock
(other than under the Senior Credit Facility) or debt of any Restricted
Subsidiary which owns property or assets, now owned or hereafter acquired,
unless (i) if such Lien secures Indebtedness which is pari passu with the Notes,
then the Notes are secured on an equal and ratable basis with the obligations so
secured until such time as such obligation is no longer secured by a Lien or
(ii) if such Lien secures Indebtedness which is subordinated to the Notes, any
such Lien shall be subordinated to the Lien granted to the Holders of the Notes
to the same extent as such subordinated Indebtedness is subordinated to the
Notes.
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Limitation on Transactions with Affiliates
The Issuers will not, and will not permit any of their Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate (including entities in which the Issuers or any of their Restricted
Subsidiaries owns a minority interest) (an "Affiliate Transaction") or extend,
renew, waive or otherwise modify the terms of any Affiliate Transaction entered
into prior to the Issue Date if such extension, renewal, waiver or other
modification is more disadvantageous to the Holders in any material respect than
the original agreement as in effect on the Issue Date unless (i) such Affiliate
Transaction is between or among the Issuers and/or their Wholly-Owned
Subsidiaries and/or Holdings (so long as Holdings owns at least 99% of the
voting and economic power of the Common Stock of the Company); or (ii) the terms
of such Affiliate Transaction are fair and reasonable to the Issuers or such
Restricted Subsidiary, as the case may be, and the terms of such Affiliate
Transaction are at least as favorable as the terms which could be obtained by
the Issuers or such Restricted Subsidiary, as the case may be, in a comparable
transaction made on an arm's-length basis between unaffiliated parties. In any
Affiliate Transaction involving an amount or having a value in excess of $1.0
million which is not permitted under clause (i) above, the Issuers must obtain a
resolution of the Board of Directors of the Company certifying that such
Affiliate Transaction complies with clause (ii) above. In any Affiliate
Transaction with a value in excess of $5.0 million which is not permitted under
clause (i) above (other than any sale by the Company of its Capital Stock that
is not Disqualified Capital Stock), the Issuers must obtain a written opinion as
to the fairness of such a transaction from an independent investment banking
firm.
The foregoing provisions will not apply to (i) any Restricted Payment that
is not prohibited by the provisions described under "Limitation on Restricted
Payments" contained herein, (ii) any transaction pursuant to an agreement,
arrangement or understanding existing on the Issue Date and described elsewhere
in this Prospectus, (iii) any transaction, approved by the Board of Directors of
the Company or Capital II, with an officer or director of the Issuers or of any
Subsidiary in his or her capacity as officer or director entered into in the
ordinary course of business, or (iv) transactions permitted by the Indenture
under the provision "Merger, Consolidation or Sale of Assets."
Limitation on Creation of Subsidiaries
The Issuers will not create or acquire, nor permit any of their Restricted
Subsidiaries to create or acquire, any Subsidiary other than (i) a Restricted
Subsidiary that is acquired or created in connection with the acquisition by the
Company of a business primarily engaged in, or an asset primarily utilized in,
providing directory services and/or classified advertising, or (ii) an
Unrestricted Subsidiary; provided, however, that each Restricted Subsidiary
acquired or created pursuant to clause (i) shall at the time it has either
assets or stockholder's equity in excess of $100,000 execute a guarantee in the
form attached to the Indenture and reasonably satisfactory in form and substance
to the Trustee (and with such documentation relating thereto as the Trustee
shall require, including, without limitation, a supplement or amendment to the
Indenture and opinions of counsel as to the enforceability of such guarantee),
pursuant to which such Restricted Subsidiary shall become a Guarantor. As of the
Issue Date, the Company will have no Subsidiaries other than Capital.
Limitation on Certain Asset Sales
The Issuers will not, and will not permit any of their Restricted
Subsidiaries to, consummate an Asset Sale unless (i) such Issuer or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such sale or other disposition at least equal to the fair market value thereof
(as determined in good faith by the Company's Board of Directors, and evidenced
by a board resolution); (ii) not less than 75% of the consideration received by
the Issuers or their Subsidiaries, as the case may be, is in the form of cash or
Temporary Cash Investments other than in the case where the Company is
undertaking a Permitted Asset Swap; and (iii) the Asset Sale Proceeds received
by such Issuer or such Restricted Subsidiary are applied (a) first, to the
extent the Company elects, or is required, to prepay, repay or purchase debt or
to reduce an unused commitment to lend under any then existing Senior
Indebtedness of the Company or any Restricted Subsidiary within 180 days
following the receipt of the Asset Sale Proceeds from any Asset Sale, but only
to
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the extent that any such repayment shall result in a permanent reduction of the
commitments thereunder in an amount equal to the principal amount so repaid; (b)
second, to the extent of the balance of Asset Sale Proceeds after application as
described above, to the extent the Company or a Restricted Subsidiary elects, to
an investment in assets (including Capital Stock or other securities purchased
in connection with the acquisition of Capital Stock or property of another
person) used or useful in businesses similar or ancillary to the business of the
Company or such Restricted Subsidiary as conducted at the time of such Asset
Sale, provided that such investment occurs or the Issuers or a Restricted
Subsidiary enters into contractual commitments to make such investment, subject
only to customary conditions (other than the obtaining of financing), on or
prior to the 181st day following receipt of such Asset Sale Proceeds (the
"Reinvestment Date") and Asset Sale Proceeds contractually committed are so
applied within 270 days following the receipt of such Asset Sale Proceeds; and
(c) third, if on the Reinvestment Date with respect to any Asset Sale, the
Available Asset Sale Proceeds exceed $10.0 million, the Issuers shall apply an
amount equal to such Available Asset Sale Proceeds to an offer to repurchase the
Notes, at a purchase price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of repurchase (an "Excess
Proceeds Offer"). If an Excess Proceeds Offer is not fully subscribed, the
Company may retain the portion of the Available Asset Sale Proceeds not required
to repurchase Notes and use such portion for general corporate purposes, and
such retained portion will not be considered in the calculation of "Available
Asset Sale Proceeds" with respect to any subsequent offer to purchase Notes.
If the Issuers are required to make an Excess Proceeds Offer, the Issuers
shall mail, within 30 days following the Reinvestment Date, a notice to the
Holders stating, among other things: (1) that such Holders have the right to
require the Issuers to apply the Available Asset Sale Proceeds to repurchase
such Notes at a purchase price in cash equal to 100% of the aggregate principal
amount thereof together with accrued and unpaid interest, if any, thereon to the
date of purchase; (2) the purchase date, which shall be no earlier than 30 days
and not later than 60 days from the date such notice is mailed; (3) the
instructions, determined by the Issuers, that each Holder must follow in order
to have such Notes repurchased; and (4) the calculations used in determining the
amount of Available Asset Sale Proceeds to be applied to the repurchase of such
Notes.
Limitation on Preferred Stock of Restricted Subsidiaries
The Issuers will not permit any Restricted Subsidiary to issue any
Preferred Stock (except Preferred Stock to the Company or a Restricted
Subsidiary) or permit any Person (other than the Company or a Subsidiary) to
hold any such Preferred Stock unless the Company or such Restricted Subsidiary
would be entitled to incur or assume Indebtedness under the first paragraph of
the covenant described under "Limitation on Additional Indebtedness" in an
aggregate principal amount equal to the aggregate liquidation value of the
Preferred Stock to be issued.
Limitation on Capital Stock of Subsidiaries
The Issuers will not (i) sell, pledge, hypothecate or otherwise convey or
dispose of any Capital Stock of a Subsidiary (other than under the Senior Credit
Facility or under the terms of any Designated Senior Indebtedness) or (ii)
permit any of their Subsidiaries to issue any Capital Stock, other than to the
Issuers or a Wholly-Owned Subsidiary of the Company. The foregoing restrictions
shall not apply to an Asset Sale made in compliance with "Limitation on Certain
Asset Sales" or the issuance of Preferred Stock in compliance with the covenant
described under "Limitation on Preferred Stock of Subsidiaries." In no event
will the Company sell, pledge, hypothecate or otherwise convey or dispose of any
Capital Stock of Capital or will Capital issue any Capital Stock.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Issuers will not, and will not permit any of their Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Issuers to (a)(i) pay dividends or make any other
distributions to the Issuers or any Restricted Subsidiary of the Issuers (A) on
its Capital Stock or (B) with respect to any other interest or participation in,
or measured by, its profits or (ii) repay any Indebtedness or any other
obligation owed to
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the Issuers or any Restricted Subsidiary of the Issuers, (b) make loans or
advances or capital contributions to the Issuers or any of their Restricted
Subsidiaries or (c) transfer any of its properties or assets to the Issuers or
any of their Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (i) encumbrances or restrictions
existing on the Issue Date to the extent and in the manner such encumbrances and
restrictions are in effect on the Issue Date (including without limitation
pursuant to the Senior Credit Facility or under the Discount Notes), (ii) the
Indenture, the Notes and the Guarantees, (iii) applicable law, (iv) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person (including any
Subsidiary of the Person), so acquired, (v) customary non-assignment provisions
in leases or other agreements entered in the ordinary course of business and
consistent with past practices, (vi) Refinancing Indebtedness; provided that
such restrictions are no more restrictive than those contained in the agreements
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded, (vii) customary restrictions in security agreements or
mortgages securing Indebtedness of the Issuers or a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject to such
security agreements and mortgages or (viii) customary restrictions with respect
to a Restricted Subsidiary of the Issuers pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary.
Limitation on Sale and Lease-Back Transactions
The Issuers will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Lease-Back Transaction unless (i) the consideration
received in such Sale and Lease-Back Transaction is at least equal to the fair
market value of the property sold, as determined, in good faith, by the Board of
Directors of the Company, and (ii) the Issuers could incur the Attributable
Indebtedness in respect of such Sale and Lease-Back Transaction in compliance
with the covenant described under "Limitation on Additional Indebtedness."
Payments for Consent
Neither the Issuers nor any of their Subsidiaries will, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all holders of the Notes which so consent, waive or agree to amend
in the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
Limitation on Conduct of Business of Capital II
Except to the extent permitted under "Merger, Consolidation or Sale of
Assets," Capital II will not hold any operating assets or other properties or
conduct any business other than to serve as an Issuer and co-obligor with
respect to the Notes and will not own any Capital Stock of any other Person.
Certain Consents and Filings
On or before December 31, 1997, the Issuers will have made, or caused to
have been made, all filings, and will have received all required consents of
third parties, relating to the Asset Drop-Down, other than filings and consents
the absence of which, individually or in the aggregate, will not have a material
adverse effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a whole, or
on the legality, validity, binding effect or enforceability of the Notes or the
Indenture. The Issuers will deliver to the Trustee, within 10 days after such
date, an Officer's Certificate stating that such filings have been made and such
consents received, subject only to the qualification in the immediately
preceding sentence.
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CHANGE OF CONTROL OFFER
Within 20 days of the occurrence of a Change of Control, the Company shall
notify the Trustee in writing of such occurrence and shall make an offer to
purchase (the "Change of Control Offer") the outstanding Notes at a purchase
price equal to 101% of the principal amount thereof together with any accrued
and unpaid interest thereon to the Change of Control Payment Date (as
hereinafter defined) (such applicable purchase price being hereinafter referred
to as the "Change of Control Purchase Price") in accordance with the procedures
set forth in this covenant.
Within 20 days of the occurrence of a Change of Control, the Company also
shall (i) cause a notice of the Change of Control Offer to be sent at least once
to the Dow Jones News Service or similar business news service in the United
States and (ii) send by first-class mail, postage prepaid, to the Trustee and to
each holder of the Notes, at the address appearing in the register maintained by
the registrar of the Notes, a notice stating:
(i) that the Change of Control Offer is being made pursuant to this
covenant and that all Notes tendered will be accepted for payment, and
otherwise subject to the terms and conditions set forth herein;
(ii) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 20 business days from the date such
notice is mailed (the "Change of Control Payment Date"));
(iii) that any Note not tendered will remain outstanding and continue
to accrue interest;
(iv) that, unless the Issuers default in the payment of the Change of
Control Purchase Price, any Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that holders accepting the offer to have their Notes purchased
pursuant to a Change of Control Offer will be required to surrender the
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address specified
in the notice prior to the close of business on the Business Day preceding
the Change of Control Payment Date;
(vi) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount of the Notes delivered for purchase, and a
statement that such holder is withdrawing his election to have such Notes
purchased;
(vii) that holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, provided that each Note purchased and each such new
Note issued shall be in an original principal amount in denominations of
$1,000 and integral multiples thereof;
(viii) any other procedures that a holder must follow to accept a
Change of Control Offer or effect withdrawal of such acceptance; and
(ix) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Issuers shall, to the extent
lawful, (i) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent money sufficient
to pay the purchase price of all Notes or portions thereof so tendered and (iii)
deliver or cause to be delivered to the Trustee Notes so accepted together with
an Officers' Certificate stating the Notes or portions thereof tendered to the
Issuers. The Paying Agent shall promptly mail to each holder of Notes so
accepted payment in an amount equal to the purchase price for such Notes, and
the Issuers shall execute and issue, the Guarantors shall endorse the Guarantee
and the Trustee shall promptly authenticate and mail to such holder, a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered;
provided that each such new Note shall be issued in an original principal amount
in denominations of $1,000 and integral multiples thereof.
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The Indenture will require that if the Senior Credit Facility is in effect,
or any amounts are owing thereunder or in respect thereof, at the time of the
occurrence of a Change of Control, prior to the mailing of the notice to holders
described in the preceding paragraph, but in any event within 20 days following
any Change of Control, the Issuers on a joint and several basis covenant to (i)
repay in full all obligations under or in respect of the Senior Credit Facility
or offer to repay in full all obligations under or in respect of the Senior
Credit Facility and repay the obligations under or in respect of the Senior
Credit Facility of each lender who has accepted such offer or (ii) obtain the
requisite consent under the Senior Credit Facility to permit the repurchase of
the Notes as described above. The Issuers must first comply with the covenant
described in the preceding sentence before they shall be required to purchase
Notes in the event of a Change of Control; provided that the Issuers' failure to
comply with the covenant described in the preceding sentence constitutes an
Event of Default described in clause (iii) under "Events of Default" below if
not cured within 60 days after the notice required by such clause. As a result
of the foregoing, a holder of the Notes may not be able to compel the Issuers to
purchase the Notes unless the Issuers are able at the time to refinance all of
the obligations under or in respect of the Senior Credit Facility or obtain
requisite consents under the Senior Credit Facility. Failure by the Issuers to
make a Change of Control Offer when required by the Indenture constitutes a
default under the Indenture and, if not cured within 60 days after notice,
constitutes an Event of Default.
The Indenture will require that (A) if either Issuer or any Subsidiary
thereof has issued any outstanding (i) Indebtedness that is subordinated in
right of payment to the Notes or (ii) Preferred Stock, and such Issuer or
Subsidiary is required to make a change of control offer or to make a
distribution with respect to such subordinated Indebtedness or Preferred Stock
in the event of a change of control, the Issuers shall not consummate any such
offer or distribution with respect to such subordinated Indebtedness or
Preferred Stock until such time as the Issuers shall have paid the Change of
Control Purchase Price in full to the holders of Notes that have accepted the
Issuers' Change of Control Offer and shall otherwise have consummated the Change
of Control Offer made to holders of the Notes and (B) the Issuers will not issue
Indebtedness that is subordinated in right of payment to the Notes or Preferred
Stock with change of control provisions requiring the payment of such
Indebtedness or Preferred Stock prior to the payment of the Notes in the event
of a Change in Control under the Indenture.
In the event that a Change of Control occurs and the holders of Notes
exercise their right to require the Issuers to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Issuers will comply with the requirements of Rule 14e-1 as
then in effect with respect to such repurchase.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Neither of the Issuers will, nor will they permit any Guarantor to,
consolidate with, merge with or into, or transfer all or substantially all of
its assets (as an entirety or substantially as an entirety in one transaction or
a series of related transactions) to, any Person unless (in the case of the
Company or any Guarantor): (i) the Company or such Guarantor, as the case may
be, shall be the continuing Person, or the Person (if other than the Company or
such Guarantor) formed by such consolidation or into which the Company or such
Guarantor, as the case may be, is merged or to which the properties and assets
of the Company or such Guarantor, as the case may be, are transferred shall be a
corporation (or, in the case of the Company, a corporation or a limited
partnership) organized and existing under the laws of the United States or any
State thereof or the District of Columbia and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Company or such
Guarantor, as the case may be, under the Notes and the Indenture, and the
obligations under the Indenture shall remain in full force and effect; provided,
that at any time the Company or its successor is a limited partnership, there
shall be a co-issuer of the Notes that is a corporation; (ii) immediately before
and immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction or series of transactions on a pro forma basis the
Consolidated Net Worth of the Company or the surviving entity as the case may be
is at least equal to the Consolidated Net Worth of the Company immediately
before such transaction or series of transactions;
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and (iv) immediately after giving effect to such transaction on a pro forma
basis the Company or such Person could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the covenant set forth
under "Limitation on Additional Indebtedness." Notwithstanding anything in this
"Merger, Consolidation or Sale of Assets" provision herein to the contrary, but
subject to the "Change of Control Offer" provisions above, (a) any of the
Company, Capital II and TCC may merge with or into, or consolidate with, another
of them and subject only to compliance with clause (i) of the immediately
preceding sentence and (b) the Company may merge into, consolidate with or
transfer all or substantially all of its assets to another entity, which entity
shall have no significant assets (other than an ownership interest in the
Company) and no liabilities immediately prior to such transaction, without
regard to the requirements of clause (iv) of the immediately preceeding
sentence.
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Issuers shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this provision and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
GUARANTEES
The Notes will be unconditionally guaranteed on an unsecured senior
subordinated basis by the Guarantors, if any. All payments pursuant to the
Guarantees by the Guarantors will be unconditionally subordinated in right of
payment to the prior indefeasible payment and satisfaction in full in cash of
all Senior Indebtedness of the Guarantor, to the same extent and in the same
manner that all payments pursuant to the Notes are subordinated in right of
payment to the prior payment in full of all Senior Indebtedness of the Issuers.
The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor (including, without limitation, any Guarantees of Senior Indebtedness)
and after giving effect to any collections from or payments made by or on behalf
of any other Guarantor in respect of the obligations of such other Guarantor
under its Guarantee or pursuant to its contribution obligations under the
Indenture, result in the obligations of such Guarantor under the Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
shall be entitled to a contribution from each other Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Guarantor.
A Guarantor shall be released from all of its obligations under its
Guarantee if all or substantially all of its assets are sold or all of its
Capital Stock is sold, in each case in a transaction in compliance with the
covenant described under "Limitation on Certain Asset Sales," or the Guarantor
merges with or into or consolidates with, or transfers all or substantially all
of its assets to, the Company or another Guarantor in a transaction in
compliance with "Merger, Consolidation or Sale of Assets," and such Guarantor
has delivered to the Trustee an Officers' Certificate and an opinion of counsel,
each stating that all conditions precedent herein provided for relating to such
transaction have been complied with.
EVENTS OF DEFAULT
The following events will be defined in the Indenture as "Events of
Default":
(i) default in payment of any principal of, or premium, if any, on the
Notes whether at maturity, upon acceleration or redemption or otherwise
(whether or not such payment shall be prohibited by the subordination
provisions of the Indenture);
(ii) default for 30 days (whether or not such payment is prohibited by
the subordination provisions of the Indenture) in payment of any interest
on the Notes;
(iii) default by either of the Issuers or any Guarantor in the
observance or performance of any other covenant in the Notes or the
Indenture for 60 days after written notice from the Trustee or the holders
of not less than 25% in aggregate principal amount of the Notes then
outstanding;
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(iv) default in the payment at final maturity of principal in an
aggregate amount of $5.0 million or more with respect to any Indebtedness
of either Issuer or any Restricted Subsidiary thereof, or the acceleration
of any such Indebtedness aggregating $5.0 million or more which default
shall not be cured, waived or postponed pursuant to an agreement with the
holders of such Indebtedness within 60 days after written notice as
provided in the Indenture, or such acceleration shall not be rescinded or
annulled within 20 days after written notice as provided in the Indenture;
(v) any final judgment or judgments which can no longer be appealed
for the payment of money in excess of $5.0 million shall be rendered
against either of the Issuers or any Restricted Subsidiary thereof, and
shall not be discharged for any period of 60 consecutive days during which
a stay of enforcement shall not be in effect;
(vi) certain events involving bankruptcy, insolvency or reorganization
of either of the Issuers or any Restricted Subsidiary thereof; and
(vii) any of the Guarantees ceases to be in full force and effect or
any of the Guarantees is declared to be null and void and unenforceable or
any of the Guarantees is found to be invalid or any of the Guarantors
denies in writing its liability under its Guarantee (other than by reason
of release of a Guarantor in accordance with the terms of the Indenture).
The Indenture will provide that the Trustee may withhold notice to the
holders of the Notes of any default (except in payment of principal or premium,
if any, or interest on the Notes) if the Trustee considers it to be in the best
interest of the holders of the Notes to do so.
The Indenture will provide that if an Event of Default (other than an Event
of Default resulting from certain events of bankruptcy, insolvency or
reorganization) shall have occurred and be continuing, then the Trustee by
notice to the Issuers or the holders of not less than 25% in aggregate principal
amount of the Notes then outstanding by written notice to the Issuers and the
Trustee may declare to be immediately due and payable the entire principal
amount of all the Notes then outstanding plus accrued but unpaid interest to the
date of acceleration and such amounts shall become immediately due and payable
or if there are any amounts outstanding under or in respect of the Senior Credit
Facility, such amounts shall become due and payable upon the first to occur of
an acceleration of amounts outstanding under or in respect of the Senior Credit
Facility or five business days after receipt by the Company and the
representative of the holders of Senior Indebtedness under or in respect of the
Senior Credit Facility, of notice of the acceleration of the Notes; provided,
however, that after such acceleration but before a judgment or decree based on
such acceleration is obtained by the Trustee, the holders of a majority in
aggregate principal amount of outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if all existing Events of
Default, other than nonpayment of accelerated principal, premium, if any, or
interest that has become due solely because of the acceleration, have been cured
or waived as provided in the Indenture. In case an Event of Default resulting
from certain events of bankruptcy, insolvency or reorganization shall occur, the
principal, premium, if any, and interest amount with respect to all of the Notes
shall be due and payable immediately without any declaration or other act on the
part of the Trustee or the holders of the Notes.
The holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing default or compliance with any
provision of the Indenture or the Notes and to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, subject to
certain limitations specified in the Indenture.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the holders of at least 25% in aggregate principal
amount of the outstanding Notes shall have made written request and offered
indemnity satisfactory to the Trustee to institute such proceeding as a trustee,
and unless the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. However, such limitations do not apply to a suit instituted on such Note
on or after the respective due dates expressed in such Note.
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DEFEASANCE AND COVENANT DEFEASANCE
The Indenture will provide that the Issuers may elect either (a) to defease
and be discharged from any and all obligations with respect to the Notes (except
for the obligations to register the transfer or exchange of such Notes, to
replace temporary or mutilated, destroyed, lost or stolen Notes, to maintain an
office or agency in respect of the Notes and to hold monies for payment in
trust) ("defeasance") or (b) to be released from their obligations with respect
to the Notes under certain covenants contained in the Indenture and described
above under "Certain Covenants" ("covenant defeasance"), upon the deposit with
the Trustee (or other qualifying trustee), in trust for such purpose of money
and/or U.S. Government Obligations (as defined in the Indenture) which through
the payment of principal and interest in accordance with their terms will
provide money, in an amount sufficient to pay the principal of, premium, if any,
and interest on the Notes, on the scheduled due dates therefor or on a selected
date of redemption in accordance with the terms of the Indenture. Such a trust
may only be established if, among other things, the Issuers have delivered to
the Trustee an Opinion of Counsel (as specified in the Indenture) (i) to the
effect that neither the trust nor the Trustee will be required to register as an
investment company under the Investment Company Act of 1940, as amended, and
(ii) describing either a private ruling concerning the Notes or a published
ruling of the Internal Revenue Service, to the effect that holders of the Notes
or persons in their positions will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred.
MODIFICATION OF INDENTURE
From time to time, the Issuers, the Guarantors and the Trustee may, without
the consent of holders of the Notes, amend the Indenture or the Notes or
supplement the Indenture for certain specified purposes, including providing for
uncertificated Notes in addition to certificated Notes, and curing any
ambiguity, defect or inconsistency, or making any other change that does not
adversely affect the rights of any holder. The Indenture contains provisions
permitting the Issuers, the Guarantors and the Trustee, with the consent of
holders of at least a majority in principal amount of the outstanding Notes, to
modify or supplement the Indenture or the Notes, except that no such
modification shall, without the consent of each holder affected thereby, (i)
reduce the amount of Notes whose holders must consent to an amendment,
supplement, or waiver to the Indenture or the Notes, (ii) reduce the rate of or
change the time for payment of interest on any Note, (iii) reduce the principal
of or premium on or change the stated maturity of any Note, (iv) make any Note
payable in money other than that stated in the Note or change the place of
payment from New York, New York, (v) change the amount or time of any payment
required by the Notes or reduce the premium payable upon any redemption of
Notes, or change the time before which no such redemption may be made, (vi)
waive a default in the payment of the principal of, interest on, or redemption
payment with respect to any Note, (vii) take any other action otherwise
prohibited by the Indenture to be taken without the consent of each holder
affected thereby or (viii) affect the ranking of the Notes or the Guarantees in
a manner adverse to the Holders.
REPORTS TO HOLDERS
So long as the Issuers are subject to the periodic reporting requirements
of the Exchange Act, they will continue to furnish the information required
thereby to the Commission and to the holders of the Notes. The Indenture will
provide that even if the Company is entitled under the Exchange Act not to
furnish such information to the Commission or to the holders of the Notes, it
will nonetheless continue to furnish such information to the Commission and
holders of the Notes.
COMPLIANCE CERTIFICATE
The Issuers will deliver to the Trustee on or before 120 days after the end
of the Issuers' fiscal year and on or before 50 days after the end of each of
the first, second and third fiscal quarters in each year an Officers'
Certificate stating whether or not the signers know of any Default or Event of
Default that has occurred. If they do, the certificate will describe the Default
or Event of Default and its status.
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THE TRUSTEE
The Trustee under the Indenture will be the Registrar and Paying Agent with
regard to the Notes. The Indenture will provide that, except during the
continuance of an Event of Default, the Trustee will perform only such duties as
are specifically set forth in the Indenture. During the existence of an Event of
Default, the Trustee will exercise such rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. The Trustee is also acting as trustee under the indenture relating
to the Discount Notes.
TRANSFER AND EXCHANGE
Holders of the Notes may transfer or exchange the Notes in accordance with
the Indenture. The Registrar under such Indenture may require a holder, among
other things, to furnish appropriate endorsements and transfer documents, and to
pay any taxes and fees required by law or permitted by the Indentures. The
Registrar is not required to transfer or exchange any Note selected for
redemption. Also, the Registrar is not required to transfer or exchange any Note
for a period of 15 days before selection of the Notes to be redeemed.
The Notes will be issued in a transaction exempt from registration under
the Securities Act and will be subject to the restrictions on transfer described
in "Notice to Investors."
The registered holder of a Note may be treated as the owner of it for all
purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants contained in the Indenture. Reference is made to the Indenture for the
full definition of all such terms as well as any other capitalized terms used
herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
the amount by which (x) the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities),
but excluding liabilities under the Guarantee, of such Guarantor at such date
and (y) the present fair salable value of the assets of such Guarantor at such
date exceeds the amount that will be required to pay the probable liability of
such Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities and after giving effect to any collection from any
Subsidiary of such Guarantor in respect of the obligations of such Subsidiary
under the Guarantee), excluding Indebtedness in respect of the Guarantee, as
they become absolute and matured.
"Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
"Asset Sale" means the sale, transfer or other disposition (other than to
the Company or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions having a fair market value in excess of
$1,000,000 of (a) any Capital Stock of or other equity interest in any
Restricted Subsidiary of the Issuers, (b) all or substantially all of the assets
of the Issuers or of any Restricted Subsidiary thereof, (c) real property or (d)
all or substantially all of the assets of a division, line of business or
comparable business segment of the Issuers or any Restricted Subsidiary thereof;
provided that Asset Sales shall not include (i) sales, leases, conveyances,
transfers or other dispositions to the Company or to a Restricted Subsidiary or
to any other Person if after giving effect to such sale, lease, conveyance,
transfer or other disposition such other
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Person becomes a Restricted Subsidiary; or (ii) the contribution of any assets
to a joint venture, partnership or other Person (which may be a Subsidiary) to
the extent such contribution constitutes a Permitted Investment (other than by
operation of clause (iv) of the definition thereof).
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Issuers or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes (including taxes required to be
distributed under the partnership agreement of the Company) measured by or
resulting from such Asset Sale, (b) payment of all brokerage commissions,
underwriting and other fees and expenses related to such Asset Sale, (c)
provision for minority interest holders in any Restricted Subsidiary as a result
of such Asset Sale and (d) deduction of appropriate amounts to be provided by
the Issuers or a Restricted Subsidiary as a reserve, in accordance with GAAP,
against any liabilities associated with the assets sold or disposed of in such
Asset Sale and retained by the Issuers or a Restricted Subsidiary after such
Asset Sale, including, without limitation, severance, healthcare, pension and
other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
the assets sold or disposed of in such Asset Sale, and (ii) promissory notes and
other non-cash consideration received by the Issuers or any Restricted
Subsidiary from such Asset Sale or other disposition upon the liquidation or
conversion of such notes or noncash consideration into cash.
"Attributable Indebtedness" in respect of a Sale and Lease-Back Transaction
means, as at the time of determination, the greater of (i) the fair value of the
property subject to such arrangement (as determined by the Board of Directors of
the Company) and (ii) the present value of the total obligations (discounted at
a rate of 10%, compounded annually) of the lessee for rental payments during the
remaining term of the lease included in such Sale and Lease-Back Transaction
(including any period for which such lease has been extended).
"Available Asset Sale Proceeds" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sale that have not been applied in
accordance with clauses (iii)(a) or (iii)(b), and that have not been the basis
for an Excess Proceeds Offer in accordance with clause (iii)(c), of the first
paragraph of "Certain Covenants -- Limitation on Certain Asset Sales."
"Board of Directors" means (i) in the case of a Person that is a limited
partnership, the board of directors of its corporate general partner or any
committee authorized to act therefor (or, if the general partner is itself a
limited partnership, the board of directors of such general partner's corporate
general partner or any committee authorized to act therefor), (ii) in the case
of a Person that is a corporation, the board of directors of such Person or any
committee authorized to act therefor and (iii) in the case of any other Person,
the board of directors, management committee or similar governing body or any
authorized committee thereof responsible for the management of the business and
affairs of such Person.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into or exercisable for any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
A "Change of Control" means the occurrence of one or more of the following
events: (i) any Person (including a Person's Affiliates and associates), other
than a Permitted Holder, becomes the beneficial owner (directly or indirectly)
(as defined under Rule 13d-3 or any successor rule or regulation promulgated
under the Exchange Act) of 50% or more of the total voting or economic power of
the Common Stock of the Company, (ii) any Person (including a Person's
Affiliates and associates), other than a Permitted Holder, becomes the
beneficial owner (directly or indirectly) of more than 33 1/3% of the total
voting power of the Common Stock of the Company, and the Permitted Holders
beneficially own (directly or indirectly), in the aggregate, a lesser percentage
of the total voting power of the Common Stock of the Company, as the case
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may be, than such other Person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority of
the Board of Directors of the Company, (iii) the admission of any Person as a
general partner of Holdings after which TCC, together with one or more Permitted
Holders, do not have the sole power, directly or indirectly, to take all of the
actions they are entitled or required, to take under the partnership agreement
of Holdings as in effect on the Issue Date, (iv) there shall be consummated any
consolidation or merger of either Issuer in which such Issuer is not the
continuing or surviving corporation or pursuant to which the Common Stock of
such Issuer would be converted into cash, securities or other property, other
than a merger or consolidation of such Issuer in which the beneficial owners of
the Common Stock of such Issuer outstanding immediately prior to the
consolidation or merger hold, directly or indirectly, at least a majority of the
Common Stock of the surviving corporation immediately after such consolidation
or merger, or (v) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of TCC (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of TCC has been approved by a
majority of the directors then still in office who either were directors at the
beginning of such period or whose election or recommendation for election was
previously so approved) cease to constitute a majority of the Board of Directors
of TCC.
"CIBC Merchant Fund" means the CIBC WG Argosy Merchant Fund 2, L.L.C.
"CIVC" means Continental Illinois Venture Corporation.
"Commodity Hedge Agreement" shall mean any option, hedge or other similar
agreement or arrangement designed to protect against fluctuations in commodity
or materials prices.
"Common Stock" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Subsidiaries on a consolidated basis
(including, but not limited to, Redeemable Dividends, whether paid or accrued,
on Preferred Stock of Subsidiaries, imputed interest included in Capitalized
Lease Obligations, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, the net
costs associated with hedging obligations, amortization of other financing fees
and expenses, the interest portion of any deferred payment obligation,
amortization of discount or premium, if any, and all other non-cash interest
expense (other than interest amortized to cost of sales)) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of any Person, plus the amount
of all dividends or distributions paid on Disqualified Stock (other than
dividends paid or payable in shares of Capital Stock of the Company), less the
amortization of deferred financing costs.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP, plus,
in the case of the Company, payments by the Company to the Equity Compensation
Trust for the benefit of the beneficiaries thereof, minus Permitted Tax
Distributions (to the extent such Permitted Tax Distributions are made);
provided, however, that (a) the Net Income of any Person (the "other Person") in
which the Person in question or any of its Subsidiaries has less than a 100%
interest (which interest does not cause the net income of such other Person to
be consolidated into the net income of the Person in question in accordance with
GAAP) shall be included only to the extent of the amount of dividends or
distributions paid to the Person in question or the Subsidiary, (b) the Net
Income of any Subsidiary of the Person in question that is subject to any
restriction or limitation on the payment of dividends or the making of other
distributions (other than pursuant to the Notes or the Indenture) shall be
excluded to the extent of such restriction or limitation, (c)(i) the Net Income
of any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition and (ii) any net gain (but not loss)
resulting from an Asset Sale by the
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Person in question or any of its Subsidiaries other than in the ordinary course
of business shall be excluded and (d) extraordinary, unusual and non-recurring
gains and losses (including any related tax effects on the Issuers) shall be
excluded.
"Consolidated Net Worth" means, with respect to any Person at any date, the
consolidated stockholder's equity of such Person less the amount of such
stockholder's equity attributable to Disqualified Capital Stock of such Person
and its Subsidiaries, as determined in accordance with GAAP.
"Default" means any condition or event that is, or with the passing of time
or giving of any notice expressly required under the Indenture (or both), would
be, an Event of Default.
"Designated Senior Indebtedness" as to the Company or any Guarantor, as the
case may be, means any Senior Indebtedness (a) under the Senior Credit Facility,
or (b)(i) which at the time of determination exceeds $25.0 million in aggregate
principal amount (or accreted value in the case of Indebtedness issued at a
discount) outstanding or available under a committed facility, (ii) which is
specifically designated in the instrument evidencing such Senior Indebtedness as
"Designated Senior Indebtedness" by such Person and (iii) as to which the
Trustee has been given written notice of such designation.
"Disqualified Capital Stock" means any Capital Stock of the Company or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness; provided that Capital Stock of the Company that is held by a
current or former employee of the Company subject to a put option and/or a call
option with the Company triggered by the termination of such employee's
employment with the Company and/or the Company's performance shall not be deemed
to be Disqualified Capital Stock solely by virtue of such call option and/or put
option. Without limitation of the foregoing, Disqualified Capital Stock shall be
deemed to include (i) any Preferred Stock of a Restricted Subsidiary of the
Company and (ii) any Preferred Stock of the Company, with respect to either of
which, under the terms of such Preferred Stock, by agreement or otherwise, such
Restricted Subsidiary or the Company is obligated to pay current dividends or
distributions in cash (other than Permitted Tax Distributions) during the period
prior to the maturity date of the Notes; provided, however, that Preferred Stock
of the Company or any Restricted Subsidiary thereof that is issued with the
benefit of provisions requiring a change of control offer to be made for such
Preferred Stock in the event of a change of control of the Company or such
Restricted Subsidiary, which provisions have substantially the same effect as
the provisions of the Indenture described under "Change of Control," shall not
be deemed to be Disqualified Capital Stock solely by virtue of such provisions.
"EBITDA" means, for any Person, for any period, an amount equal to (a) the
sum of (i) Consolidated Net Income for such period, plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing Consolidated Net Income and any provision for
taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period (but only including Redeemable
Dividends in the calculation of such Consolidated Interest Expense to the extent
that such Redeemable Dividends have not been excluded in the calculation of
Consolidated Net Income), plus (iv) depreciation for such period on a
consolidated basis, plus (v) amortization of intangibles for such period on a
consolidated basis, plus (vi) any other non-cash items reducing Consolidated Net
Income for such period, plus (vii) without duplication, Permitted Tax
Distributions, plus (viii) cash payments of expenses arising in connection with
the Recapitalization, minus (b) all non-cash items increasing Consolidated Net
Income for such period, all for such Person and its Subsidiaries determined in
accordance with GAAP, except that with respect to the Issuers each of the
foregoing items shall be determined on a consolidated basis with respect to the
Issuers and their Restricted Subsidiaries only; provided, however, that, for
purposes of calculating EBITDA during any fiscal quarter, cash income from a
particular Investment (other than in a Subsidiary which under GAAP is
consolidated) of such Person shall be included only (x) if cash income has been
received by such Person with respect to such Investment or (y) if the cash
income derived from such Investment is attributable to Temporary Cash
Investments.
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"Equity Compensation Trust" means the Company's Equity Compensation Trust
for the benefit of certain of its employees, established pursuant to the Equity
Compensation Trust Agreement, dated as of November 4, 1993, as amended by an
agreement dated as of October 1, 1997 between the Company and the trustees
thereof, and any successor trust with terms substantially similar thereto (with
an additional requirement of continued employment status).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Union" means First Union Corporation.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"Guarantee" means, as the context may require, individually, a guarantee,
or collectively, any and all guarantees, of the Obligations of the Company with
respect to the Notes by each Guarantor, if any, pursuant to the terms of the
Indenture.
"Guarantor" means each Restricted Subsidiary of the Issuers that hereafter
becomes a Guarantor pursuant to the Indenture, and "Guarantors" mean such
entities, collectively.
"Guarantor Senior Indebtedness" means the principal of and premium, if any,
and interest (including, without limitation, interest accruing or that would
have accrued but for the filing of a bankruptcy, reorganization or other
insolvency proceeding whether or not such interest constitutes an allowable
claim in such proceeding) on, and any and all other fees, expense reimbursement
obligations, indemnities and other amounts due pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with, (a) any Guarantor's
direct incurrence of any Indebtedness or its guarantee of all Indebtedness of
the Company or any Restricted Subsidiaries, in each case owed to lenders under
the Senior Credit Facility, (b) all obligations of such Guarantor with respect
to any Interest Rate Agreement, (c) all obligations of such Guarantor to
reimburse any bank or other person in respect of amounts paid under letters of
credit, acceptances or other similar instruments, (d) all other Indebtedness of
such Guarantor which does not provide that it is to rank pari passu with or
subordinate to the Guarantees and (e) all deferrals, renewals, extensions and
refundings of, and amendments, modifications and supplements to, any of the
Guarantor Senior Indebtedness described above. Notwithstanding anything to the
contrary in the foregoing, Guarantor Senior Indebtedness will not include (i)
Indebtedness of such Guarantor to any of its Subsidiaries, (ii) Indebtedness
represented by the Guarantees, (iii) any Indebtedness which by the express terms
of the agreement or instrument creating, evidencing or governing the same is
junior or subordinate in right of payment to any item of Guarantor Senior
Indebtedness, (iv) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business or (v)
Indebtedness incurred in violation of this Indenture.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person (and
"incurrence," "incurred," "incurrable" and "incurring" shall have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables or liabilities arising from advance payments or
customer deposits for goods and services sold by the Company in the ordinary
course of business, and other accrued liabilities arising in the ordinary course
of business) if and to the extent any of the foregoing indebtedness would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP, and shall also include, to the extent not otherwise
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included (i) any Capitalized Lease Obligations, (ii) obligations secured by a
Lien to which the property or assets owned or held by such Person is subject,
whether or not the obligation or obligations secured thereby shall have been
assumed (provided, however, that if such obligation or obligations shall not
have been assumed, the amount of such indebtedness shall be deemed to be the
lesser of the principal amount of the obligation or the fair market value of the
pledged property or assets), (iii) guarantees of items of other Persons which
would be included within this definition for such other Persons (whether or not
such items would appear upon the balance sheet of the guarantor), (iv) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (provided that in the case of
any such letters of credit, the items for which such letters of credit provide
credit support are those of other Persons which would be included within this
definition for such other Persons), (v) in the case of the Issuers, Disqualified
Capital Stock of the Issuers or any Restricted Subsidiary thereof, and (vi)
obligations of any such Person under any Interest Rate Agreement applicable to
any of the foregoing (if and to the extent such Interest Rate Agreement
obligations would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP). The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations, the
maximum liability upon the occurrence of the contingency giving rise to the
obligation, provided (i) that the amount outstanding at any time of any
Indebtedness issued with original issue discount is the principal amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with GAAP
and (ii) that Indebtedness shall not include any liability for federal, state,
local or other taxes. Notwithstanding any other provision of the foregoing
definition, any trade payable arising from the purchase of goods or materials or
for services obtained in the ordinary course of business shall not be deemed to
be "Indebtedness" of the Company or any Restricted Subsidiary for purposes of
this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Individual Investors" means the Management Investors and the former
Chairman of Holdings.
"Interest Rate Agreement" shall mean any interest or foreign currency rate
swap, cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Investments" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business or acquired as part of the assets acquired by the Issuers in connection
with an acquisition of assets which is otherwise permitted by the terms of the
Indenture), loan or capital contribution to (by means of transfers of property
to others, payments for property or services for the account or use of others or
otherwise), the purchase of any stock, bonds, notes, debentures, partnership or
joint venture interests or other securities of, the acquisition, by purchase or
otherwise, of all or substantially all of the business or assets or stock or
other evidence of beneficial ownership of, any Person or the making of any
investment in any Person. Investments shall exclude extensions of trade credit
on commercially reasonable terms in accordance with normal trade practices.
"Issue Date" means the date the Notes are first issued by the Issuers and
authenticated by the Trustee under the Indenture.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement (other than advance payments or customer deposits for goods and
services sold by the Company in the ordinary course of business), security
interest, lien, charge, easement, encumbrance, preference, priority, or other
security agreement or preferential arrangement of any kind or nature whatsoever
on or with respect to such property or assets (including without limitation, any
Capitalized Lease Obligation, conditional sales, or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Management Subordinated Notes" means notes issued to current or former
employees of the Company in accordance with the terms of the Executive
Agreements between the Company and such current or former employees in existence
on the Issue Date or pursuant to agreements between Holdings, TCC or the Company
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and then current or former employees with substantially similar terms regarding
such issuance entered into after the Issue Date, which notes are expressly
subordinated as to payment of principal, premium, if any, and interest to the
Notes.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by an
Issuer, the aggregate net proceeds received by such Issuer, after payment of
expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the Board of Directors of such Issuer,
at the time of receipt) and (b) in the case of any exchange, exercise,
conversion or surrender of outstanding securities of any kind for or into shares
of Capital Stock of the Company which is not Disqualified Capital Stock, the net
book value of such outstanding securities on the date of such exchange,
exercise, conversion or surrender (plus any additional amount required to be
paid by the holder to the Company upon such exchange, exercise, conversion or
surrender, less any and all payments made to the holders, e.g., on account of
fractional shares and less all expenses incurred by the Company in connection
therewith).
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the President or any Vice President and
the Chief Financial Officer or any Treasurer of such Person that shall comply
with applicable provisions of the Indenture and delivered to the Trustee.
"Payment Default" means any default, whether or not any requirement for the
giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default has occurred, in the payment of principal
of (or premium, if any) or interest on or any other amount payable in connection
with Designated Senior Indebtedness.
"Permitted Asset Swap" means any transfer of properties or assets by the
Company or any of its Subsidiaries in which 90% of the consideration received by
the transferor consists of properties or assets (other than cash) that will be
used in the business of the transferor; provided that (i) the aggregate fair
market value (as determined in good faith by the Board of Directors of the
Company) of the property or assets being transferred by the Company or such
Subsidiary is not greater than the aggregate fair market value (as determined in
good faith by the Board of Directors) of the property or assets received by the
Company or such Subsidiary in such exchange and (ii) the aggregate fair market
value (as determined in good faith by the Board of Directors) of all property or
assets transferred by the Company and any of its Subsidiaries (A) in connection
with any single transfer or series of related transfers shall not exceed $2.0
million and (B) in connection with all such transfers following the Issue Date
shall not exceed $5.0 million in the aggregate.
"Permitted Holders" means, collectively, (i) Holdings and TCC, (ii) THL,
CIVC, CIBC Merchant Fund, First Union and any Affiliate of (including any equity
fund advised by) any of the foregoing (other than any portfolio company with
operating assets) and (iii) the Individual Investors, each of the spouses,
children (adoptive or biological) or other lineal descendants of the Individual
Investors, the probate estate of any such individual and any trust, so long as
one or more of the foregoing individuals retains substantially all of the
controlling or beneficial interest thereunder.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted Subsidiary (A)
arising under or in connection with the Senior Credit Facility in an amount
not to exceed $125.0 million, which amount shall be reduced by any
mandatory prepayments actually made thereunder required as a result of any
Asset Sale or similar sale of assets (to the extent, in the case of
payments of revolving credit indebtedness, that the corresponding
commitments have been permanently reduced) and any scheduled payments
actually made thereunder or (B) that constitutes Acquisition Debt (as
defined in the Senior Credit Facility)
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under the Senior Credit Facility to the extent such Indebtedness
permanently reduces the aggregate commitments available under the Senior
Credit Facility;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness not covered by any other clause of this definition
which is outstanding on the date of the Indenture;
(iv) Indebtedness of the Company to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to the Company or another
Restricted Subsidiary;
(v) Interest Rate Agreements;
(vi) Refinancing Indebtedness;
(vii) Indebtedness under Commodity Hedge Agreements entered into in
the ordinary course of business consistent with reasonable business
requirements and not for speculation;
(viii) Indebtedness consisting of guarantees made in the ordinary
course of business by the Company or its Subsidiaries of obligations of the
Issuers or any of their Subsidiaries, which obligations are otherwise
permitted under the Indenture;
(ix) contingent obligations of the Company or its Subsidiaries in
respect of customary indemnification and purchase price adjustment
obligations incurred in connection with an Asset Sale; provided that the
maximum assumable liability in respect of all such obligations shall at no
time exceed the gross proceeds actually received by the Company and its
Subsidiaries in connection with such Asset Sale;
(x) Purchase Money Indebtedness and Capitalized Lease Obligations of
the Company and its Subsidiaries incurred to acquire property in the
ordinary course of business and any refinancings, renewals or replacements
of any such Purchase Money Indebtedness or Capitalized Lease Obligation
(subject to the limitations on the principal amount thereof set forth in
this clause (x)), the principal amount of which Purchase Money Indebtedness
and Capitalized Lease Obligations shall not in the aggregate at any one
time outstanding exceed 5% of the Company's consolidated total assets
stated in accordance with GAAP as of the end of the last preceding fiscal
quarter for which financial statements are available;
(xi) the Management Subordinated Notes; and
(xii) additional Indebtedness of the Company or any of its
Subsidiaries (other than Indebtedness specified in clauses (i) through (xi)
above) not to exceed $5.0 million in the aggregate at any one time
outstanding.
"Permitted Investments" means, for any Person, Investments made on or after
the date of the Indenture consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary thereof,
in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person, if as a result of such Investment (a) such Person
becomes a Restricted Subsidiary of the Company, (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary thereof or (c) such business or assets are owned by
the Company or a Restricted Subsidiary;
(iv) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to either or both of the Issuers or a Restricted
Subsidiary solely as partial consideration for the consummation of an Asset
Sale that is otherwise permitted under the covenant described under
"Limitation on Sale of Assets";
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(v) Investments consisting of (a) purchases and acquisitions of
inventory, supplies, materials and equipment, or (b) licenses or leases of
intellectual property and other assets, in each case in the ordinary course
of business;
(vi) Investments consisting of (a) loans and advances to employees for
reasonable travel, relocation and business expenses in the ordinary course
of business not to exceed $1.0 million in the aggregate at any one time
outstanding, (b) loans to employees of the Company for the sole purpose of
purchasing equity of the Company, (c) extensions of trade credit in the
ordinary course of business, and (d) prepaid expenses incurred in the
ordinary course of business;
(vii) without duplication, Investments consisting of Indebtedness
permitted pursuant to clause (iv) under the definition of Permitted
Indebtedness;
(viii) Investments existing on the date of the Indenture;
(ix) Investments of the Company under Interest Rate Agreements;
(x) Investments under Commodity Hedge Agreements entered into in the
ordinary course of business consistent with reasonable business
requirements and not for speculation;
(xi) Investments consisting of endorsements for collection or deposit
in the ordinary course of business; and
(xii) Investments (other than Investments specified in clauses (i)
through (xi) above) in an aggregate amount, as valued at the time each such
Investment is made, not exceeding $5.0 million for all such Investments
from and after the Issue Date; provided that the amount available for
Investments to be made pursuant to this clause (xii) shall be increased
from time to time to the extent any return on capital is received by the
Company or a Restricted Subsidiary on an Investment previously made in
reliance on this clause (xii).
"Permitted Liens" means (i) Liens on property or assets of, or any shares
of stock of or secured debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary of the Company or at the time such
corporation is merged into the Company or any of its Restricted Subsidiaries;
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Restricted Subsidiary of the
Company or merging into the Company or any of its Restricted Subsidiaries, (ii)
Liens securing Refinancing Indebtedness; provided that any such Lien does not
extend to or cover any Property, shares or debt other than the Property, shares
or debt securing the Indebtedness so refunded, refinanced or extended, (iii)
Liens in favor of the Issuers or any of their Restricted Subsidiaries, (iv)
Liens securing industrial revenue bonds, (v) Liens to secure Purchase Money
Indebtedness and Capitalized Lease Obligations that are permitted under clause
(x) of the definition of "Permitted Indebtedness"; provided that (a) with
respect to any Purchase Money Indebtedness, any such Lien is created solely for
the purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including sales and excise taxes, installation
and delivery charges and other direct costs of, and other direct expenses paid
or charged in connection with, such purchase or construction) of such Property,
(b) with respect to any Purchase Money Indebtedness, the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such costs, and (c)
such Lien does not extend to or cover any Property other than the item of
Property that is the subject of such Purchase Money Indebtedness or Capitalized
Lease Obligation, as the case may be, and any improvements on such item, (vi)
statutory liens or landlords', carriers', warehouseman's, mechanics',
suppliers', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which do not secure any Indebtedness and with
respect to amounts not yet delinquent or being contested in good faith by
appropriate proceedings, if a reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor, (vii)
Liens for taxes, assessments or governmental charges that are being contested in
good faith by appropriate proceedings, (viii) Liens securing Senior Indebtedness
or Guarantor Senior Indebtedness, (ix) Liens existing on the Issue Date; (x) any
extensions, substitutions, replacements or renewals of the foregoing, (xi) Liens
incurred in the ordinary course of business in connection with worker's
compensation, unemployment insurance or other forms of government insurance or
benefits, or to secure the performance of letters of credit, bids, tenders,
statutory obligations, surety and appeal bonds,
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leases, government contracts and other similar obligations (other than
obligations for borrowed money) entered into in the ordinary course of business,
(xii) any attachment or judgment Lien not constituting an Event of Default under
the Indenture that is being contested in good faith by appropriate proceedings
and for which adequate reserves have been established in accordance with GAAP
(if so required), (xiii) Liens arising from the filing, for notice purposes
only, of financing statements in respect of operating leases, (xiv) Liens
arising by operation of law in favor of depositary banks and collecting banks,
incurred in the ordinary course of business, (xv) Liens consisting of
restrictions on the transfer of securities pursuant to applicable federal and
state securities laws, (xvi) interests of lessors and licensors under leases and
licenses to which the Issuers or any of their Restricted Subsidiaries is a party
and (xvii) with respect to any real property occupied by the Company or any of
its Restricted Subsidiaries, all easements, rights of way, licenses and similar
encumbrances on or defects of title that do not materially impair the use of
such property for its intended purposes.
"Permitted Tax Distributions" means distributions by Holdings or the
Company to their respective partners or members from time to time in an amount
approximately equal to the income tax liability of such partners or members of
Holdings or the Company, as the case may be, resulting from the taxable income
of Holdings or Company, as the case may be, (after taking into account, to the
extent they may reduce such tax liability, all of the prior tax losses of
Holdings or the Company, as the case may be, to the extent such losses have not
previously been deemed to reduce the taxable income of Holdings or the Company,
as the case may be, and thereby reduce distributions for taxes in accordance
herewith); such distribution for taxes shall be based on the approximate highest
combined tax rate that applies to any one of the partners or members of Holdings
or the Company, as the case may be.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"Public Equity Offering" means a public offering by the Company, Holdings,
Capital II, Capital or TCC of shares of its Common Stock (however designated and
whether voting or non-voting) and any and all rights, warrants or options to
acquire such Common Stock; provided, however, that in connection with any such
Public Equity Offering the net proceeds of such Public Equity Offering are
contributed to the Company as common equity.
"Purchase Money Indebtedness" means any Indebtedness incurred by a Person
to finance (within 90 days from incurrence) the cost (including the cost of
construction) of an item of Property acquired in the ordinary course of
business, the principal amount of which Indebtedness does not exceed the sum of
(i) 100% of such cost and (ii) reasonable fees and expenses of such Person
incurred in connection therewith.
"Recapitalization" means the transactions described in the Recapitalization
Agreement.
"Recapitalization Agreement" means the Securities Purchase and Redemption
Agreement dated August 27, 1997 by and among Holdings, TCC, TWP Recapitalization
Corp., THL and certain limited partners of Holdings and TCC, as amended as of
September 30, 1997.
"Redeemable Dividend" means, for any dividend or distribution (other than
Permitted Tax Distributions) with regard to Disqualified Capital Stock, the
quotient of the dividend or distribution divided by the difference between one
and the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Disqualified Capital
Stock.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Company outstanding on the Issue Date or other
Indebtedness permitted to be incurred by the Company
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or its Restricted Subsidiaries pursuant to the terms of the Indenture, but only
to the extent that (i) the Refinancing Indebtedness is subordinated to the Notes
to at least the same extent as the Indebtedness being refunded, refinanced or
extended, if at all, (ii) the Refinancing Indebtedness is scheduled to mature
either (a) no earlier than the Indebtedness being refunded, refinanced or
extended, or (b) after the maturity date of the Notes, (iii) the portion, if
any, of the Refinancing Indebtedness that is scheduled to mature on or prior to
the maturity date of the Notes has a weighted average life to maturity at the
time such Refinancing Indebtedness is incurred that is equal to or greater than
the weighted average life to maturity of the portion of the Indebtedness being
refunded, refinanced or extended that is scheduled to mature on or prior to the
maturity date of the Notes, (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is equal to or less than the sum of (a) the
aggregate principal amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (b) the amount of accrued and unpaid interest,
if any, and premiums owed, if any, not in excess of preexisting prepayment
provisions on such Indebtedness being refunded, refinanced or extended and (c)
the amount of customary fees, expenses and costs related to the incurrence of
such Refinancing Indebtedness, and (v) such Refinancing Indebtedness is incurred
by the same Person that initially incurred the Indebtedness being refunded,
refinanced or extended, except that the Company may incur Refinancing
Indebtedness to refund, refinance or extend Indebtedness of any Wholly-Owned
Subsidiary of the Company.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Capital Stock of
the Issuers or any Restricted Subsidiary of the Issuers or any payment made to
the direct or indirect holders (in their capacities as such) of Capital Stock of
the Issuers or any Restricted Subsidiary of the Issuers (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Disqualified Capital Stock), (y) Permitted Tax
Distributions and (z) in the case of Restricted Subsidiaries of the Company,
dividends or distributions payable to the Company or to a Wholly-Owned
Subsidiary of the Company), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company or any of its
Restricted Subsidiaries (other than Capital Stock owned by the Company or a
Wholly-Owned Subsidiary of the Company, excluding Disqualified Stock), (iii) the
making of any principal payment on, or the purchase, defeasance, repurchase,
redemption or other acquisition or retirement for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, of any
Indebtedness which is subordinated in right of payment to the Notes other than
subordinated Indebtedness acquired in anticipation of satisfying a scheduled
sinking fund obligation, principal installment or final maturity (in each case
due within one year of the date of acquisition), (iv) without limiting the
generality of the foregoing clause (iii), the making of any principal or
interest payment on the Management Subordinated Notes, (v) the making of any
payments to the Equity Compensation Trust, (vi) the making of any Investment or
guarantee of any Investment in any Person other than a Permitted Investment,
(vii) any designation of a Restricted Subsidiary as an Unrestricted Subsidiary
on the basis of the Investment by the Issuers therein and (viii) forgiveness of
any Indebtedness of an Affiliate of the Issuers (other than a Restricted
Subsidiary) to the Issuers or a Restricted Subsidiary. For purposes of
determining the amount expended for Restricted Payments, cash distributed or
invested shall be valued at the face amount thereof and property other than cash
shall be valued at its fair market value determined by the Company's Board of
Directors.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary. The Board of Directors of the Company may designate any
Unrestricted Subsidiary or any Person that is to become a Subsidiary as a
Restricted Subsidiary if immediately after giving effect to such action (and
treating any Acquired Indebtedness as having been incurred at the time of such
action), the Issuers could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation on
Additional Indebtedness" covenant.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of the
Company of any real or tangible personal Property, which Property has been or is
to be sold or transferred by the Company or such Restricted Subsidiary to such
Person in contemplation of such leasing.
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"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit Agreement, dated as of October 1,
1997, among the Issuers, the lenders listed therein and Canadian Imperial Bank
of Commerce, as administrative agent, and First Union National Bank, as
documentation agent, as amended and restated as of November 6, 1997, together
with the documents related thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including adding
Subsidiaries of the Issuers as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Senior Indebtedness" means the principal of and premium, if any, and
interest (including, without limitation, interest accruing or that would have
accrued but for the filing of a bankruptcy, reorganization or other insolvency
proceeding whether or not such interest constitutes an allowable claim in such
proceeding) on, and any and all other fees, expense reimbursement obligations,
indemnities and other amounts due pursuant to the terms of all agreements,
documents and instruments providing for, creating, securing or evidencing or
otherwise entered into in connection with (a) all Indebtedness of the Issuers
owed to lenders under the Senior Credit Facility, (b) all obligations of the
Company with respect to any Interest Rate Agreement, (c) all obligations of the
Company to reimburse any bank or other Person in respect of amounts paid under
letters of credit, acceptances or other similar instruments, (d) all other
Indebtedness of the Company which does not provide that it is to rank pari passu
with or subordinate to the Notes and (e) all deferrals, renewals, extensions and
refundings of, and amendments, modifications and supplements to, any of the
Senior Indebtedness described above. Notwithstanding anything to the contrary in
the foregoing, Senior Indebtedness will not include (i) Indebtedness of the
Company to any of its Subsidiaries, (ii) Indebtedness represented by the Notes,
(iii) any Indebtedness which by the express terms of the agreement or instrument
creating, evidencing or governing the same is junior or subordinate in right of
payment to any item of Senior Indebtedness, (iv) any trade payable arising from
the purchase of goods or materials or for services obtained in the ordinary
course of business and (v) Indebtedness incurred in violation of the Indenture.
"Subsidiary" of any specified Person means any corporation, partnership,
limited liability company, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired, (i) in the case of a
corporation, of which more than 50% of the total voting power of the Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, limited liability company, joint venture, association or other
business entity, with respect to which such first-named Person or any of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise or if in accordance with
GAAP such entity is consolidated with the first-named Person for financial
statement purposes.
"TCC" means TransWestern Communications Company, Inc., a Delaware
corporation and the general partner of the Company.
"Temporary Cash Investments" means (i) Investments in marketable, direct
obligations issued or guaranteed by the United States of America, or of any
governmental agency or political subdivision thereof, maturing within 365 days
of the date of purchase; (ii) Investments in certificates of deposit issued by a
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia, in each case having capital, surplus and
undivided profits totaling more than $500.0 million and rated at least A by
Standard & Poor's Corporation and A-2 by Moody's Investors Service, Inc.,
maturing within 365 days of purchase; or (iii) Investments not exceeding 365
days in duration in money market funds that invest substantially all of such
funds' assets in the Investments described in the preceding clauses (i) and
(ii).
"THL" means Thomas H. Lee Equity Fund III, L.P.
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary by a
96
<PAGE> 102
resolution adopted by the Board of Directors of the Company; provided that a
Subsidiary organized or acquired after the Issue Date may be so classified as an
Unrestricted Subsidiary only if such classification is in compliance with the
covenant set forth under "Limitation on Restricted Payments." The Trustee shall
be given prompt notice by the Company of each resolution adopted by the Board of
Directors of the Company under this provision, together with a copy of each such
resolution adopted.
"Wholly-Owned Subsidiary" of a specified Person means any Subsidiary (or,
if such specified Person is the Company, a Restricted Subsidiary), all of the
outstanding voting securities (other than directors' qualifying shares) of which
are owned, directly or indirectly, by such Person.
BOOK-ENTRY; DELIVERY AND FORM
The Exchange Notes initially will be represented by one or more notes in
registered, global form without interest coupons (collectively, the "Global
Note"). The Global Note will be deposited upon issuance with the Trustee, as
custodian for The Depository Trust Company ("DTC"), in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant as described below. Notes sold to
Institutional Accredited Investors may be represented by the Global Note or, if
such an investor may not hold an interest in the Global Note, a certificated
Note.
Except as set forth below, the Global Note may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Note may not be exchanged for Notes
in certificated form except in the limited circumstances described below.
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar.
DTC has advised the Issuers that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between the Participants through electronic
book-entry changes in accounts of the Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and the Indirect Participants.
DTC has also advised the Issuers that pursuant to procedures established by
it, (i) upon deposit of the Global Note, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Note and (ii) ownership of such interests in the Global
Note will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Note).
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in the Global Note to such persons may be limited
to that extent. Because DTC can act only on behalf of the Participants, which in
turn act on behalf of the Indirect Participants and certain banks, the ability
of a person having beneficial interests in the Global Note to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTE WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
97
<PAGE> 103
Payments in respect of the principal of (and premium, if any) and interest
on the Global Note registered in the name of DTC or its nominee will be payable
to DTC or its nominee in its capacity as the registered holder under the
Indenture. Under the terms of the Indenture, the Issuers and the Trustee will
treat the persons in whose names the Notes, including the Global Note, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, none of the Issuers or
the Trustee nor any agent of the Issuers or the Trustee has or will have any
responsibility or liability for (i) any aspect or accuracy of DTC's records or
any Participant's or Indirect Participant's records relating to or payments made
on account of beneficial ownership interests in the Global Note, or for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial ownership interests
in the Global Note, or (ii) any other matter relating to the actions and
practices of DTC or any of the Participants or the Indirect Participants.
DTC has advised the Issuers that its current practice, upon receipt of any
payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security as
shown on the records of DTC. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed by standing
instructions and customary practices and will not be the responsibility of DTC,
the Trustee or the Issuers. Neither the Issuers nor the Trustee will be liable
for any delay by DTC or any of the Participants in identifying the beneficial
owners of the Notes, and the Issuers and the Trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its nominee as the
registered owner of the Global Note for all purposes.
Interests in the Global Note will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and the Participants. Transfers between Participants in DTC
will be effected in accordance with DTC's procedures and will be settled in
same-day funds.
DTC has advised the Issuers that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account with DTC interests in the Global Note are credited and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if any of the events described under "-- Exchange of Book Entry Notes
for Certificated Notes" occurs, DTC reserves the right to exchange the Global
Note for Notes in certificated form and to distribute such Notes to its
Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Note among accountholders in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Issuers or the Trustee
nor any agent of the Issuers or the Trustee will have any responsibility for the
performance by DTC or its respective participants, indirect participants or
accountholders of their respective obligations under the rules and procedures
governing their operations.
Exchange of Book-Entry Notes for Certificated Notes
The Global Note is exchangeable for definitive Notes in registered
certificated form if (i) DTC (x) notifies the Issuers that it is unwilling or
unable to continue as depository for the Global Note and the Issuers thereupon
fail to appoint a successor depository or (y) has ceased to be a clearing agency
registered under the Exchange Act, (ii) the Issuers, at their option, notify the
Trustee in writing that they elect to cause the issuance of the Notes in
certificated form or (iii) there shall have occurred and be continuing a Default
or an Event of Default with respect to the Notes. In all cases, certificated
Notes delivered in exchange for the Global Note or beneficial interests therein
will be registered in the names, and issued in any approved denominations,
requested by or on behalf of DTC (in accordance with its customary procedures).
98
<PAGE> 104
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is based on the current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations,
judicial authority and administrative rulings and practice. There can be no
assurance that the Internal Revenue Service (the "Service") will not take a
contrary view, and no ruling from the Service has been or will be sought.
Legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conditions set forth
herein. Any such changes or interpretations may or may not be retroactive and
could affect the tax consequences to holders. Certain holders (including
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) may be subject to special rules not discussed
below. The Company recommends that each holder consult such holder's own tax
advisor as to the particular tax consequences of exchanging such holder's Old
Notes for Exchange Notes, including the applicability and effect of any state,
local or foreign tax laws.
The Company believes that the exchange of Old Notes for Exchange Notes
pursuant to the Exchange Offer will not be treated as an "exchange" for federal
income tax purposes because the Exchange Notes will not be considered to differ
materially in kind or extent from the Old Notes. Rather, the Exchange Notes
received by a holder will be treated as a continuation of the Old Notes in the
hands of such holder. As a result, there will be no federal income tax
consequences to holders exchanging Old Notes for Exchange Notes pursuant to the
Exchange Offer.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with the resale of Exchange Notes
received in exchange for Old Notes where such Old Notes were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that for a period of 180 days after the Expiration Date, they will make
this Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale. In addition, until
, 1998 (90 days after the commencement of the Exchange Offer), all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Notes. Any Participating Broker-Dealer that resells the
Exchange Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal.
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<PAGE> 105
LEGAL MATTERS
Certain legal matters relating to the issuance of the Exchange Notes will
be passed upon for the Issuers by Kirkland & Ellis, Chicago, Illinois (a
partnership which includes professional corporations). Certain partners of
Kirkland & Ellis are also partners of KLANS Associates, a partnership that
invested in the Partnership and TCC in connection with the 1993 Acquisition. In
the Recapitalization, KLANS Associates received $2.1 million for the redemption
of all of its holdings of Partnership interests and for the sale of all of its
holdings of TCC common stock.
EXPERTS
The financial statements of TransWestern as of April 30, 1996 and 1997 and
for each of the three years in the period ended April 30, 1997 included in this
Prospectus have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report appearing elsewhere herein and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
100
<PAGE> 106
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 107
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
TRANSWESTERN PUBLISHING COMPANY LLC
Report of Ernst & Young LLP, Independent Auditors..................................... F-2
Balance Sheets as of April 30, 1996 and 1997 and October 31, 1997 (unaudited)......... F-3
Statements of Operations for each of the three years in the period ended April 30 1997
and the six months ended October 31, 1996 and 1997 (unaudited)...................... F-4
Statements of Changes in Member Deficit for each year in the period ended April 30,
1997 and for the six months ended October 31, 1997 (unaudited)...................... F-5
Statements of Cash Flows for each of the three years in the period ended April 30 1997
and the six months ended October 31, 1996 and 1997 (unaudited)...................... F-6
Notes to Financial Statements......................................................... F-7
</TABLE>
F-1
<PAGE> 108
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Member
TransWestern Publishing Company LLC
We have audited the accompanying balance sheets of TransWestern Publishing
Company LLC as of April 30, 1996 and 1997 and the related statements of
operations, changes in member deficit and cash flows for each of the three years
in the period ended April 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of TransWestern Publishing
Company LLC at April 30, 1996 and 1997 and the results of its operations and its
cash flows for each of the three years in the period ended April 30, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
San Diego, California
June 6, 1997, except for "Organization, Business
Activity and Basis of Presentation" under Note 1,
as to which the date is November 6, 1997
F-2
<PAGE> 109
TRANSWESTERN PUBLISHING COMPANY LLC
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 30,
--------------------- OCTOBER 31,
1996 1997 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................................... $ 1,320 $ 1,254 $ 2,223
Trade receivables (less allowance for doubtful accounts
of $5,314 in 1996 and $7,626 in 1997 ($7,771 at
October 31, 1997 (unaudited))........................ 21,449 23,279 17,230
Deferred directory costs................................ 5,667 6,412 8,417
Other current assets.................................... 765 518 475
-------- -------- ---------
Total current assets...................................... 29,201 31,463 28,345
Property, equipment and leasehold improvements, net....... 2,759 2,840 2,881
Acquired intangibles, net................................. 12,867 12,093 9,281
Other assets, primarily debt issuance costs, net.......... 2,596 1,835 8,246
-------- -------- ---------
$ 47,423 $ 48,231 $ 48,753
======== ======== =========
LIABILITIES AND MEMBER DEFICIT
Current liabilities:
Accounts payable........................................ $ 3,191 $ 3,901 $ 2,925
Salaries and benefits payable........................... 3,757 4,112 2,498
Other accrued liabilities............................... 1,636 1,503 4,753
Amount due General Partner.............................. 754 805 --
Customer deposits....................................... 9,281 10,197 14,752
Current portion, long-term debt......................... 8,494 10,921 2,555
-------- -------- --------
Total current liabilities................................. 27,113 31,439 27,483
Long-term debt............................................ 75,916 67,514 173,875
Member deficit............................................ (55,606) (50,722) (152,605)
-------- -------- --------
$ 47,423 $ 48,231 $ 48,753
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 110
TRANSWESTERN PUBLISHING COMPANY LLC
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED APRIL 30, OCTOBER 31,
--------------------------- -----------------
1995 1996 1997 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues..................................... $69,845 $77,731 $91,414 $38,050 $38,254
Cost of sales.................................... 16,956 18,202 19,500 8,996 9,172
------- ------- ------- ------- -------
Gross profit................................... 52,889 59,529 71,914 29,054 29,082
Operating expenses:
Sales and marketing............................ 27,671 29,919 36,640 15,888 17,114
General and administrative..................... 13,279 14,276 16,821 7,870 7,893
Contributions to equity compensation plan...... 525 796 -- -- 5,543
------- ------- ------- ------- -------
Total operating expenses......................... 41,475 44,991 53,461 23,758 30,550
------- ------- ------- ------- -------
Income (loss) from operations.................... 11,414 14,538 18,453 5,296 (1,468)
Other income (expense), net...................... 470 375 48 18 (107)
Interest expense................................. (4,345) (6,630) (7,816) (4,029) (4,333)
------- ------- ------- ------- -------
(3,875) (6,255) (7,768) (4,011) (4,440)
------- ------- ------- ------- -------
Income (loss) before extraordinary item.......... 7,539 8,283 10,685 1,285 (5,908)
Extraordinary item............................... 392 1,368 -- -- 1,391
------- ------- ------- ------- -------
Net income (loss)................................ $ 7,147 $ 6,915 $10,685 $ 1,285 $(7,299)
======= ======= ======= ======= =======
</TABLE>
See accompanying notes.
F-4
<PAGE> 111
TRANSWESTERN PUBLISHING COMPANY LLC
STATEMENTS OF CHANGES IN MEMBER DEFICIT
(IN THOUSANDS)
<TABLE>
<S> <C>
Balance at April 30, 1994.................................... $ 4,458
Net income................................................. 7,147
Distributions to member.................................... (34,326)
---------
Balance at April 30, 1995.................................... (22,721)
Net income................................................. 6,915
Distributions to member.................................... (39,800)
---------
Balance at April 30, 1996.................................... (55,606)
Net income................................................. 10,685
Distributions to member.................................... (5,801)
---------
Balance at April 30, 1997.................................... (50,722)
Net (loss) (unaudited)..................................... (7,299)
Contributions from member (unaudited)...................... 85,756
Equity transaction costs (unaudited)....................... (3,859)
Distributions to member (unaudited)........................ (176,481)
---------
Balance at October 31, 1997 (unaudited)...................... $(152,605)
=========
</TABLE>
See accompanying notes.
F-5
<PAGE> 112
TRANSWESTERN PUBLISHING COMPANY LLC
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED APRIL 30, OCTOBER 31,
------------------------------ --------------------
1995 1996 1997 1996 1997
-------- -------- -------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).......................... $ 7,147 $ 6,915 $ 10,685 $ 1,285 $ (7,299)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Extraordinary item....................... 353 1,368 -- -- 1,391
Depreciation and amortization............ 4,593 4,691 6,399 3,122 3,274
Amortization of deferred debt issuance
costs................................. 488 804 703 371 358
Provision for bad debts.................. 6,429 7,069 8,920 3,653 3,747
Changes in operating assets and
liabilities net of effects from
purchase of directories:
Trade receivables..................... (2,810) (684) (4,142) 1,796 5,903
Write-off of doubtful accounts........ (5,718) (7,571) (6,608) (2,970) (3,601)
Deferred directory costs.............. 600 97 (302) (1,316) (2,005)
Other current assets.................. 269 (158) 247 174 42
Accounts payable...................... 967 (96) 710 (734) (976)
Accrued liabilities................... 1,667 1,038 (1,136) (1,838) (660)
Accrued interest, non current......... -- (1,054) 69 (17) 1,516
Customer deposits..................... 623 672 (243) 2,146 4,555
-------- -------- -------- -------- ---------
Net cash provided by operating
activities............................... 14,608 13,091 15,302 5,672 6,245
INVESTING ACTIVITIES
Purchase of property, equipment and
leasehold improvements................... (496) (484) (1,034) (259) (580)
Increase in other assets................... (2,342) (2,631) -- -- (8,182)
Payment for purchase of directories........ -- (5,229) (2,558) (2,558) --
-------- -------- -------- -------- ---------
Net cash used for investing activities..... (2,838) (8,344) (3,592) (2,817) (8,762)
FINANCING ACTIVITIES
Proceeds from long-term debt............... 50,000 87,300 24,000 14,000 187,373
Repayments of long-term debt............... (27,224) (51,861) (29,975) (14,075) (89,303)
Equity transaction costs................... -- -- -- -- (3,859)
Contributions from member.................. -- -- -- -- 85,756
Distributions to member.................... (34,326) (39,800) (5,801) (2,800) (176,481)
-------- -------- -------- -------- ---------
Net cash provided by (used for) financing
activities............................... (11,550) (4,361) (11,776) (2,875) 3,486
-------- -------- -------- -------- ---------
Net increase (decrease) in cash............ 220 386 (66) (20) 969
Cash at beginning of period................ 714 934 1,320 1,320 1,254
-------- -------- -------- -------- ---------
Cash at end of period...................... $ 934 $ 1,320 $ 1,254 $ 1,300 $ 2,223
======== ======== ======== ======== =========
Supplemental disclosure of cash flow
information:
Cash paid for interest..................... $ 3,066 $ 7,223 $ 7,131 $ 3,674 $ 2,459
======== ======== ======== ======== =========
</TABLE>
See accompanying notes.
F-6
<PAGE> 113
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS, INFORMATION SUBSEQUENT TO APRIL 30, 1997
AND
FOR THE SIX MONTH PERIODS ENDED OCTOBER 31, 1996 AND 1997 ARE UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization, Business Activities and Basis of Presentation
TransWestern Publishing Company, L.P. (the "Partnership") was formed in
1993 to acquire the business of TransWestern Publishing from US West Marketing
Resources Group, Inc. TransWestern Publishing was a division of US West prior to
May 1993.
In November 1997, the Partnership changed its name to TransWestern Holdings
L.P. ("Holdings") and formed and contributed substantially all of its assets to
TransWestern Publishing Company LLC ("TransWestern" or the "Company").
TransWestern assumed or guaranteed all of the liabilities of the Partnership. As
a result, Holdings' only assets are all of the TransWestern membership interests
and all of Capital's capital stock. All of the operations that were previously
conducted by the Partnership are now being conducted by TransWestern. Holdings
has formed TWP Capital Corp. ("Capital") as a wholly-owned subsidiary and the
Company has formed TWP Capital Corp. II ("Capital II") as a wholly-owned
subsidiary. Neither Capital nor Capital II has any significant assets or
operations.
The accompanying financial statements give retroactive effect to the
formation of the Company and the contribution of assets and liabilities by
Holdings as if these events had occurred on the date of the Partnership's
formation. The accompanying financial statements present the historical
financial position and results of operations of TransWestern.
TransWestern publishes and distributes local yellow page directories in
twelve states.
Revenue Recognition, Deferred Directory Costs and Customer Deposits
Revenues from the sale of advertising placed in each directory are
recognized upon the distribution of directories in their individual market
areas. Advance payments received for directory advertising are shown as customer
deposits in the accompanying balance sheets. Expenditures directly related to
sales, production, printing and distribution of directories are capitalized as
deferred directory costs and matched against related revenues upon directory
distribution. The Company published and recognized revenue for 106, 118 and 128
directories in fiscal 1995, 1996 and 1997, respectively.
Concentration of Credit Risk
Credit is extended based upon customer collection history and generally a
deposit is required. The Company is not subject to a concentration of credit
risk due to the geographic and economic diversity of its customer base, however
credit losses have represented a cost of doing business due to the nature of the
customer base (predominantly small businesses) and the use of extended credit
terms.
A provision for doubtful accounts based on historical experience is
recorded at the time revenue is recognized for individual directories. The
estimated provision for doubtful accounts as a percentage of net revenues
equaled 9.2%, 9.1% and 9.8% of net revenues in fiscal 1995, 1996 and 1997,
respectively. Actual write-offs are taken against the allowance when management
determines that an account is uncollectible. In general, management makes this
determination when an account has declared bankruptcy, has gone out of business
or fails to renew for the following year's directory.
F-7
<PAGE> 114
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Fair Value of Financial Instruments
In accordance with requirements of Statement of Financial Accounting
Standards No. 107, Disclosures about Fair Value of Financial Instruments, the
following methods and assumptions were used by the Company in estimating the
fair value disclosures:
Cash and Short-Term Receivables
The carrying amounts approximate fair values because of short maturities of
these instruments.
Long-Term Debt
Management believes that the carrying value of the Company's long-term debt
materially approximates its fair value as all debt outstanding at April 30, 1997
and October 31, 1997 is variable rate debt which is tied to standard indices
which adjust over relatively short periods (one to six months). These rates are
similar to current rates offered to the Company for debt of similar maturity.
Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements are carried at cost, less
depreciation and amortization. Depreciation is computed using the straight-line
method over the assets' estimated useful lives which range from three to seven
years. Leasehold improvements are amortized over the shorter of their estimated
useful lives or the lease period.
Acquired Intangibles
Acquired intangibles are being amortized over their estimated economic
lives of five years for the customer base and three years for the covenants not
to compete.
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, regarding the impairment of long-lived assets,
identifiable intangibles and goodwill related to those assets. The Company
adopted Statement No. 121 on May 1, 1996 and such adoption did not have a
material effect on the Company's financial position or results of operations.
Debt Issuance Costs
Debt issuance costs are being amortized over the term of the related debt
using the weighted-average declining balance method (which approximates the
interest method). Amortization is included in interest expense in the
accompanying statements of income.
Income Taxes
No provision has been made in the accompanying statements of income for
federal and state income taxes, except for the California minimum franchise tax,
as any taxable income or loss of the Partnership prior to the formation of
TransWestern was included in the income tax returns of the Partnership's
partners.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-8
<PAGE> 115
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Interim Financial Information
The accompanying financial statements and related notes for the six month
periods ended October 31, 1996 and 1997 are unaudited but include all
adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair statement of financial position,
results of operations and cash flows for these interim periods. The results of
operations for the six months ended October 31, 1997 are not necessarily
indicative of operating results to be expected for the full fiscal year.
2. DIRECTORY ACQUISITIONS
During fiscal 1996 and 1997, the Company completed acquisitions of certain
tangible and intangible assets from companies which publish yellow page
directories in California, Massachusetts, New York, Indiana, Kentucky and
Tennessee. These transactions were accounted for as purchases and accordingly
the purchase price was allocated to the tangible and intangible assets acquired
based on their respective fair values at the date of acquisition as follows:
<TABLE>
<CAPTION>
APRIL 30,
-----------------
1996 1997
------ ------
<S> <C> <C>
Deferred directory costs................................... $ 671 $ 443
Customer base.............................................. 6,615 4,620
Other...................................................... 421 56
------ ------
Total assets acquired...................................... $7,707 $5,119
====== ======
</TABLE>
In fiscal 1997, the Company purchased certain tangible and intangible
assets totaling $5,119 (including related liabilities totaling $535) of Alliance
Media, Inc. for cash of $2,558 and recorded other obligations totaling $2,026.
The obligations represent the realized contribution margin contingent upon the
operating results (as defined in the purchase agreement) of certain directories
acquired and certain acquisition related expenses. Management believes the
contingent payments due under the 1997 acquisition agreement are reasonably
assured.
Assuming that the acquisition of Alliance Media, Inc. had occurred on the
first day of the Company's fiscal years ended April 30, 1996 and 1997, pro forma
condensed results of operations would be as follows:
<TABLE>
<CAPTION>
YEARS ENDED APRIL
30,
-------------------
1996 1997
------- -------
(UNAUDITED)
<S> <C> <C>
Revenues................................................. $82,180 $91,414
Net income............................................... 7,110 9,651
</TABLE>
These results give effect to pro forma adjustments for the amortization of
acquired intangibles.
In fiscal 1996, the Company purchased certain tangible and intangible
assets, totaling $7,707 (including related liabilities totaling $611) of J&J
Marketing Services, Inc. and Golden State Directory Corporation for cash of
$5,229, notes payable totaling $1,010 (Note 4) and other amounts due totaling
$857.
F-9
<PAGE> 116
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Assuming that the acquisitions of J&J Marketing Services, Inc. and Golden
State Directory Corporation had occurred on the first day of the Company's
fiscal year ended April 30, 1996 pro forma condensed results of operations would
be as follows:
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30,
1996
----------
(UNAUDITED)
<S> <C>
Revenues.......................................................... $ 81,595
Net income........................................................ 7,008
</TABLE>
These results give effect to a pro forma adjustment for the amortization of
acquired intangibles and additional interest expense on related debt.
3. FINANCIAL STATEMENT DETAILS
Property, Equipment and Leasehold Improvements
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
------------------- -----------
1996 1997 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer and office equipment....................... $ 3,337 $ 4,335 $ 4,794
Furniture and fixtures.............................. 1,340 1,370 1,471
Leasehold improvements.............................. 227 233 254
------- ------- -------
4,904 5,938 6,519
Less accumulated depreciation and amortization...... (2,145) (3,098) (3,638)
------- ------- -------
$ 2,759 $ 2,840 $ 2,881
======= ======= =======
</TABLE>
Acquired Intangibles
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
--------------------- -----------
1996 1997 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Customer base..................................... $ 23,073 $ 27,693 $ 27,587
Covenant not to compete........................... 1,200 -- --
-------- -------- --------
24,273 27,693 27,587
Less accumulated amortization..................... (11,406) (15,600) (18,306)
-------- -------- --------
$ 12,867 $ 12,093 $ 9,281
======== ======== ========
</TABLE>
Other Assets
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
------------------- -----------
1996 1997 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Debt issuance costs................................. $ 2,883 $ 2,827 $ 8,434
Other............................................... 214 264 271
------- ------- -------
3,097 3,091 8,705
Less accumulated amortization....................... (501) (1,256) (459)
------- ------- -------
$ 2,596 $ 1,835 $ 8,246
======= ======= =======
</TABLE>
F-10
<PAGE> 117
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. FINANCING ARRANGEMENTS
Long-term financing arrangements consist of the following:
<TABLE>
<CAPTION>
APRIL 30,
-------------------
1996 1997
------- -------
<S> <C> <C>
Senior term loan................................................. $76,100 $68,100
Revolving loan................................................... 7,300 9,400
Other notes payable.............................................. 1,010 935
------- -------
84,410 78,435
Less current portion............................................. 8,494 10,921
------- -------
$75,916 $67,514
======= =======
</TABLE>
In November 1995, the Company entered into a $95.0 million credit agreement
with a group of banks in which First Union National Bank of North Carolina is
the administrative agent. Under the terms of this agreement, the Company
borrowed $80.0 million under a senior term note and initially borrowed $5.0
million under a $15.0 million (maximum) revolving credit facility. Proceeds from
the term note and the revolving credit facility were used to repay principal and
interest outstanding under the then existing term note and revolving credit
facilities of $40.5 million, repay principal and accrued interest of $5.8
million on the Junior Subordinated Note (as defined below), make a distribution
to the general and limited partners totaling $36.4 million and $2.3 million for
working capital purposes. In connection with the repayment of the previous term
notes and revolving credit facilities, unamortized debt issue costs of $392 and
$1,368 were written off and recorded in the accompanying 1995 and 1996 income
statements as extraordinary items.
Principal payments on the senior term note are due quarterly through
maturity, April 30, 2002. The revolving credit agreement also expires on April
30, 2002. Borrowings under this agreement rank senior to all other indebtedness
of the Company and are secured by all of the Company's assets.
Annual maturities under the long-term financing arrangements as of April
30, 1997 are as follows:
<TABLE>
<CAPTION>
REVOLVING
SENIOR LOAN AND
TERM LOAN OTHER TOTAL
--------- --------- -------
<S> <C> <C> <C>
1998.................................................. $ 9,986 $ 935 $10,921
1999.................................................. 11,984 -- 11,984
2000.................................................. 15,480 -- 15,480
2001.................................................. 17,977 -- 17,977
2002.................................................. 12,673 9,400 22,073
------- -------- -------
$68,100 $ 10,335 $78,435
======= ======== =======
</TABLE>
The Company may prepay any or all of the outstanding borrowings under the
term or revolving credit notes, in minimum increments of $50, without penalty.
The agreement requires that excess cash flows (as defined) and net cash proceeds
from the sale of assets, issuance of debt or partnership equity (in excess of
prescribed amounts) shall be used to repay term or revolving credit borrowings.
Such mandatory prepayments shall first be applied to the outstanding term note
balance with any excess being applied to the revolving credit note balance.
Under the terms of the agreement, the Company can elect to have the
interest rate on borrowings tied to either of two indices: the administrative
agent's prime rate based on the Alternative Base Rate (ABR) (as defined) plus a
margin of 1.75 percentage points, or the administrative agent's LIBOR base rate
(as defined) plus a margin of 2.75 percentage points. The margin applicable for
ABR and LIBOR loans is subject to
F-11
<PAGE> 118
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
adjustment based on the ratio of the Company's total indebtedness to EBITDA. The
ABR margin ranges from 1.25% to 1.75% and the LIBOR margin ranges from 2.25% to
2.75%.
Interest tied to LIBOR may be based on one, three or six month interest
rate periods. At April 30, 1997, all outstanding term loan borrowings of $68.1
million were tied to a one month LIBOR period and the total interest rate in
effect was 8.4375%. Borrowings under the revolving credit facility at April 30,
1997 consisted of $7.0 million under a one month LIBOR period (total interest
rate of 8.4375%) and $2.4 million under an ABR rate (interest rate of 10.25%).
Interest on loans tied to the ABR is payable quarterly, interest on debt tied to
one month and three month LIBOR periods is payable at the end of the respective
period and interest on six month LIBOR periods is payable at three month
intervals. The Company is also required to pay a quarterly fee of 0.5% of the
average daily available balance outstanding under the revolving credit facility.
Additionally, the Company is also required to pay a annual fee of $75 to the
administrative agent which the Company accrues for ratably over the twelve month
period.
Under the terms of the term loan agreement, the Company is required to have
interest rate protection for at least 50% of the initial balance of the term
loan. In December 1996, the Company entered into interest rate swap agreements
with two banks which are effective through October 30, 1998. Interest rate
coverage under these agreements is tied to the one month LIBOR rate relative to
a fixed "Swap Reset Rate" (equal to 5.375%). Under these agreements, if the one
month LIBOR rate is greater than the "Swap Reset Rate," the Company will receive
an amount equal to the interest rate differential multiplied by the "Notional
Amount" (the "Notional Amount" at April 30, 1997 equaled $61.0 million). The
"Notional Amount" decreases by approximately $3.0 million per quarter through
March 1998.
If the LIBOR rate is less than the "Swap Reset Rate," the Company would owe
the banks an amount calculated in a similar manner. As of April 30, 1997,
amounts paid or received by the Company under the interest rate swap agreements
were not significant.
In addition to the interest rate swap agreements, at April 30, 1997, the
Company has nine months remaining under an interest rate cap contract entered
into in 1996 and to date amounts paid or received by the Company under the
interest rate cap agreement were not significant.
Terms of the credit agreements include certain financial covenants,
including minimum annual EBITDA (earnings before interest, taxes, depreciation
and amortization, as defined), a leverage ratio, an interest coverage ratio, and
a fixed charge coverage ratio. These covenants also limit capital expenditures
and indebtedness of the Company as well as restricting distributions to the
partners. As of April 30, 1997 and October 31, 1997 the Company was in
compliance with these covenants.
In conjunction with the November 1996 refinancing, the Company retired all
indebtedness associated with a $4.5 million 12% Junior Subordinated Note.
In connection with the acquisition of certain assets from other directory
companies in fiscal 1996 (Note 2) the Company issued two 7% notes payable
totaling $1,010, of which $935 remains outstanding at April 30, 1997. The
outstanding balance is due in fiscal 1998.
5. MEMBER DEFICIT
Prior to the formation of TransWestern, the accumulated deficit of the
Partnership arose from distributions to partners of the Partnership in
accordance with the terms of the Partnership Agreement.
During fiscal 1996 and 1997, the Partnership made tax distributions to unit
holders totaling $3,400 and $5,801, respectively. Also, in connection with the
November 1995 refinancing of the Partnership, $36 million was distributed to the
limited and general partners of the Partnership. Other than for tax
distributions, the Company is currently restricted under the terms of its senior
term loan agreement from making additional member distributions.
F-12
<PAGE> 119
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. BENEFIT PLANS
401(k) and Profit Sharing Plan
Substantially all of the Partnership's employees are covered by a 401(k)
and profit sharing retirement plan. Employees can make contributions to the plan
up to the maximum amount allowed by federal tax code regulations. The
Partnership may match the employee contributions, up to a limitation of 83% of
the first 6% of annual earnings per participant. The Partnership may also make
annual discretionary profit sharing contributions. Contributions to the plan for
the years ended April 30, 1995, 1996 and 1997 were approximately $608, $761 and
$761, respectively.
Equity Compensation Plan
Prior to formation of TransWestern, the Partnership established the
TransWestern Publishing Company, L.P. Equity Compensation Plan (the "Plan"). The
Plan provides select key full-time employees with deferred compensation benefits
for income tax purposes. Special distributions to the Trust are recorded as
expense in the accompanying statements of income when declared by the Board of
Directors. Employees receiving units in the Trust are eligible to receive a
ratable per unit share of cash distributions from the Trust, if and when
declared by the Plan Administrators.
Generally, the Plan Administrators intend to distribute to employee unit
holders all assets contributed to the Trust within three years of the date of
contribution. In fiscal 1997, the Plan Administrators paid distributions
totaling $411 and at April 30, 1997 there was no undistributed equity trust
proceeds.
7. LEASE COMMITMENTS
The Partnership leases office facilities in several cities throughout the
United States under operating leases with remaining terms ranging from one to
six years. Total rent expense for the years ended April 30, 1995, 1996 and 1997,
was $1,711, $1,750 and $1,866, respectively. Future minimum lease payments,
under these leases are as follows for fiscal years ending April 30:
<TABLE>
<S> <C>
1998................................................ $1,428
1999................................................ 1,301
2000................................................ 1,002
2001................................................ 827
2002................................................ 558
Thereafter.......................................... 627
------
$5,743
======
</TABLE>
8. RELATED PARTY TRANSACTION
Prior to formation of TransWestern, the General Partner advanced $694 and
$4 in fiscal 1996 and 1997, respectively, to the Partnership for working capital
purposes. The Partnership accrues interest on these advances at the established
senior term loan rate (see Note 4). As of April 30, 1997, $805, including
accrued interest of $124, was due the General Partner. The amount due to the
General Partner is payable upon demand by the General Partner.
9. SUBSEQUENT EVENTS (UNAUDITED)
In October 1997, the Partnership completed a $312,700 Recapitalization Plan
(the "Recapitalization"). In the Recapitalization, new investors including
Thomas H. Lee Equity Fund III, L.P. and its affiliates along with other
investors, existing limited partners of the Partnership and the Partnership's
senior managers
F-13
<PAGE> 120
TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
invested new and continuing capital of $130,000 in the Partnership and
TransWestern Communications Company, Inc. (which is the general partner of the
Partnership). The proceeds of the equity investment together with approximately
$182,700 of senior and senior subordinated debt financing were used (i) for
$224,500 of consideration paid to redeem a portion of the limited partnership
interests from existing limited partners, (ii) to repay $75,600 outstanding
under credit facilities in existence since 1995, (iii) to pay $10,600 of fees
and expenses associated with the Recapitalization and (iv) for $2,000 for
general corporate purposes, including working capital.
The Recapitalization was financed with (i) the $130,009 equity investment,
(ii) borrowings of $107,700 under a $125,000 (maximum) variable interest rate
Senior Credit Facility and (iii) borrowings of $75,000 under a Senior
Subordinated Facility. As a result of the Recapitalization, Thomas H. Lee Equity
Fund III, L.P. and its affiliates will collectively own approximately 59% of the
equity of the Partnership.
In November 1997, the Partnership changed its name to TransWestern Holdings
L.P. and formed and contributed substantially all of its assets to TransWestern.
TransWestern assumed or guaranteed all of the liabilities of the Partnership. As
a result, Holdings' only assets are all of the TransWestern membership interests
and all of Capital's capital stock. All of the operations that were previously
conducted by the Partnership are now being conducted by TransWestern. Holdings
formed Capital as a wholly-owned subsidiary and the Company formed Capital II as
a wholly-owned subsidiary. Neither Capital nor Capital II has any significant
assets or operations.
The Partnership intends to utilize the proceeds of an offering by
TransWestern of $100,000 of unsecured notes to repay the $75,000 Senior
Subordinated Facility and to pay down a portion of the revolving balance
outstanding under the Senior Credit Facility. Subsequent to the
Recapitalization, Holdings commenced an offering of $32,500 initial aggregate
principal amount of unsecured senior discount notes, the net proceeds of which
will be used to redeem approximately $31,300 of preferred units of Holdings.
However, the redemption will not reduce the equity capitalization of
TransWestern.
F-14
<PAGE> 121
============================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERS
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................... i
Summary.................................... 1
Risk Factors............................... 12
The Issuers................................ 18
The Transactions........................... 19
The Principal Investors.................... 21
Use of Proceeds............................ 22
Capitalization............................. 23
Unaudited Pro Forma Financial Data......... 24
Selected Historical Financial and Other
Data..................................... 31
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 33
Business................................... 40
Management................................. 47
Security Ownership of Certain Beneficial
Owners and Management.................... 52
Certain Transactions....................... 54
Limited Partnership Agreement.............. 58
Limited Liability Company Agreement........ 59
Description of Certain Indebtedness........ 60
The Exchange Offer......................... 63
Description of the Notes................... 71
Certain U.S. Federal Income Tax
Considerations........................... 99
Plan of Distribution....................... 99
Legal Matters.............................. 100
Experts.................................... 100
Index to Financial Statements.............. F-1
</TABLE>
============================================================
============================================================
$100,000,000
TRANSWESTERN PUBLISHING
COMPANY LLC
TWP CAPITAL CORP. II
OFFER TO EXCHANGE THEIR SERIES B
9 5/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ANY AND ALL OF THEIR OUTSTANDING
9 5/8% SENIOR SUBORDINATED
NOTES DUE 2007
-----------------
PROSPECTUS
-----------------
JANUARY , 1998
============================================================
<PAGE> 122
PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
TransWestern. TransWestern is a limited liability company organized under
the laws of the State of Delaware. Section 18-108 of the Delaware Limited
Liability Company Act(the "Act") provides that, subject to such standards and
restrictions, if any, as are set forth in its limited liability company
agreement, a limited liability company may, and shall have the power to,
indemnify and hold harmless any member or manager or other person from and
against any and all claims and demands whatsoever.
Section 4.2 of TransWestern's Limited Liability Company Agreement ("Section
4.2") provides, among other things, that each person and entity shall be
entitled to be indemnified and held harmless on an incurred basis by
TransWestern (but only after first making a claim for indemnification available
from any other source and only to the extent indemnification is not provided by
that source) to the fullest extent permitted under the Act (including
indemnification for gross negligence and breach of fiduciary duty to the extent
so authorized) as amended from time to time (but, in the case of any such
amendment, only to the extent that such amendment permits TransWestern to
provide broader indemnification rights than such law permitted TransWestern to
provide prior to such amendment) against all losses, liabilities and expenses,
including attorneys' fees and expenses, arising from claims, actions and
proceedings in which such person or entity may be involved, as a party or
otherwise, by reason of his, her or it being or having been the Manager, a
Member or an officer of TransWestern, or by reason of his, her or it serving at
the request of TransWestern as a director, officer, manager, member, partner,
employee or agent of another limited liability company or of a corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan whether or not such person or entity
continues to be such or serve in such capacity at the time any such loss,
liability or expense is paid or incurred.
Section 4.2 also provides that, the rights of indemnification will be in
addition to any rights to which such person or entity may otherwise be entitled
by contract or as a matter of law and shall extend to his, her or its successors
and assigns. In particular, and without limitation of the foregoing, such person
or entity shall be entitled to indemnification by TransWestern against expenses
(as incurred), including attorneys' fees and expenses, incurred by such person
or entity upon the delivery by such person or entity to TransWestern of a
written undertaking (reasonably acceptable to the Manager) to repay all amounts
so advanced if it shall ultimately be determined that such person or entity is
not entitled to be indemnified under Section 4.2. TransWestern may, to the
extent authorized from time to time by the Manager, grant rights to
indemnification and to advancement of expenses to any employee or agent of
TransWestern to the fullest extent of the provisions of Section 4.2 with respect
to the indemnification and advancement of expenses of the Manager, Members and
officers of TransWestern.
TransWestern intends to obtain insurance policies covering all of its
Directors and officers against certain liabilities for actions taken in such
capacities, including liabilities under the Securities Act of 1933.
Capital II. Capital II is incorporated under the laws of the State of
Delaware. Section 145 of the General Corporation Law of the State of Delaware,
inter alia ("Section 145") provides that a Delaware corporation may indemnify
any persons who were, are or are threatened to be made, parties to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was an
officer, director, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such person acted in good faith and in a manner he or she
reasonably believed to be or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his or her conduct was illegal. A Delaware corporation may
indemnify any persons who are, were or are threatened to be made, party to any
threatened, pending or completed action or suit by or in the right of the
corporation by reasons of the fact that such person was a director, officer,
employee or agent of such corporation, or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such
II-1
<PAGE> 123
person in connection with the defense or settlement of such action or suit,
provided such person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the corporation's best interests, provided
that no indemnification is permitted without judicial approval if the officer,
director, employee or agent is adjudged to be liable to the corporation. Where
an officer, director, employee or agent is successful on the merits or otherwise
in the defense of any action referred to above, the corporation must indemnify
him or her against the expenses which such officer or director has actually and
reasonably incurred.
Capital II's Certificate of Incorporation provides that to the fullest
extent permitted by the General Corporation Law of the State of Delaware as the
same exists or may hereafter be amended, a director of Capital II shall not be
liable to Capital II or its stockholders for monetary damages for a breach of
fiduciary duty as a director.
Article V of the By-laws of Capital II ("Article V") provides, among other
things, that each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she,
or a person of whom he or she is the legal representative, is or was a director
or officer, of the corporation or is or was serving at the request of Capital II
as a director, officer, employee, fiduciary, or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, shall be indemnified
and held harmless by Capital II to the fullest extent which it is empowered to
do so by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits Capital II to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment) against all expense, liability and loss (including attorneys'
fees actually and reasonably incurred by such person in connection with such
proceeding) and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, Capital II shall
indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
the board of directors of Capital II.
Article V also provides that persons who are not covered by the foregoing
provisions of Article V and who are or were employees or agents of Capital II,
or who are or were serving at the request of Capital II as employees or agents
of another corporation, partnership, joint venture, trust or other enterprise,
may be indemnified to the extent authorized at any time or from time to time by
the board of directors.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him or her in any
such capacity, arising out of his or her status as such, whether or not the
corporation would otherwise have the power to indemnify him or her under Section
145.
Article V further provides that Capital II may purchase and maintain
insurance on its behalf and on behalf of any person who is or was a director,
officer, employee, fiduciary or agent of Capital II or was serving at the
request of Capital II as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not Capital II would have the power to indemnify such
person against such liability under Article V.
All of Capital II's directors and officers will be covered by insurance
policies intended to be obtained by Capital II against certain liabilities for
actions taken in such capacities, including liabilities under the Securities Act
of 1933.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
See Index to Exhibits.
(b) Financial Statement Schedules.
II-2
<PAGE> 124
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions, are inapplicable or not
material, or the information called for thereby is otherwise included in
the financial statements and therefore has been omitted.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) The undersigned registrants hereby undertake as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuers undertake that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by
the other Items of the applicable form.
(5) The registrants undertake that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of section 10(a)(3) of the Act and is
used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrants pursuant to the provisions described
under Item 20 or otherwise, the registrants have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate
II-3
<PAGE> 125
jurisdiction the question whether such indemnification by them is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(6) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrants
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time
it was declared effective.
(7) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(8) The undersigned registrants hereby undertake to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of
responding to the request.
(9) The undersigned registrants hereby undertake to supply by
means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was
not the subject of and included in the registration statement when it
became effective.
II-4
<PAGE> 126
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TransWestern
Publishing Company LLC has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in City of San
Diego, State of California, on the 11th day of December, 1997.
TRANSWESTERN PUBLISHING COMPANY LLC
By: /s/ LAURENCE H. BLOCH
-------------------------------------
Name: Laurence H. Bloch
Title: Chairman and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Laurence H. Bloch and Joan M. Fiorito and each of
them, his or her true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
* * *
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons in the
capacities indicated on the 11th day of December, 1997.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- -------------------------------------------- --------------------------------------------
<C> <S>
/s/ RICARDO PUENTE President, Chief Executive Officer and
- -------------------------------------------- Director of TCC (Principal Executive
Ricardo Puente Officer)
/s/ LAURENCE H. BLOCH Chairman, Secretary and Director of TCC
- --------------------------------------------
Laurence H. Bloch
/s/ JOAN M. FIORITO Vice President, Chief Financial Officer and
- -------------------------------------------- Assistant Secretary (Principal Financial and
Joan M. Fiorito Accounting Officer)
/s/ C. HUNTER BOLL Director of TCC
- --------------------------------------------
C. Hunter Boll
/s/ TERRENCE M. MULLEN Director of TCC
- --------------------------------------------
Terrence M. Mullen
/s/ CHRISTOPHER J. PERRY Director of TCC
- --------------------------------------------
Christopher J. Perry
/s/ SCOTT A. SCHOEN Director of TCC
- --------------------------------------------
Scott A. Schoen
/s/ MARCUS D. WEDNER Director of TCC
- --------------------------------------------
Marcus D. Wedner
</TABLE>
- ------------------
* TCC is the Manager of TransWestern Publishing Company LLC.
II-5
<PAGE> 127
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TWP Capital
Corp. II has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in City of San Diego, State of
California, on the 11th day of December, 1997.
TWP CAPITAL CORP. II
By: /s/ LAURENCE H. BLOCH
---------------------------------
Name: Laurence H. Bloch
Title: President and Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 11th day of December, 1997.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ------------------------------------- ------------------------------------------------
<C> <S>
/s/ LAURENCE H. BLOCH President, Secretary and Director
- ------------------------------------- (Principal Executive Officer)
Laurence H. Bloch
/s/ JOAN M. FIORITO Vice President and Assistant Secretary
- ------------------------------------- (Principal Financial and Accounting Officer)
Joan M. Fiorito
</TABLE>
II-6
<PAGE> 128
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------------------------------
<C> <S>
2.1 Contribution and Assumption Agreement, dated November 6, 1997, by and among Holdings
and TransWestern.
2.2 Assignment and Assumption Agreement, dated November 6, 1997, by and among Holdings
and TransWestern.
2.3 Bill of Sale, dated November 6, 1997 by and among Holdings and TransWestern.
3.1 Certificate of Formation of TransWestern.
3.2 Certificate of Incorporation of Capital II.
3.3 By-Laws of Capital II.
3.4 Limited Liability Company Agreement of TransWestern Publishing Company LLC.
3.5 Certificate of Incorporation of TCC.
3.6 By-Laws of TCC.
4.1 Indenture, dated as of November 12, 1997, by and between the Company and Wilmington
Trust Company, as Trustee.
4.2 Form of 9 5/8% Senior Subordinated Notes due 2007.
4.3 Securities Purchase Agreement, dated as of November 6, 1997, by and among the
Company, Holdings, TCC, and the Initial Purchasers.
4.4 Registration Rights Agreement, dated as of November 12, 1997, by and among the
Company and the Initial Purchasers.
5.1 Opinion of Kirkland & Ellis.*
10.1 Employment Agreement, dated as of October 1, 1997, by and between Laurence H. Bloch
and TransWestern.
10.2 Employment Agreement, dated as of October 1, 1997, by and between Ricardo Puente and
TransWestern.
10.3 Assumption Agreement and Amended and Restated Credit Agreement, dated as of November
6, 1997, among the Company, the lenders listed therein and Canadian Imperial Bank of
Commerce, as administrative agent, and First Union National Bank, as documentation
agent.+
10.4 Equity Compensation Plan.*
10.5 Form of Executive Agreement between Holdings (formerly known as TransWestern
Publishing Company, L.P.), TCC and each Management Investor.
10.6 Securities Purchase Agreement, dated as of November 6, 1997, by and among the
Discount Note Issuers, TransWestern, TCC, and the Initial Purchasers.
10.7 Indenture, dated as of November 12, 1997 by and between the Discount Note Issuers
and Wilmington Trust Company, as Trustee.
10.8 Registration Rights Agreement, dated as of November 12, 1997, by and among the
Discount Note Issuers and the Initial Purchasers.
12.1 Statement regarding computation of ratio of earnings to fixed charges.
21.1 Subsidiaries of Holdings and TransWestern.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Kirkland & Ellis (included in Exhibit 5.1 above).*
24.1 Power of Attorney (included in Part II of the Registration Statement).
25.1 Statement of Eligibility of Trustee on Form T-1.*
27.1 Financial Data Schedule.
</TABLE>
<PAGE> 129
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------------------------------
<C> <S>
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Tender Instructions.*
</TABLE>
- ---------------
* To be filed by amendment.
+ The Company agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the Commission.
<PAGE> 1
EXHIBIT 2.1
CONTRIBUTION AND ASSUMPTION AGREEMENT
This Contribution and Assumption Agreement (this "Agreement") is
made as of November 6, 1997, by and among TransWestern Holdings L.P., a Delaware
limited partnership ("Contributor"), and TransWestern Publishing Company LLC, a
Delaware limited liability company ("LLC"). LLC and Contributor sometimes are
referred to herein collectively as the "Parties" and individually as a "Party".
Contributor is engaged, among other things, in the business of
operating and publishing yellow page directories and related properties;
carrying on of businesses relating thereto or arising therefrom; and exercising
such other activities as are necessary or useful in connection with the
foregoing or are incidental or ancillary thereto (the "Business"). Contributor
desires to contribute all of its businesses, assets and properties relating to
the Business to LLC, subject to the assumption of certain liabilities, and LLC
desires to acquire all of Contributor's businesses, assets and properties
relating to the Business in exchange for member units of the LLC ("LLC Units")
on the terms set forth in this Agreement. Capitalized terms not otherwise
defined herein have the meanings assigned them in Article 4 below.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
Parties hereby agree as follows:
AGREEMENT
ARTICLE 1
CONTRIBUTION AND ASSUMPTION
1.1 CONTRIBUTION.
(a) Upon the terms set forth in this Agreement, at the Closing,
Contributor shall contribute, assign, transfer and deliver to LLC (the
"Contribution") all of its properties, assets, rights and interests of every
kind and nature, whether tangible or intangible, and wherever located and by
whomever possessed, owned by Contributor as of the Closing Date (collectively,
the "Contributed Assets"). The Contributed Assets include, but are not limited
to the following:
(i) all accounts, trade and notes receivables (whether
current or noncurrent) arising in connection with the Business;
- 1 -
<PAGE> 2
(ii) all intellectual and other Proprietary Rights of the
Contributor, along with all income, royalties, damages and payments due
or payable as of the Closing or thereafter, including, without
limitation, goodwill associated therewith, damages and payments for
past, present or future infringements or misappropriations thereof, the
right to sue and recover for past infringements or misappropriations
thereof and any and all corresponding rights that, now or hereafter, may
be secured throughout the world;
(iii) all of Contributor's rights existing under leases,
contracts (including but not limited to customer contracts), employee
benefit plans (and any related trusts and contracts), licenses, permits,
distribution arrangements, plans, sales and purchase agreements,
accounts receivable, insurance policies other agreements and business
arrangements;
(iv) all machinery, equipment (including all transportation
and office equipment), fixtures, trade fixtures, tools, dyes and
furniture owned by Contributor, including, without limitation, all such
items which are located in any building, warehouse, office or other
space occupied by Contributor;
(v) all inventories of work in process, semi-finished and
finished goods, stores, replacement and spare parts, packaging
materials, operating supplies, and fuels, owned by Contributor or
located in any space occupied by Contributor;
(vi) ad-copy, drawings, designs, specifications, advertising
and promotional materials, studies, reports and other printed or written
materials;
(vii) all office supplies, production supplies, spare parts,
other miscellaneous supplies, and other tangible property of any kind
wherever located, owned by Contributor;
(viii) all advance payments and other prepayments, prepaid
costs and prepaid expenses and all deferred directory costs associated
with the Business;
(ix) all claims, refunds, causes of action, choses in action,
rights of recovery and rights of set-off of any kind (including, without
limitation, all of Contributor's rights pursuant to any judgment, order,
injunction or decree of any governmental, administrative or judicial
authority or agency) arising in connection with or relating to the
Business;
(x) the right to receive and retain mail, accounts receivable
payments and other communications relating to the Business;
(xi) the right to bill and receive payment for services
performed in connection with the Business but unbilled or unpaid as of
the Closing;
- 2 -
<PAGE> 3
(xii) to the extent used in connection with any directory
published by Seller not in violation of noncompetition agreements, a
license to use all such ad-copy, drawings, designs, specifications,
advertising and/or promotional materials;
(xiii) the books and records pertaining to the Business;
(xiv) all advertising, marketing and promotional materials
and all other printed or written materials pertaining to the Business;
(xv) all permits, licenses, certifications and approvals
applied for or issued or obtained in connection with the Business from
all permitting, licensing, accrediting and certifying agencies, and the
rights to all data and records pertaining to the Business held by such
permitting, licensing and certifying agencies;
(xvi) all other intangible properties relating to or
associated with the Business;
(xvii) the name "TransWestern Publishing"; and
(xviii) except as provided in clause (b) below, all other
property owned by Contributor, or in which Contributor has an interest
on the Closing Date.
(b) Notwithstanding the other provisions of this Section 1.1 to
the contrary, the Contributed Assets shall not include any LLC Units held by the
Contributor.
1.2 UNIT TRANSFER AND ASSUMPTION.
(a) In consideration of the Contribution of the Contributed
Assets, on the Closing Date, LLC shall transfer (the "Unit Transfer") to
Contributor all of the LLC Units.
(b) As additional consideration for the Contributed Assets, at
the Closing, LLC will assume (the "Assumption") all of the liabilities and
obligations of Contributor as of the Closing including, but not limited to the
following (the "Assumed Liabilities"):
(i) all liabilities incurred by Contributor in the ordinary
course of the Business;
(ii) liabilities and obligations of Contributor pursuant to
executory contracts, orders and commitments entered into in connection
with the operation of the Business covering, among other things, the
purchase of printing and publication services, directory information and
other supplies and the sale of advertising space;
(iii) liabilities and obligations of Contributor with respect
to the Employees (as defined below) of the Business under Contributor's
employee benefit plans and other liabilities with respect to Employees;
and
- 3 -
<PAGE> 4
(iv) liabilities and obligations of the Contributor under the
Bridge Securities Purchase Agreement, dated October 1, 1997 between
Contributor, its wholly-owned subsidiary TWP Capital Corp., CIBC Wood
Gundy Securities Corp. and First Union Capital Markets Corp., which
liability assumption shall be in the form of a Senior Subordinated
Guarantee to be issued by LLC.
ARTICLE 2
CLOSING
2.1 THE CLOSING. The closing of the Contribution, the Unit
Transfer and the Assumption, and the transactions relating thereto (the
"Closing") will take place at the offices of Kirkland & Ellis, 200 East Randolph
Drive, Chicago, Illinois, or at such other place as is mutually agreeable to the
Parties, commencing at 10:00 a.m. local time on November 6, 1997 or on such day
as the Parties may mutually determine. The date and time of the Closing are
referred to herein as the "Closing Date." At the Closing:
(a) LLC shall deliver to Contributor the following documents:
(i) a validly issued certificate representing the LLC Units
to be transferred to Contributor duly endorsed for transfer or
accompanied by duly executed stock powers;
(ii) all assignments, consents or other instruments necessary
to effect the Unit Transfer;
(iii) an Assumption and Assignment Agreement in the form of
Exhibit A hereto;
(iv) a copy of the resolutions duly adopted by the board of
directors of LLC's manager and its initial Member authorizing LLC's
execution, delivery and perfor mance of the Transaction Documents to
which LLC is party and the consummation of the Unit Transfer and the
Assumption and all other transactions contemplated by the Transaction
Documents, as in effect as of the Closing, certified by an officer of
LLC;
(v) a certificate of formation of LLC, certified as of a date
not less than five (5) business days prior to the Closing by the
Secretary of State of the State of Delaware, and bylaws of LLC; and
(vi) such other documents relating to the transactions
contemplated by the Transaction Documents as Contributor reasonably
requests.
(b) Contributor shall deliver to LLC the following:
- 4 -
<PAGE> 5
(i) a Bill of Sale in the form of Exhibit B hereto and all
other instruments of conveyance which are necessary or desirable to
effect the Contribution and convey to LLC good title to all of the
Contributed Assets, free and clear of all liens, charges, security
interests and other encumbrances;
(ii) a copy of the resolutions duly authorized by the board
of directors of the General Partner and stockholders of the General
Partner authorizing Contributor's execution, delivery and performance of
the Transaction Documents and the consummation of the Contribution and
the other transactions contemplated in the Transaction Documents, as in
effect as of the Closing, certified by an officer of Contributor; and
(iii) such other documents relating to the transactions
contemplated by the Transaction Documents to be consummated at the
Closing as LLC reasonably requests.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATION AND WARRANTIES OF LLC. As a material
inducement to Contributor to enter into this Agreement, LLC hereby represents
and warrants to Contributor that:
(a) LLC is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware. LLC has
the corporate power and authority and all material licenses, permits and
authorizations necessary to enter into, deliver and carry out its obligations
pursuant to this Agreement and the other Transaction Documents to which LLC is
party, except such licenses, permits or authorizations for which application has
been made.
(b) LLC's execution, delivery and performance of each Transaction
Document has been duly authorized by LLC. Each Transaction Document to which LLC
is a party constitutes a valid and binding obligation of LLC which is
enforceable in accordance with its terms. The execution, delivery and
performance by LLC of the Transaction Documents to which LLC is a party do not
and will not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) result in a violation of,
or (iv) require any authorization, consent, approval, exemption or other action
by or declaration or notice to any Governmental Entity pursuant to LLC's charter
or bylaws, other than authorizations or consents for which application has been
made.
(c) All of the LLC Units have been duly authorized, are validly
issued, and are free and clear of any lien, encumbrance, claim, option or other
right of any nature, except the pledge of the LLC Units in favor of Canadian
Imperial National Bank and the other lenders party to the Second Amended and
Restated Credit Agreement, dated as of the date hereof, with LLC and its
wholly-owned subsidiary.
- 5 -
<PAGE> 6
3.2 REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR. As a material
inducement to LLC to enter into this Agreement, acquire the Contributed Assets
and assume the Assumed Liabilities, Contributor hereby represents and warrants
to LLC that:
(i) Organization and Corporate Power. Contributor is a
limited partnership duly formed, validly existing and in good standing
under the laws of the State of Delaware and is qualified to do business
in each jurisdiction in which its ownership of property or conduct of
business requires it to so qualify.
(ii) Authorization; Binding Effect; No Breach. Contributor's
execution, delivery and performance of this Agreement and each other
Transaction Document have been duly authorized by Contributor. Each
Transaction Document to which Contributor is party constitutes a valid
and binding obligation of Contributor which is enforceable in accordance
with its terms. The execution, delivery and performance of the
Transaction Documents by Contributor do not and will not (i) conflict
with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) result in the creation of any
lien or other encumbrance upon any of the Contributed Assets under, (iv)
give any third party the right to modify, terminate or accelerate any
Assumed Liability or other liability or obligation of Contributor under,
(v) result in a violation of, or (vi) require any material
authorization, consent, approval, exemption or other action by or
declaration or notice to any Governmental Entity or any third party
pursuant to, the certificate of limited partnership or Third Amended and
Restated Agreement of Limited Partnership of Contributor or any material
agreement, instrument or other document, or any Legal Requirement, to
which Contributor or any of the Contributed Assets is subject, other
than such application, consents or approvals the application for which
has been made.
(iii) Contributed Assets. The Contributed Assets constitute
all of the assets and rights which are necessary for the conduct of the
Business as currently conducted. Contributor has good and marketable
title to, or a valid leasehold interest in, all properties and assets
used by it in connection with the Business, other than properties and
assets disposed of in the ordinary course of Contributor's business
consistent with its past practice.
ARTICLE 4
CERTAIN DEFINITIONS
"Governmental Entity" means the United States of America or any
other nation, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government.
"Legal Requirement" means any requirement arising under any
action, law, treaty, rule or regulation, determination or direction of an
arbitrator or Government Entity, including any Environmental and Safety
Requirement.
- 6 -
<PAGE> 7
"Transactional Documents" means this Agreement and all other
agreements, docu ments and instruments executed pursuant hereto or in connection
with the consummation of the Contribution, the Unit Transfer or the Assumption
and the other transactions contemplated hereby or thereby.
ARTICLE 5
OTHER AGREEMENTS
5.1 EMPLOYEES. Contributor shall terminate the employment of all
of its employees employed in connection with the operation of the Business
(collectively, the "Employees"), immediately prior to the closing of the
Contribution. Immediately following consummation of the Contribution, LLC shall
offer employment to each of the Employees on terms and conditions substantially
similar to their employment by Contributor; provided that the terms of this
Section 5.1 shall not entitle any employee to remain in the employment of LLC or
affect the right of LLC to terminate any employee at any time, or to establish,
modify or terminate any employee benefit plan as defined in Section (3) of ERISA
or any benefit under any such plan at any time. Contributor shall provide
payroll, accounting and other transitional services to LLC as may be necessary,
to the extent permitted by applicable law, to accomplish the transfer of the
employment of the Employees to LLC.
5.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided in this Agreement, all covenants and agreements set forth in this
Agreement by or on behalf of the Parties will bind and inure to the benefit of
the respective successors and assigns of the Parties, whether so expressed or
not.
5.3 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF ILLINOIS, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT PROVISION OR RULE (WHETHER OF THE
STATE OF ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF ILLINOIS TO BE APPLIED.
5.4 SEVERABILITY OF PROVISIONS. If any covenant, agreement,
provision or term of this Agreement is held to be invalid for any reason
whatsoever, then such covenant, agreement, provision or term will be deemed
severable from the remaining covenants, agreements, provisions and terms of this
Agreement and will in no way affect the validity or enforceability of any other
provision of this Agreement.
5.5 SCHEDULES AND EXHIBITS. The Schedules and Exhibits constitute
a part of this Agreement and are incorporated into this Agreement for all
purposes.
5.6 COUNTERPARTS. The Parties may execute this Agreement in two
or more counterparts (no one of which need contain the signatures of all
Parties), each of which will be an original and all of which together will
constitute one and the same instrument.
- 7 -
<PAGE> 8
5.7 NO THIRD-PARTY BENEFICIARIES. Except as otherwise expressly
provided in this Agreement, no Person which is not a Party will have any right
or obligation pursuant to this Agreement.
5.8 HEADINGS. The headings used in this Agreement are for the
purpose of reference only and will not affect the meaning or interpretation of
any provision of this Agreement.
5.9 MERGER AND INTEGRATION. Except as otherwise provided in this
Agreement, this Agreement sets forth the entire understanding of the Parties
relating to the subject matter hereof, and all prior understandings, whether
written or oral are superseded by this Agreement.
* * * * *
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, the Parties have executed this Contribution
and Assumption Agreement as of the date first written above.
TRANSWESTERN HOLDINGS, L.P.
By: TransWestern Communications Company,
Inc., its general partner
By: /s/ Laurence H. Bloch
-------------------------------------
Its Vice President
TRANSWESTERN PUBLISHING COMPANY LLC
By: TransWestern Communications Company,
Inc., its manager
By: /s/ Laurence H. Bloch
-------------------------------------
Its Vice President
- 9 -
<PAGE> 1
EXHIBIT 2.2
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION Agreement (this"Agreement") is
executed this 6th day of November, 1997, by TransWestern Holdings, L.P., a
Delaware limited partnership, ("Contributor") and TransWestern Publishing
Company LLC, a Delaware limited liability company ("LLC"), pursuant to and in
accordance with Section 2.1(a) of the Contribution and Assumption Agreement,
dated as of the date hereof (the "Contribution Agreement"), between Contributor
and LLC pursuant to which LLC agrees to assume the Assumed Liabilities (as
defined in the Contribution Agreement) in partial consideration for the
Contributor's contribution of all of its assets, business and properties (the
"Contributed Assets").
Contributor has been engaged in the business of operating
companies that publish yellow page directories and related properties; the
carrying on of any business relating thereto or arising therefrom in the United
States; the entering into of any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or the ownership of any interest
in any entity engaged in any of the foregoing; and exercising such powers as are
necessary in connection with the foregoing or are incidental or ancillary
thereto.
Contributor desires to transfer all of the Contributed Assets to
LLC, and LLC desires to assume all of the Assume Liabilities, effective as of
the date of this Agreement.
LLC hereby acknowledges due receipt of the Bill of Sale executed
of even date herewith and, from and after the date of this Agreement, LLC will
assume and agree to pay, defend, discharge and perform as and when due all of
the Assumed Liabilities as of the execution of this Agreement which Contributor
hereby assigns to LLC.
* * * * *
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have duly caused this
Assignment and Assumption to be executed as of the first date above written.
TRANSWESTERN PUBLISHING COMPANY LLC
By: /s/ Laurence H. Bloch
-------------------------------
Its Vice President
TRANSWESTERN HOLDINGS, L.P.
By: /s/ Laurence H. Bloch
-------------------------------
Its Vice President
<PAGE> 1
EXHIBIT 2.3
BILL OF SALE
This BILL OF SALE is made as of November 6, 1997, by TransWestern
Holdings, L.P., a Delaware limited partnership, ("Contributor"), pursuant to
Section 2.1(b) of the Contribution and Assumption Agreement, dated as of
November 6, 1997, between Contributor and TransWestern Publishing Company LLC, a
Delaware limited liability company ("LLC"), pursuant to which Contributor agrees
to contribute to LLC, and LLC agrees to assume from Contributor, all of
Contributor's assets, businesses and properties (the "Contributed Assets")
subject to the assumption by LLC of the Assumed Liabilities (as defined
therein). For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, as of the date hereof, Contributor hereby
absolutely, unconditionally and irrevocably sells, assigns, conveys and
transfers, free and clear of any and all liens or encumbrances to LLC all of
Contributor's right, title and interest in and to all of the Contributed Assets.
Contributor agrees hereby that it shall execute and deliver or
cause to be executed and delivered from time to time such instruments,
documents, agreements, and assurances and take such other action as LLC may
require to more effectively assign and transfer to and vest in LLC, its
successors and assigns, all right, title and interest in and to the Assets.
Contributor agrees hereby that it shall promptly remit and send to LLC any and
all payments, funds, assets, notices, reports and other documents and
information received by Contributor or its agents as a result of or with respect
to any of the Assets.
THIS BILL OF SALE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
* * * * *
<PAGE> 2
IN WITNESS WHEREOF, Contributor has, intending to be legally
bound, caused this Bill of Sale to be signed, sealed and executed by its
authorized representative on and as of the day and date first above set forth.
TRANSWESTERN HOLDINGS, L.P.
By: /s/ Laurence H. Bloch
--------------------------------
Its Vice President
NOTARY:
SUBSCRIBED AND SWORN to
before me this 6th day of
November, 1997.
/s/ Thaddine Gomez
- ---------------------------------
Notary Public
My Commission Expires:
September 30, 1998
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<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF FORMATION
OF
TRANSWESTERN PUBLISHING COMPANY, LLC
The undersigned, being duly authorized to execute and file this
Certificate of Formation for the purpose of forming a limited liability company
pursuant to the Delaware Limited Liability Company Act, 6 Del. C. Section
Section 18-101, et seq., does hereby certify as follows:
FIRST
The name of the limited liability company is TransWestern Publishing
Company, LLC (the "Company").
SECOND
The Company's registered office in the State of Delaware is located at
1013 Centre Road, in the City of Wilmington, County of New Castle, 19805. The
registered agent of the Company for service of process at such address is
Corporation Service Company.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of
Formation as of the 4th day of November, 1997.
/s/ Thaddine G. Gomez
-------------------------
Thaddine G. Gomez,
an authorized person
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF INCORPORATION
OF
TWP CAPITAL CORP. II
ARTICLE ONE
The name of the corporation is TWP Capital Corp. II
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle,
19805. The name of its registered agent at such address is Corporation Service
Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The total number of shares of stock which the corporation has authority to
issue is one thousand (1,000) shares of Common Stock, par value one cent
($0.01) per share.
ARTICLE FIVE
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Thaddine G. Gomez 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
<PAGE> 2
ARTICLE SIX
The corporation is to have perpetual existence.
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make,
alter or repeal the by-laws of the corporation.
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places
as may be designated from time to time by the board of directors or in the
by-laws of the corporation. Election of directors need not be by written
ballot unless the by-laws of the corporation so provide.
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation in the manner now or
hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
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<PAGE> 3
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 4th day of November, 1997.
/s/ Thaddine G. Gomez
-------------------------------
Thaddine G. Gomez
Sole Incorporator
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<PAGE> 1
EXHIBIT 3.3
BY-LAWS
OF
TWP CAPITAL CORP. II
A Delaware corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
in the State of Delaware shall be located at 1013 Centre Road, Wilmington,
Delaware, County of New Castle 19805. The name of the corporation's registered
agent at such address shall be Corporation Service Company. The registered
office and/or registered agent of the corporation may be changed from time to
time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or
without the State of Delaware, as shall be stated in a notice of meeting or in
a duly executed waiver of notice thereof. Such meetings may be called at any
time by the board of directors or the president and shall be called by the
president upon the written request of holders of shares entitled to cast not
less than a majority of the votes at the meeting, such written request shall
state the purpose or purposes of the meeting and shall be delivered to the
president.
<PAGE> 2
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting
not less than ten (10) nor more than sixty (60) days before the date of the
meeting. All such notices shall be delivered, either personally or by mail, by
or at the direction of the board of directors, the president or the secretary,
and if mailed, such notice shall be deemed to be delivered when deposited in
the United States mail, postage prepaid, addressed to the stockholder at his,
her or its address as the same appears on the records of the corporation.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends for the express purpose of objecting at
the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present,
the holders of a majority of the shares present in person or represented by
proxy at the meeting, and entitled to vote at the meeting, may adjourn the
meeting to another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty (30) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
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<PAGE> 3
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of
Article VI hereof, every stockholder shall at every meeting of the stockholders
be entitled to one (1) vote in person or by proxy for each share of common
stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the corporation by delivery to its registered office
in the state of Delaware, or the corporation's principal place of business, or
an officer or agent of the corporation having custody of the book or books in
which proceedings of meetings of the stockholders are recorded. Delivery made
to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested provided, however, that no consent or
consents delivered by certified or registered mail shall be deemed delivered
until such consent or consents are actually received at the registered office.
All consents properly delivered in
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<PAGE> 4
accordance with this section shall be deemed to be recorded when so delivered.
No written consent shall be effective to take the corporate action referred to
therein unless, within sixty (60) days of the earliest dated consent delivered
to the corporation as required by this section, written consents signed by the
holders of a sufficient number of shares to take such corporate action are so
recorded. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Any action taken pursuant to
such written consent or consents of the stockholders shall have the same force
and effect as if taken by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be one (1). Thereafter, the
number of directors shall be established from time to time by resolution of the
board. The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this
manner at the annual meeting of the stockholders, except as provided in Section
4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of
a majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon
written notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of
stockholders.
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<PAGE> 5
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution
of the board. Special meetings of the board of directors may be called by or
at the request of the president on at least twenty-four (24) hours notice to
each director, either personally, by telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. Each
committee shall keep regular minutes of its meetings and report the same to the
board of directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent
or disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such
board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively
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<PAGE> 6
presumed to have waived notice of such meeting except when such member attends
for the express purpose of objecting at the beginning of the meeting to
the transaction of any business because the meeting is not lawfully called or
convened. Such member shall be conclusively presumed to have assented to any
action taken unless his or her dissent shall be entered in the minutes of the
meeting or unless his or her written dissent to such action shall be filed with
the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by
the board of directors and shall consist of a president, one or more
vice-presidents, secretary, a treasurer, and such other officers and assistant
officers as may be deemed necessary or desirable by the board of directors.
Any number of offices may be held by the same person. In its discretion, the
board of directors may choose not to fill any office for any period as it may
deem advisable, except that the offices of president and secretary shall be
filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall be elected annually by the board of directors at
the first meeting of the board of directors held after each annual meeting of
stockholders or as soon thereafter as conveniently may be. The president shall
appoint other officers to serve for such terms as he or she deems desirable.
Vacancies may be filled or new offices created and filled at any meeting of the
board of directors. Each officer shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by
the board of directors for the unexpired portion of the term by the board of
directors then in office.
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<PAGE> 7
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The President. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present; subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation. The president shall have such other powers and perform such
other duties as may be prescribed by the board of directors or as may be
provided in these by-laws.
Section 7. Vice-presidents. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors or by the president, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and
have such other powers as the board of directors, the president or these
by-laws may, from time to time, prescribe.
Section 8. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these
by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors, the president, or
secretary may, from time to time, prescribe.
Section 9. The Treasurer and Assistant Treasurer. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name
and to the credit of the corporation as may be ordered by the board of
directors; shall cause the funds of the corporation to be disbursed
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<PAGE> 8
when such disbursements have been duly authorized, taking proper vouchers for
such disbursements; and shall render to the president and the board of
directors, at its regular meeting or when the board of directors so requires,
an account of the corporation; shall have such powers and perform such duties
as the board of directors, the president or these by-laws may, from time to
time, prescribe. If required by the board of directors, the treasurer shall
give the corporation a bond (which shall be rendered every six (6) years) in
such sums and with such surety or sureties as shall be satisfactory to the
board of directors for the faithful performance of the duties of the office of
treasurer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in the possession or under
the control of the treasurer belonging to the corporation. The assistant
treasurer, or if there shall be more than one, the assistant treasurers in the
order determined by the board of directors, shall in the absence or disability
of the treasurer, perform the duties and exercise the powers of the treasurer.
The assistant treasurers shall perform such other duties and have such other
powers as the board of directors, the president or treasurer may, from time to
time, prescribe.
Section 10. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such
duties as may from time to time be prescribed by resolution of the board of
directors.
Section 11. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the corporation and of any person
hereby authorized to act in such officer's place during such officer's absence
or disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation to the fullest extent which it is empowered to
do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment) against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in
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connection with such proceeding) and such indemnification shall inure to the
benefit of his heirs, executors and administrators; provided, however, that,
except as provided in Section 2 hereof, the corporation shall indemnify any
such person seeking indemnification in connection with a proceeding initiated
by such person only if such proceeding was authorized by the board of directors
of the corporation. The right to indemnification conferred in this Article V
shall be a contract right and, subject to Sections 2 and 5 hereof, shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition. The
corporation may, by action of its board of directors, provide indemnification
to employees and agents of the corporation with the same scope and effect as
the foregoing indemnification of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall
be made promptly, and in any event within thirty (30) days, upon the written
request of the director or officer. If a determination by the corporation that
the director or officer is entitled to indemnification pursuant to this Article
V is required, and the corporation fails to respond within sixty (60) days to a
written request for indemnity, the corporation shall be deemed to have approved
the request. If the corporation denies a written request for indemnification
or advancing of expenses, in whole or in part, or if payment in full pursuant
to such request is not made within thirty (30) days, the right to
indemnification or advances as granted by this Article V shall be enforceable
by the director or officer in any court of competent jurisdiction. Such
person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the corporation) that
the claimant has not met the standards of conduct which make it permissible
under the General Corporation Law of the State of Delaware for the corporation
to indemnify the claimant for the amount claimed, but the burden of such
defense shall be on the corporation. Neither the failure of the corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the General
Corporation Law of the State of Delaware, nor an actual determination by the
corporation (including its board of directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
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Section 4. Insurance. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, whether or not the corporation would have the
power to indemnify such person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless otherwise
determined by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the
corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and
the relevant provisions of the General Corporation Law of the State of Delaware
or other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was
a director, officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
V with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued.
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ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president or a vice-president and the secretary or an assistant secretary
of the corporation, certifying the number of shares of a specific class or
series owned by such holder in the corporation. If such a certificate is
countersigned (1) by a transfer agent or an assistant transfer agent other than
the corporation or its employee or (2) by a registrar, other than the
corporation or its employee, the signature of any such president,
vice-president, secretary, or assistant secretary may be facsimiles. In case
any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall cease
to be such officer or officers of the corporation whether because of death,
resignation or otherwise before such certificate or certificates have been
delivered by the corporation, such certificate or certificates may nevertheless
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the corporation. Shares of stock of the corporation
shall only be transferred on the books of the corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters as
the corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, cancel the old
certificate or certificates, and record the transaction on its books. The
board of directors may appoint a bank or trust company organized under the laws
of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be
made against the corporation on account of the loss, theft or destruction of
any such certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting
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of stockholders or any adjournment thereof, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be the close of business on the
next day preceding the day on which notice is given, or if notice is waived,
at the close of business on the day next preceding the day on which the meeting
is held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In
order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the board of directors may
fix a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required
by statute, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by statute, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting shall be at the
close of business on the day on which the board of directors adopts the
resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purposes of any other lawful action, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty (60) days prior to such action. If no record
date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person
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entitled to receive dividends, to vote, to receive notifications, and otherwise
to exercise all the rights and powers of an owner. The corporation shall not
be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any
installment or call when such payment is due, the corporation may proceed to
collect the amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a
duly authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer
or officers, or any agent or agents, of the corporation to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the
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board of directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in this section contained shall be
deemed to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
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ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
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EXHIBIT 3.4
LIMITED LIABILITY COMPANY
AGREEMENT OF
TRANSWESTERN PUBLISHING COMPANY LLC
LIMITED LIABILITY COMPANY AGREEMENT of TRANSWESTERN PUBLISHING COMPANY
LLC, dated as of November 6, 1997 (this "Agreement"), is adopted, executed and
agreed to, for good and valuable consideration, by the sole Initial Member.
Capitalized terms used and not otherwise defined herein have the meanings set
forth in Section 1.6.
ARTICLE I
GENERAL PROVISIONS; CAPITAL CONTRIBUTIONS; DEFINITIONS
Section 1.1 Formation. The formation of TransWestern Publishing
Company LLC (the "LLC") pursuant to and in accordance with the Delaware Limited
Liability Company Act, 6 Del. C. Section 18-101, et seq., as amended from time
to time (the "Act"), occurred on November 4, 1997. An authorized person within
the meaning of the Act executed, delivered and filed the certificate of
formation of the LLC on such date (the "Certificate"). Upon the Initial
Member's (i) execution of this Agreement or a counterpart hereof and (ii) the
making of the capital contribution required by Section 1.5, such Initial Member
shall be admitted to the LLC as its sole Member.
Section 1.2 Name. The name of the LLC will be "TransWestern Publishing
Company LLC" or such other name or names as the Manager may from time to time
designate.
Section 1.3 Purpose. The LLC's purpose shall be to carry on any business,
purpose or activity which may be lawfully carried on by a limited liability
company organized pursuant to the Act, including but not limited to: the
operation of companies that publish yellow page directories and related
properties; the carrying on of any business relating thereto or arising
therefrom in the United States; the entering into of any partnership, joint
venture or other similar arrangement to engage in any of the foregoing or the
ownership of any interest in any entity engaged in any of the foregoing; and
exercising such powers as are necessary in connection with the foregoing or are
incidental or ancillary thereto.
Section 1.4 Registered Office; Registered Agent; Place of Business. The
registered office of the LLC required by the Act to be maintained in the State
of Delaware shall be the office of the initial registered agent named in the
Certificate or such other office (which need not be a place of business of the
LLC) as the Manager may designate from time to time in the manner provided by
law. The registered agent of the LLC in the State of Delaware shall be the
initial registered agent named in the Certificate or such other person or
persons as the Manager may designate from time to time in the manner provided
by law. The principal office of the LLC shall be at 8344 Clairemont Mesa
Boulevard in San Diego, California or at such other place or places as the
Manager may designate from time to time.
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Section 1.5 Capital Contributions; Liability.
(a) The Initial Member shall, promptly following the execution of
this Agreement, contribute to the LLC all of its businesses, assets and
properties, including without limitation the assets specified on Schedule
I attached hereto (the "Initial Contribution"). The Manager shall amend
Schedule I from time to time to reflect any future capital contribution
made by any Member. Persons hereafter admitted as Members of the LLC
shall make such contributions of cash (or promissory obligations),
property or services to the LLC as shall be determined by the Manager and
the Member making the contribution in their sole discretion at the time
of each such admission.
(b) No Member shall have any responsibility to restore any
negative balance in his, her or its Capital Account or return
distributions made by the LLC except as required by the Act or other
applicable law. Except as required by the Act, the debts, obligations
and liabilities of the LLC, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities
of the LLC and no Member or officer of the LLC shall be obligated
personally for any such debt, obligation or liability of the LLC solely
by reason of being a Member or acting as an officer of the LLC. The
failure of the LLC to observe any formalities or requirements relating to
the exercise of its powers or management of its business or affairs
under this Agreement or the Act shall not be grounds for imposing
personal liability on the Members for liabilities of the LLC.
(c) No interest shall be paid by the LLC on capital
contributions or on balances in Capital Accounts.
(d) A Member shall not be entitled to withdraw any part of his,
her or its Capital Account or to receive any distributions from the LLC
except as provided in Articles III and V; nor shall a Member be entitled
to make any capital contribution to the LLC other than as expressly
provided herein. Any Member may, with the approval of the Manager, make
loans to the LLC, and any loan by a Member to the LLC shall not be
considered to be a capital contribution for any purpose and shall not
result in an increase in the amount of the Capital Account of such Member.
Section 1.6 Definitions. For purposes of this Agreement:
"Act" has the meaning set forth in Section 1.1.
"Book Value" means, with respect to any LLC property, the LLC's adjusted
basis for federal income tax purposes, except that the initial Book Value of
any property contributed to the LLC shall be the value of such property on the
date of such contribution, as agreed by the Manager and the Member contributing
the property, and the Book Value of any LLC property shall be adjusted pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) (in connection with a
distribution of such property) or (f) (in connection with a revaluation of
Capital Accounts).
"Capital Account" has the meaning set forth in Section 2.1.
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"Certificate" has the meaning set forth in Section 1.1.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
"Event of Withdrawal" means the death, expulsion, bankruptcy, dissolution
or withdrawal of a Member.
"Initial Member" means TransWestern Holdings, L.P., a Delaware limited
partnership.
"Losses" for any period means all items of LLC loss, deduction and expense
for such period determined according to Section 2.2.
"Majority in Interest" means the Member(s) holding a majority of the
Percentage Interests of all Members.
"Manager" means TransWestern Communications Company, Inc., a Delaware
corporation, or its successor as provided for in Section 4.1(d) below.
"Member" means the Initial Member and any of the parties admitted as a
member after the date of this Agreement in accordance with the terms hereof, in
each case for so long as such person continues to be a member hereunder.
"Percentage Interest" means, in respect of each Member, such Member's
interest in the income, gains, losses, deductions and expenses of the LLC as
set forth on Schedule I.
"Profits" for any period means all items of LLC income and gain for such
period determined according to Section 2.2.
"Tax Matters Partner" has the meaning set forth in Section 8.3(d).
"Transfer" has the meaning set forth in Section 4.3(a).
"Treasury Regulation" means the United States Treasury Regulations
promulgated under the Code, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
Section 1.7 Term. The LLC shall continue until dissolved and terminated in
accordance with Article V of this Agreement.
Section 1.8 No State-Law Partnership. The Member(s) intend that the LLC
not be a partnership (including, without limitation, a limited partnership) or
joint venture, and that no Member be a partner or joint venturer of any other
Member, for any purposes other than federal and,
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if applicable, state income tax purposes, and neither this Agreement nor any
other document entered into by the LLC or any Member shall be construed to
suggest otherwise. The Member(s) intend that (i) for so long as the LLC
has only one Member, the LLC shall be disregarded as a separate entity for
federal and, if applicable, state income tax purposes and (ii) if and when the
LLC has more than one Member, the LLC shall be treated as a partnership for
federal and, if applicable, state income tax purposes, and that each Member
and the LLC shall file all tax returns and shall otherwise take all tax and
financial reporting positions in a manner consistent with such treatment.
ARTICLE II
CAPITAL ACCOUNTS
Section 2.1 Capital Accounts. A capital account will be established for
each Member on the books of the LLC (each, a "Capital Account") and will be
adjusted as follows:
(a) Such Member's contributions to the capital of the LLC will be
credited to his, her or its Capital Account when received by the LLC.
(b) At the end of each fiscal year of the LLC and upon dissolution
and winding up of the LLC pursuant to Article V, Profits for such period
allocated to such Member pursuant to Section 3.2 shall be credited and
Losses for such period allocated to such Member pursuant to Section 3.2
shall be debited, as the case may be, to such Member's Capital Account.
(c) Any amounts distributed to such Member will be debited against
his, her or its Capital Account.
(d) Such Member's Capital Account will otherwise be adjusted in
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv).
Notwithstanding the foregoing, for so long as the Initial Member remains the
sole Member of the LLC, the LLC shall not maintain a Capital Account for such
Member.
Section 2.2 Computation of Amounts. For purposes of computing the amount
of any item of income, gain, loss, deduction or expense to be reflected in
Capital Accounts, the determination, recognition and classification of each
such item shall be the same as its determination, recognition and
classification for federal income tax purposes; provided that:
(a) any income that is exempt from Federal income tax shall be added
to such taxable income or losses and any expenditures of the LLC described
in Section 705(a)(2)(B) of the Code or treated as Code Section
705(a)(2)(B) expenditures pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(i), shall be subtracted from such taxable income or
losses;
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(b) if the Book Value of any LLC property is adjusted
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) (in
connection with a distribution of such property) or (f) (in connection
with a revaluation of Capital Accounts), the amount of such adjustment
shall be taken into account as gain or loss from the disposition of such
property; and
(c) if property that is reflected on the books of the LLC has
a Book Value that differs from the adjusted tax basis of such property,
depreciation, amortization and gain or loss with respect to such property
shall be determined by reference to such Book Value.
Section 2.3 Distribution in Kind. If property is to be distributed in
kind to the Members pursuant to this Agreement, (i) the value of such property
shall first be adjusted pursuant to Section 2.2(b) to its value (as determined
pursuant to Article VI as of the date of such distribution), (ii) the Capital
Accounts of the Member(s) shall be adjusted immediately prior to the
distribution as if such property were sold at its value (as so determined) and
(iii) the value of such property (as so determined) received by each Member
shall be debited against his, her or its respective Capital Account at the time
of distribution.
ARTICLE III
DISTRIBUTIONS AND ALLOCATIONS
Section 3.1 Distributions. Distributions of cash or other assets of
the LLC shall be made at such times and in such amounts as the Manager may
determine. Unless the Manager determines otherwise, distributions shall be made
to Members pro rata based on the Percentage Interests held by each Member.
Notwithstanding any provision to the contrary contained in this Agreement, the
LLC shall not make a distribution to any Member on account of his, her or its
interest in the LLC if such distribution would violate Section 18-607 of the
Act or other applicable law.
Section 3.2 Allocation of Profits and Losses. Except as may be
required by the Code, Profits and Losses shall be allocated among the Member(s)
in proportion to the Percentage Interests held by each Member.
ARTICLE IV
MANAGEMENT AND MEMBER RIGHTS
Section 4.1 Management Authority.
(a) The Manager shall have the sole right to manage the business of
the LLC and shall have all of the powers and rights necessary, appropriate
or advisable to effectuate and carry out the purposes and business of the
LLC, including the authority to act for and bind
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the LLC, and no Member, unless such Member is also the Manager, shall
have any authority to act for or bind the LLC but shall have only the
right to vote on or approve the actions herein specified to be voted on
or approved by the Members or as otherwise specified in the Act.
(b) The Manager may appoint such officers, to such terms and to
perform such functions as the Manager shall determine in its sole
discretion. The Manager may appoint, employ or otherwise contract with
such other persons or entities for the transaction of the business of the
LLC or the performance of services for or on behalf of the LLC as it
shall determine in its sole discretion. The Manager may delegate to any
such officer, person or entity such authority to act on behalf of the LLC
as the Manager may from time to time deem appropriate in its sole
discretion.
(c) When the taking of such action has been authorized by the
Manager, any officer of the LLC or any other person or entity
specifically authorized by the Manager, may execute any contract or other
agreement or document on behalf of the LLC and may execute and file on
behalf of the LLC with the Secretary of State of the State of Delaware
any certificates of amendment to the LLC's Certificate, one or more
restated certificates of formation and certificates of merger or
consolidation and, upon the dissolution and completion of winding up of
the LLC, at any time when there are no Members, or as otherwise provided
in the Act, a certificate of cancellation canceling the LLC's
Certificate.
(d) The Manager may be removed, with or without cause, and without
notice, by the affirmative vote of a Majority in Interest of the
Member(s). Upon such removal, a Majority in Interest of the Member(s)
shall appoint a successor Manager; provided that such successor Manager
shall not be a Member. The Manager may resign at any time upon ten days'
prior notice to the Member(s). Upon such resignation, a Majority in
Interest of the Members shall appoint a successor Manager; provided that
such successor Manager shall not be a Member.
(e) All decisions regarding the management and affairs of the LLC
shall be made by the Manager.
(f) At any given time, there shall only be one Manager.
Section 4.2 Indemnification. Except as limited by law and subject to
the provisions of this Section 4.2, each person and entity shall be entitled to
be indemnified and held harmless on an as incurred basis by the LLC (but only
after first making a claim for indemnification available from any other source
and only to the extent indemnification is not provided by that source) to the
fullest extent permitted under the Act (including indemnification for gross
negligence and breach of fiduciary duty to the extent so authorized) as
amended from time to time (but, in the case of any such amendment, only to the
extent that such amendment permits the LLC to provide broader indemnification
rights than such law permitted the LLC to provide prior to such amendment)
against all losses, liabilities and expenses, including attorneys' fees and
expenses, arising from claims, actions and proceedings in which such person or
entity may be involved, as a
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party or otherwise, by reason of his, her or it being or having been the
Manager, a Member or an officer of the LLC, or by reason of his, her or it
serving at the request of the LLC as a director, officer, manager, member,
partner, employee or agent of another limited liability company or of a
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan whether or not such person or
entity continues to be such or serve in such capacity at the time any such
loss, liability or expense is paid or incurred. The rights of indemnification
provided in this Section 4.2 will be in addition to any rights to which such
person or entity may otherwise be entitled by contract or as a matter of law
and shall extend to his, her or its successors and assigns. In particular, and
without limitation of the foregoing, such person or entity shall be entitled to
indemnification by the LLC against expenses (as incurred), including attorneys'
fees and expenses, incurred by such person or entity upon the delivery by such
person or entity to the LLC of a written undertaking (reasonably acceptable to
the Manager) to repay all amounts so advanced if it shall ultimately be
determined that such person or entity is not entitled to be indemnified under
this Section 4.2. The LLC may, to the extent authorized from time to time by
the Manager, grant rights to indemnification and to advancement of expenses to
any employee or agent of the LLC to the fullest extent of the provisions of
this Section 4.2 with respect to the indemnification and advancement of
expenses of the Manager, Members and officers of the LLC.
Section 4.3 Transfer of LLC Interest.
(a) No Member shall sell, assign, transfer or otherwise dispose of,
whether voluntarily or involuntarily or by operation of law (a
"Transfer"), all or any portion of his, her or its interest in the LLC
without the prior written consent of the Manager, which consent may be
given or withheld in its sole discretion. No Member shall pledge or
otherwise encumber all or any portion of his, her or its interest in the
LLC, without the prior written consent of the Manager, which consent may
be given or withheld in its sole and absolute discretion.
(b) Notwithstanding any other provision of this Agreement, any
Transfer by the Members in contravention of any of the provisions of this
Section 4.3 shall be void and ineffective, and shall not bind, or be
recognized by, the LLC.
(c) If and to the extent any Transfer of an interest in the LLC is
made pursuant to and in accordance with the terms of this Agreement, this
Agreement (including the Schedules hereto) shall be amended by the
Manager to reflect the Transfer of the LLC interest to the transferee, to
admit the transferee as a Member and to reflect the elimination of the
transferring Member (or the reduction of such transferring Member's
interest in the LLC) and (if and to the extent then required by the Act)
a certificate of amendment to the Certificate reflecting such admission
and elimination (or reduction) shall be filed in accordance with the Act.
The effectiveness of the Transfer of an interest in the LLC permitted
hereunder and the admission of any substitute Member pursuant to this
Section 4.3 shall be deemed effective upon the later to occur of the time
of Transfer of an interest in the LLC to such transferee or the first
date that the Manager receives evidence of such Transfer, including the
terms thereof. If the transferring Member has transferred all or any of
its interest in the LLC pursuant to this Section 4.3, then, upon the
later to occur of the time of
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such Transfer or the first date that the Manager receives evidence of
such Transfer, including the terms thereof, the transferring Member shall
cease to be a Member with respect to such interest.
(d) Any person or entity who acquires in any manner whatsoever any
interest in the LLC, irrespective of whether such person or entity has
accepted and adopted in writing the terms and provisions of this
Agreement, shall be deemed by the acceptance of the benefits of the
acquisition thereof to have (i) made all of the capital contributions,
(ii) received all of the distributions, and (iii) agreed to be subject to
and bound by all of the terms and conditions of this Agreement, that any
predecessor in such interest in the LLC made, received and was subject to
or bound.
Section 4.4 Member Rights; Meetings.
(a) No Member, unless such Member is also the Manager, shall have any
right, power or duty, including the right to approve or vote on any matter,
except as expressly required by the Act or other applicable law or as expressly
provided for hereunder.
(b) Unless a greater vote is required by the Act or as expressly
provided for hereunder, the affirmative vote of a Majority in Interest of the
Member(s) entitled to vote shall be required to approve any proposed action
required to be voted on by the Member(s).
(c) Meetings of the Member(s) for the transaction of such business as
may properly come before such Member(s) shall be held at such place, on such
date and at such time as the Manager shall determine. Special meetings of the
Member(s) for any proper purpose or purposes may be called at any time by the
Manager or the Member(s) holding a Majority in Interest. The LLC shall deliver
oral or written notice (written notice may be delivered by mail) stating the
date, time, place and purposes of any meeting to each Member entitled to vote
at the meeting. Such notice shall be given not less than five (5) and no more
than thirty (30) days before the date of the meeting.
(d) Any action required or permitted to be taken at an annual or
special meeting of the Member(s) may be taken without a meeting, without prior
notice, and without a vote; provided that written consents, setting forth all
proposed actions to be taken at such meeting, are signed by the Member(s)
holding at least the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all Member(s) entitled to
vote on such action were present and voted. Every written consent shall bear
the date and signature of each Member who signs such consent. Prompt notice of
the taking of action without a meeting by less than unanimous written consent
shall be given to all Members who have not consented in writing to such action.
(e) Members may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this Agreement shall constitute presence
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in person at such meeting. All resolutions adopted at any such meeting shall
be reduced to writing and included in the minutes of such meeting.
(f) Any meeting of Members may be adjourned from time to time, to
reconvene at the same or some other place, and notice need not be given of any
such adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting the LLC
may transact any business which might have been transacted at the original
meeting.
(g) Each Member shall be entitled to one vote for each outstanding
Percentage Interest held by such Member.
(h) Whenever notice is required to be given by law or under any provision
of this Agreement, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Members need be specified in any written
notice or waiver of notice of meeting.
(i) In order that the LLC may determine the Members entitled to notice of
or to vote at any meeting of Members or any adjournment thereof or to consent
to action in writing without a meeting, the Members or any officer of the LLC
may fix a record date, which record date shall not be more than 60 nor less
than 10 days before the date of such meeting or consent, as applicable. If no
record date is set, the record date for determining Members entitled to notice
of or to vote at a meeting shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. If no record date is set, the record date for determining Members
entitled to consent to action in writing without a meeting shall be the first
date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the LLC. A determination of Members of
record entitled to notice of or to vote at a meeting shall apply to any
adjournment of the meeting; provided that a new record date for the adjourned
meeting may be established.
Section 4.5 Additional Members. The Manager shall have the sole right to
admit additional Members upon such terms and conditions and at such time or
times as the Manager shall in its sole discretion determine. In connection
with any such admission, the Manager shall amend Schedule I to reflect the
name, address and capital contribution of the additional Member and the new
Percentage Interests of all Members and such additional Member shall execute a
supplement or amendment to this Agreement or a restatement of this Agreement
whereby such additional Member agrees to be bound by the provisions of this
Agreement.
Section 4.6 Outside Businesses. Any Member may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar
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or dissimilar to the business of the LLC, and the LLC and the Members shall
have no rights by virtue of this Agreement in and to such independent ventures
or the income or gains derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the LLC, shall not be deemed wrongful
or improper. No Member shall be obligated to present any particular investment
opportunity to the LLC even if such opportunity is of a character that, if
presented to the LLC, could be taken by the LLC, and any Member shall have the
right to take for his, her or its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment
opportunity.
ARTICLE V
DURATION
Section 5.1 Duration. Subject to the provisions of Section 5.2 of this
Agreement, the LLC shall be dissolved and its affairs wound up and terminated
upon the first to occur of the following:
(a) The determination of the Manager to dissolve, wind up and terminate;
(b) The occurrence of an Event of Withdrawal with respect to the Initial
Member; or
(c) The entry of a decree of judicial dissolution under Section 18-802
of the Act.
Except as otherwise set forth in this Article V, the Member(s) intend for the
LLC to have perpetual existence.
Section 5.2 Continuation of the LLC. Notwithstanding the provisions of
Section 5.1(b) hereof, the occurrence of an Event of Withdrawal with respect to
the Initial Member shall not dissolve the LLC if within ninety (90) days after
the occurrence of such Event of Withdrawal, the business of the LLC is
continued by the agreement of remaining Member(s) holding not less than a
majority in interest (as defined in Revenue Procedure 94-46 or any successor
thereto) of the remaining Member(s).
Section 5.3 Winding Up.
Upon dissolution of the LLC, the LLC shall be liquidated in an orderly
manner. The Manager shall be the liquidator pursuant to this Agreement and
shall proceed diligently to wind up the affairs of the LLC and make final
distributions as provided herein and in the Act. The costs of liquidation
shall be borne as a LLC expense. The steps to be accomplished by the
liquidator are as follows:
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<PAGE> 11
(a) First, the liquidator shall satisfy all of the LLC's debts,
liabilities and obligations to creditors, including Members (whether by
payment or the reasonable provision for payment thereof), other than
liabilities and obligations for distributions to Members pursuant to
Section 18-601 or 18-604 of the Act; and
(b) Second, all remaining assets shall be distributed in the
following manner: (i) if the Initial Member remains the sole Member of
the LLC, to such Initial Member and (ii) otherwise to the Members in
accordance with their respective Capital Account balances relative to the
sum of all Capital Account balances (after taking into account any
adjustments to the Book Values of assets distributed in kind pursuant to
this Agreement).
Section 5.4 Termination. The LLC shall terminate when all of the assets
of the LLC, after payment of or due provision for all debts, liabilities and
obligations of the LLC, shall have been distributed to the Members in the
manner provided for in this Article V, and the Certificate of the LLC shall
have been canceled in the manner required by the Act.
ARTICLE VI
VALUATION
Section 6.1 Valuation. For purposes of this Agreement, the value of any
property contributed by or distributed to any Member shall be valued as
determined by the Member(s) in accordance with the principles set forth in
Article II hereof.
ARTICLE VII
CERTIFICATION OF MEMBERSHIP INTERESTS
Section 7.1 Membership Interests. Every holder of a membership interest in
the LLC shall be entitled to a certificate, signed by, or in the name of the
LLC by, the Manager, or any officer of the LLC provided with such authority
pursuant to Section 4.1(b) above, certifying such Member's Percentage Interest
in the LLC. All certificates for membership interests shall be consecutively
numbered or otherwise identified. The name of the person or entity to whom the
membership interests thereby are issued, with the Percentage Interest and date
of issue, shall be entered on the books of the LLC. Membership interests of
the LLC shall only be transferred on the books of the LLC by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the LLC of the certificate for such membership interests endorsed
by the appropriate person or persons, with such evidence of the authenticity of
such endorsement, transfer, authorization, and other matters as the LLC may
require. In that event, it shall be the duty of the LLC to issue a new
certificate to the person or entity entitled thereto, cancel the old
certificate, and record the transaction on its books. The Manager may appoint
a bank or trust company organized
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under the laws of the United States or any state thereof to act as its transfer
agent or registrar, or both in connection with the transfer of any membership
interests of the LLC.
Section 7.2 Lost Certificates. The Manager may direct a new certificate
or certificates to be issued in place of any certificate or certificates
previously issued by the LLC alleged to have been lost, stolen, or destroyed,
upon the making of an affidavit of that fact by the person or entity claiming
the certificate to be lost, stolen, or destroyed. When authorizing such
issuance of a new certificate or certificates, the Manager may, in its sole
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his,
her or its legal representative, to give the LLC a bond sufficient to indemnify
the LLC against any claim that may be made against the LLC on account of the
loss, theft or destruction of any such certificate or the issuance of such new
certificate.
ARTICLE VIII
BOOKS OF ACCOUNT
Section 8.1 Books. The Manager will maintain on behalf of the LLC
complete and accurate books of account of the LLC's affairs at the LLC's
principal office, which books will be open to inspection by any Member (or his
authorized representative) at any time during ordinary business hours and shall
be maintained in accordance with the Act.
Section 8.2 Fiscal Year. The fiscal year of the LLC shall end on
December 31 of each year or such other annual accounting period as may be
established by the Manager.
Section 8.3 Tax Allocation and Reports.
(a) The income, gains, losses, deductions and credits of the LLC
will be allocated, for federal, state and local income tax purposes,
among the Members in accordance with the allocation of such income,
gains, losses, deductions and credits among the Members for computing
their Capital Accounts, except as otherwise provided in the Code or other
applicable law.
(b) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss, deduction and expense with
respect to any property contributed to the capital of the LLC shall,
solely for tax purposes, be allocated among the Members so as to take
account of any variation between the adjusted basis of such property to
the LLC for federal income tax purposes and its fair market value at the
time of contribution.
(c) Within 75 days after the end of each fiscal year, the Tax Matters
Partner (as defined below) shall cause the LLC to furnish each Member
with a copy of the LLC's tax return and Schedule K-1 for such fiscal
year.
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(d) The LLC hereby designates the Initial Member to act as the
"Tax Matters Partner" (as defined in Section 6231(a)(7) of the Code) in
accordance with Sections 6221 through 6233 of the Code.
(e) Notwithstanding the other provisions of this Section 8.3, for
so long as the Initial Member remains the sole Member of the LLC, all
taxable items of income, gain, loss, deduction or credit of the LLC shall
be calculated and allocated to such Member as if the LLC were a division
of such Member.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendments. This Agreement may be amended or modified and
any provision hereof may be waived only by the Manager; provided that any
amendment or modification reducing disproportionately a Member's Percentage
Interest or other interest in the Profits, Losses or distributions or
increasing such person's or entity's capital contribution shall be effective
only with that person's or entity's consent.
Section 9.2 Successors. Except as otherwise provided herein, this
Agreement will inure to the benefit of and be binding upon the Members and their
respective legal representatives, heirs, successors and permitted assigns.
Section 9.3 Governing Law; Severability. The Agreement will be
construed in accordance with the laws of the State of Delaware, and, to the
maximum extent possible, in such manner as to comply with all of the terms and
conditions of the Act. If it is determined by a court of competent
jurisdiction that any provision of this Agreement is invalid under applicable
law, such provision will be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of this Agreement.
Section 9.4 Notices. All notices, demands and other communications to
be given and delivered under or by reason of provisions under this Agreement
shall be in writing and shall be deemed to have been given when personally
delivered, mailed by first class mail (postage prepaid and return receipt
requested), sent by telecopy or sent by reputable overnight courier service
(charges prepaid) to the addresses or telecopy numbers set forth in Schedule I
or to such other addresses or telecopy numbers as have been supplied in writing
to the LLC.
Section 9.5 Complete Agreement; Headings, Counterparts. This Agreement
terminates and supersedes all other agreements concerning the subject matter
hereof previously entered into among any of the parties. Descriptive headings
are for convenience only and will not control or affect the meaning or
construction of any provision of this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural
shall include the singular and the plural, and pronouns stated in either the
masculine, feminine or the neuter gender shall include the masculine, the
feminine and the neuter. This Agreement may be executed
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in any number of counterparts, any one of which need not contain the
signatures of more than one party, but all such counterparts together will
constitute one agreement.
Section 9.6 Waivers. Each Member waives, until termination of the LLC,
any and all rights that he, she or it may have to maintain an action for
partition of the LLC's property and all rights he, she or it may have under
Section 18-604 of the Act with respect to being paid the fair value of such
Member's membership interest in the LLC upon resignation from the LLC.
Section 9.7 Fiduciary Duties. To the extent that, at law or in equity,
any Member or officer of the LLC has duties (including fiduciary duties) and
liabilities relating thereto to the LLC or to another Member or officer of the
LLC, (a) such person or entity acting under this Agreement shall not be liable
to the LLC or to any other person or entity as a consequence of such person's
or entity's good faith reliance on the provisions of this Agreement and (b)
such person's or entity's duties and liabilities are restricted by the
provisions of this Agreement to the extent that such provisions restrict the
duties and liabilities of such persons or entities otherwise existing at law or
in equity.
Section 9.8 Liabilities. No Member shall be liable for any debts,
obligations and liabilities, whether arising in contract, tort or otherwise,
of any other Member or officer of the LLC, and no officer of the LLC shall be
liable for any debts, obligations and liabilities, whether arising in contract,
tort or otherwise, of any Member or other officer of the LLC.
* * * * *
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IN WITNESS WHEREOF, the party hereto has caused this Agreement to be
signed as of the date first above written.
TRANSWESTERN HOLDINGS L.P.,
its sole Initial Member
By: TransWestern Communications Company, Inc.,
its general partner
By: /s/ Laurence H. Bloch
----------------------------------------
Its: Vice President
----------------------------------------
<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
TRANSWESTERN COMMUNICATIONS COMPANY, INC.
The undersigned incorporator, for the purpose of incorporating or
organizing a corporation under the General Corporation Law of the State of
Delaware, certifies:
FIRST: The name of the corporation is
TRANSWESTERN COMMUNICATIONS COMPANY, INC.
SECOND: The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is Three Thousand (3,000) shares of Common Stock,
and the par value of each such share is One Dollar ($1.00).
FIFTH: The name and mailing address of the incorporator is Renee
E. Becnel, Morgan, Lewis & Bockius, 101 Park Avenue, New York, New York 10178.
SIXTH: Elections of directors need not be by ballot unless the
By- Laws of the Corporation shall so provide.
SEVENTH: The Board of Directors of the Corporation may make
By-Laws and from time to time may alter, amend or repeal By-Laws.
EIGHTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
NINTH: Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them
<PAGE> 2
and/or between this Corporation and its stockholders or any class of them, any
court of equitable jurisdiction within the State of Delaware may, on the
application in a summary way of this Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers appointed
for this Corporation under the provisions of section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions of
section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
IN WITNESS WHEREOF, I have signed this Certificate this 29th day
of April, 1993.
/s/ RENEE E. BECNEL
---------------------------------------
Renee E. Becnel
<PAGE> 3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
BEFORE PAYMENT OF CAPITAL
OF
TRANSWESTERN COMMUNICATIONS COMPANY, INC.
The undersigned, being the sole Director of TransWestern
Communications Company, Inc., a general corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,
certifies:
FIRST: Article FOURTH of the Certificate of Incorporation of the
Corporation is hereby amended to read as follows:
"FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is Thirty
Thousand (30,000) shares of Common Stock, and the par
value of each such share is One Dollar ($1.00)."
SECOND: The Corporation has not received any payment for any of
its stock.
THIRD: The amendment has been duly adopted in accordance with the
provisions of Section 241 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, I have signed this certificate this 12th of
May, 1993.
/s/ LAURENCE H. BLOCH
---------------------------------
Laurence H. Bloch
<PAGE> 1
EXHIBIT 3.6
AMENDED AND RESTATED BY-LAWS
OF
TRANSWESTERN COMMUNICATIONS COMPANY, INC.
A DELAWARE CORPORATION
(ADOPTED ON OCTOBER 1, 1997)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
in the State of Delaware shall be located at 1209 Orange Street, Wilmington,
Delaware, County of New Castle 19805. The name of the corporation's registered
agent at such address shall be The Corporation Trust Company. The registered
office and/or registered agent of the corporation may be changed from time to
time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or
without the State of Delaware, as shall be stated in a notice of meeting or in
a duly executed waiver of notice thereof. Such meetings may be called at any
time by the board of directors, the president or the holders of shares entitled
to cast not less than a majority of the votes at the meeting.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is
<PAGE> 2
made, or if a special meeting be otherwise called, the place of meeting shall
be the principal executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting
not less than ten (10) nor more than sixty (60) days before the date of the
meeting. All such notices shall be delivered, either personally or by mail, by
or at the direction of the board of directors, the president or the secretary,
and if mailed, such notice shall be deemed to be delivered when deposited in
the United States mail, postage prepaid, addressed to the stockholder at his,
her or its address as the same appears on the records of the corporation.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends for the express purpose of objecting at
the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present,
the holders of a majority of the shares present in person or represented by
proxy at the meeting, and entitled to vote at the meeting, may adjourn the
meeting to another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty (30) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one
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upon which by express provisions of an applicable law or of the certificate of
incorporation a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of
Article VI hereof, every stockholder shall at every meeting of the stockholders
be entitled to one (1) vote in person or by proxy for each share of common
stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in
which proceedings of meetings of the stockholders are recorded. Delivery made
to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested provided, however, that no consent or
consents delivered by certified or registered mail shall be deemed delivered
until such consent or consents are actually received at the registered office.
All consents properly delivered in accordance with this section shall be deemed
to be recorded when so delivered. No written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered to the corporation as required by this
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section, written consents signed by the holders of a sufficient number of
shares to take such corporate action are so recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Any action taken pursuant to such written consent or consents of the
stockholders shall have the same force and effect as if taken by the
stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the board shall be nine (9). Thereafter, the number of
directors shall be established from time to time by in accordance with the
provisions of that certain Investors Agreement, dated as of October 1, 1997 by
and among the corporation and certain of its stockholders (the "Investors
Agreement"). The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. Except as provided in the Investors
Agreement and Section 4 of this Article III, the directors shall be elected in
this manner at the annual meeting of the stockholders. Each director elected
shall hold office until a successor is duly elected and qualified or until his
or her earlier death, resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. The directors may only be removed,
with or without cause, as set forth in the Investors Agreement. Any director
may resign at any time upon written notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may only be
filled as set forth in the Investors Agreement. Each director so chosen shall
hold office until a successor is duly elected and qualified or until his or her
earlier death, resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of
stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution
of the board. Special meetings of the board of directors may be called by or
at the request of the president on at least
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twenty-four (24) hours notice to each director, either personally, by
telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. Each
committee shall keep regular minutes of its meetings and report the same to the
board of directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent
or disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such
board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except
when such member attends for the express purpose of objecting at the beginning
of the meeting to the transaction of any business because the meeting is not
lawfully called or convened. Such member shall be conclusively presumed to
have assented to any action taken unless his or her dissent shall
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be entered in the minutes of the meeting or unless his or her written dissent
to such action shall be filed with the person acting as the secretary of the
meeting before the adjournment thereof or shall be forwarded by registered mail
to the secretary of the corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to any member who voted in favor
of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by
the board of directors and shall consist of a chairman, president, chief
financial officer, one or more vice-presidents, secretary, a treasurer, and
such other officers and assistant officers as may be deemed necessary or
desirable by the board of directors. Any number of offices may be held by the
same person. In its discretion, the board of directors may choose not to fill
any office for any period as it may deem advisable, except that the offices of
president and secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall be elected annually by the board of directors at
the first meeting of the board of directors held after each annual meeting of
stockholders or as soon thereafter as conveniently may be. The president shall
appoint other officers to serve for such terms as he or she deems desirable.
Vacancies may be filled or new offices created and filled at any meeting of the
board of directors. Each officer shall hold office until a successor is duly
elected and qualified or until his earlier death, resignation or removal as
hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by
the board of directors for the unexpired portion of the term by the board of
directors then in office.
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Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. Chairman of the Board. The chairman of the board shall have
the powers and perform the duties incident to that position. Subject to the
powers of the board of directors, he shall be in the general and active charge
of the entire business and affairs of the corporation. He shall preside at all
meetings of the board of directors and stockholders and shall have such other
powers and perform such other duties as may be prescribed by the board of
directors or provided in these by-laws. Whenever the president is unable to
serve, by reason of sickness, absence or otherwise, the chairman of the board
shall perform all the duties and responsibilities and exercise all the powers
of the president.
Section 7. The President. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present; subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation. The president shall have such other powers and perform such
other duties as may be prescribed by the board of directors, chairman or as may
be provided in these by-laws.
Section 8 . Chief Financial Officer. The chief financial officer of the
corporation shall, under the direction of the chief executive officer, be
responsible for all financial and accounting matters and for the direction of
the offices of treasurer and controller. The chief financial officer shall
have such other powers and perform such other duties as may be prescribed by
the chairman of the board, the chief executive officer or the board of
directors or as may be provided in these by-laws.
Section 9. Vice-presidents. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors or by the president, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and
have such other powers as the board of directors, the chairman, the president
or these by-laws may, from time to time, prescribe.
Section 10. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these
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by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by
the board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors, the
chairman, the president, or secretary may, from time to time, prescribe.
Section 11. The Treasurer and Assistant Treasurer. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name
and to the credit of the corporation as may be ordered by the board of
directors; shall cause the funds of the corporation to be disbursed when such
disbursements have been duly authorized, taking proper vouchers for such
disbursements; and shall render to the president and the board of directors, at
its regular meeting or when the board of directors so requires, an account of
the corporation; shall have such powers and perform such duties as the board of
directors, the president or these by-laws may, from time to time, prescribe.
If required by the board of directors, the treasurer shall give the corporation
a bond (which shall be rendered every six (6) years) in such sums and with such
surety or sureties as shall be satisfactory to the board of directors for the
faithful performance of the duties of the office of treasurer and for the
restoration to the corporation, in case of death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money, and other property
of whatever kind in the possession or under the control of the treasurer
belonging to the corporation. The assistant treasurer, or if there shall be
more than one, the assistant treasurers in the order determined by the board of
directors, shall in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors, the chairman, the president or chief financial officer may, from
time to time, prescribe.
Section 12. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such
duties as may from time to time be prescribed by resolution of the board of
directors.
Section 13. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the corporation and of any person
hereby authorized to act in such officer's place during such officer's absence
or disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
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ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation to the fullest extent which it is empowered to
do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment) against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in connection with such proceeding) and such indemnification
shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in Section 2 hereof, the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding initiated by such person only if such proceeding
was authorized by the board of directors of the corporation. The right to
indemnification conferred in this Article V shall be a contract right and,
subject to Sections 2 and 5 hereof, shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance
of its final disposition. The corporation may, by action of its board of
directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors
and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall
be made promptly, and in any event within thirty (30) days, upon the written
request of the director or officer. If a determination by the corporation that
the director or officer is entitled to indemnification pursuant to this Article
V is required, and the corporation fails to respond within sixty (60) days to a
written request for indemnity, the corporation shall be deemed to have approved
the request. If the corporation denies a written request for indemnification
or advancing of expenses, in whole or in part, or if payment in full pursuant
to such request is not made within thirty (30) days, the right to
indemnification or advances as granted by this Article V shall be enforceable
by the director or officer in any court of competent jurisdiction. Such
person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the corporation) that
the claimant has not met the standards of conduct which make it permissible
under the General Corporation Law of the State of Delaware for the corporation
to indemnify the
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claimant for the amount claimed, but the burden of such defense shall be on
the corporation. Neither the failure of the corporation (including its board
of directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the General Corporation Law of the State of
Delaware, nor an actual determination by the corporation (including its board
of directors, independent legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, whether or not the corporation would have the
power to indemnify such person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless otherwise
determined by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the
corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and
the relevant provisions of the General Corporation Law of the State of Delaware
or other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
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Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was
a director, officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
V with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president or a vice-president and the secretary or an assistant secretary
of the corporation, certifying the number of shares of a specific class or
series owned by such holder in the corporation. If such a certificate is
countersigned (1) by a transfer agent or an assistant transfer agent other than
the corporation or its employee or (2) by a registrar, other than the
corporation or its employee, the signature of any such president,
vice-president, secretary, or assistant secretary may be facsimiles. In case
any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall cease
to be such officer or officers of the corporation whether because of death,
resignation or otherwise before such certificate or certificates have been
delivered by the corporation, such certificate or certificates may nevertheless
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the corporation. Shares of stock of the corporation
shall only be transferred on the books of the corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters as
the corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, cancel the old
certificate or certificates, and record the transaction on its books. The
board of directors may appoint a bank or trust company organized under the laws
of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
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Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any
such certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting. If no record date is fixed
by the board of directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be the
close of business on the next day preceding the day on which notice is given,
or if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the board of directors
may fix a new record date for the adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required
by statute, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by statute, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting shall be at the
close of business on the day on which the board of directors adopts the
resolution taking such prior action.
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Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purposes of any other lawful action, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty (60) days prior to such action. If no record
date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any
installment or call when such payment is due, the corporation may proceed to
collect the amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or
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<PAGE> 14
officers, agent or agents of the corporation, and in such manner, as shall be
determined by resolution of the board of directors or a duly authorized
committee thereof.
Section 3. Contracts. The board of directors may authorize any officer
or officers, or any agent or agents, of the corporation to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares
of stock of the corporation. Nothing in this section contained shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
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<PAGE> 15
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VIII
AMENDMENTS
Except for Article III hereof, the Investors Agreement, these by-laws may
be amended, altered, or repealed and new by-laws adopted at any meeting of the
board of directors by a majority vote. The fact that the power to adopt,
amend, alter, or repeal the by-laws has been conferred upon the board of
directors shall not divest the stockholders of the same powers.
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<PAGE> 1
EXHIBIT 4.1
TRANSWESTERN PUBLISHING COMPANY LLC
and TWP CAPITAL CORP. II,
as Issuers,
and
WILMINGTON TRUST COMPANY,
as Trustee
---------------------
INDENTURE
Dated as of November 12, 1997
---------------------
$100,000,000
9 5/8% Senior Subordinated Notes due 2007
=========================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ---------------------------------------------------------------------------------------------------
<S> <C>
310(a)(1)............................................................................ 7.10
(a)(2)............................................................................ 7.10
(a)(3)............................................................................ N.A.
(a)(4)............................................................................ N.A.
(b)............................................................................... 7.08; 7.10;
12.02
(b)(1)............................................................................ 7.10
(b)(9)............................................................................ 7.10
(c)................................................................................ N.A.
311(a)................................................................................ 7.11
(b)................................................................................ 7.11
(c)................................................................................ N.A.
312(a)................................................................................ 2.05
(b)................................................................................ 12.03
(c)................................................................................ 12.03
313(a)................................................................................ 7.06
(b)(1)............................................................................. 7.06
(b)(2)............................................................................. 7.06
(c)................................................................................ 12.02
(d)................................................................................ 7.06
314(a)................................................................................ 4.02; 4.04;
12.02
(b)................................................................................ N.A.
(c)(1)............................................................................. 12.04; 12.05
(c)(2)............................................................................. 12.04; 12.05
(c)(3)............................................................................. N.A.
(d)................................................................................ N.A.
(e)................................................................................ 12.05
(f)................................................................................ N.A.
315(a)................................................................................ 7.01; 7.02
(b)................................................................................ 7.05; 12.02
(c)................................................................................ 7.01
(d)................................................................................ 6.05; 7.01;
7.02
(e)................................................................................ 6.11
316(a) (last sentence)................................................................ 2.10
(a)(1)(A).......................................................................... 6.05
(a)(1)(B).......................................................................... 6.04
(a)(2)............................................................................. 8.02
(b)................................................................................ 6.07
(c)................................................................................ 8.04
317(a)(1)............................................................................. 6.08
</TABLE>
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<TABLE>
<S> <C>
(a)(2)................................................................................ 6.09
(b)................................................................................... 7.12
318(a)................................................................................... 12.01
</TABLE>
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N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed
to be a part of the Indenture
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.......................................1
Section 1.01 Definitions....................................................1
Section 1.02 Other Definitions.............................................24
Section 1.03 Incorporation by Reference of Trust Indenture Act.............25
Section 1.04 Rules of Construction.........................................26
ARTICLE 2 THE NOTES.......................................................................26
Section 2.01 Amount of Notes...............................................27
Section 2.02 Form and Dating...............................................27
Section 2.03 Execution and Authentication..................................28
Section 2.04 Registrar and Paying Agent....................................28
Section 2.05 Paying Agent to Hold Money in Trust...........................29
Section 2.06 Noteholder Lists..............................................30
Section 2.07 Transfer and Exchange.........................................30
Section 2.08 Replacement Notes.............................................31
Section 2.09 Outstanding Notes.............................................31
Section 2.10 Treasury Notes................................................32
Section 2.11 Temporary Notes...............................................32
Section 2.12 Cancellation..................................................32
Section 2.13 Defaulted Interest............................................32
Section 2.14 CUSIP Number..................................................33
Section 2.15 Deposit of Moneys.............................................33
Section 2.16 Book-Entry Provisions for Global Notes........................34
Section 2.17 Special Transfer Provisions...................................36
Section 2.18 Computation of Interest.......................................38
ARTICLE 3 REDEMPTION......................................................................38
Section 3.01 Notices to Trustee............................................38
Section 3.02 Selection by Trustee of Notes to Be Redeemed..................39
Section 3.03 Notice of Redemption..........................................39
Section 3.04 Effect of Notice of Redemption................................40
Section 3.05 Deposit of Redemption Price...................................40
Section 3.06 Notes Redeemed in Part........................................41
ARTICLE 4 COVENANTS...................................................................... 41
Section 4.01 Payment of Notes..............................................41
Section 4.02 SEC Reports...................................................41
Section 4.03 Waiver of Stay, Extension or Usury Laws.......................43
</TABLE>
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Section 4.04 Compliance Certificate......................................................43
Section 4.05 Taxes.......................................................................44
Section 4.06 Limitation on Additional Indebtedness.......................................44
Section 4.07 Limitation on Preferred Stock of Restricted Subsidiaries....................45
Section 4.08 Limitation on Capital Stock of Subsidiaries.................................45
Section 4.09 Limitation on Restricted Payments...........................................45
Section 4.10 Limitation on Certain Asset Sales...........................................48
Section 4.11 Limitation on Transactions with Affiliates..................................50
Section 4.12 Limitations on Liens........................................................51
Section 4.13 Limitations on Investments..................................................51
Section 4.14 Limitation on Creation of Subsidiaries......................................51
Section 4.15 Limitation on Other Senior Subordinated Debt................................52
Section 4.16 Limitation on Sale and Lease-Back Transactions..............................52
Section 4.17 Payments for Consent........................................................52
Section 4.18 Legal Existence.............................................................53
Section 4.19 Change of Control...........................................................53
Section 4.20 Maintenance of Office or Agency.............................................55
Section 4.21 Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.........................................................56
Section 4.22 Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.....................................................57
Section 4.23 Further Assurance to the Trustee...........................................57
Section 4.24 Limitation on Conduct of Business of Capital...............................58
Section 4.25 Certain Consents and Filings...............................................58
ARTICLE 5 SUCCESSOR CORPORATION...............................................................58
Section 5.01 Limitation on Consolidation, Merger and Sale of Assets.....................58
Section 5.02 Successor Person Substituted...............................................59
ARTICLE 6 DEFAULTS AND REMEDIES...............................................................60
Section 6.01 Events of Default..........................................................60
Section 6.02 Acceleration...............................................................62
Section 6.03 Other Remedies.............................................................62
Section 6.04 Waiver of Past Defaults and Events of Default..............................63
Section 6.05 Control by Majority........................................................63
Section 6.06 Limitation on Suits........................................................63
Section 6.07 Rights of Holders to Receive Payment.......................................64
Section 6.08 Collection Suit by Trustee.................................................64
Section 6.09 Trustee May File Proofs of Claim...........................................64
Section 6.10 Priorities.................................................................65
</TABLE>
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<TABLE>
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Section 6.11 Undertaking for Costs..................................................65
Section 6.12 Restoration of Rights and Remedies.....................................66
ARTICLE 7 TRUSTEE..........................................................................66
Section 7.01 Duties of Trustee......................................................66
Section 7.02 Rights of Trustee......................................................68
Section 7.03 Individual Rights of Trustee...........................................68
Section 7.04 Trustee's Disclaimer...................................................68
Section 7.05 Notice of Defaults.....................................................69
Section 7.06 Reports by Trustee to Holders..........................................69
Section 7.07 Compensation and Indemnity.............................................69
Section 7.08 Replacement of Trustee.................................................71
Section 7.09 Successor Trustee by Consolidation, Merger, Etc........................72
Section 7.10 Eligibility; Disqualification..........................................72
Section 7.11 Preferential Collection of Claims Against Company......................72
Section 7.12 Paying Agents..........................................................72
ARTICLE 8 AMENDMENTS, SUPPLEMENTS AND WAIVERS..............................................73
Section 8.01 Without Consent of Holders.............................................73
Section 8.02 With Consent of Holders................................................74
Section 8.03 Compliance with Trust Indenture Act....................................75
Section 8.04 Revocation and Effect of Consents......................................75
Section 8.05 Notation on or Exchange of Notes.......................................76
Section 8.06 Trustee to Sign Amendments, etc........................................76
ARTICLE 9 DISCHARGE OF INDENTURE; DEFEASANCE...............................................77
Section 9.01 Discharge of Indenture.................................................77
Section 9.02 Legal Defeasance.......................................................77
Section 9.03 Covenant Defeasance....................................................78
Section 9.04 Conditions to Defeasance or Covenant Defeasance........................78
Section 9.05 Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions..........................80
Section 9.06 Reinstatement..........................................................81
Section 9.07 Moneys Held by Paying Agent............................................81
Section 9.08 Moneys Held by Trustee.................................................81
ARTICLE 10 GUARANTEE OF NOTES..............................................................82
Section 10.01 Guarantee..............................................................82
Section 10.02 Execution and Delivery of Guarantees...................................83
Section 10.03 Limitation of Guarantee................................................83
Section 10.04 Release of Guarantor...................................................84
</TABLE>
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<TABLE>
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Section 10.05 Guarantee Obligations Subordinated to Guarantor
Senior Indebtedness....................................................84
Section 10.06 Payment Over of Proceeds upon Dissolution, etc., of a
Guarantor..............................................................85
Section 10.07 Suspension of Guarantee Obligations When Guarantor
Senior Indebtedness in Default.........................................86
Section 10.08 Subrogation to Rights of Holders of Guarantor Senior Indebtedness......88
Section 10.09 Guarantee Subordination Provisions Solely To Define
Relative Rights........................................................89
Section 10.10 Application of Certain Article 11 Provisions...........................89
ARTICLE 11 SUBORDINATION OF NOTES..........................................................90
Section 11.01 Notes Subordinate to Senior Indebtedness...............................90
Section 11.02 Payment Over of Proceeds upon Dissolution, etc.........................90
Section 11.03 Suspension of Payment When Senior Indebtedness in Default..............91
Section 11.04 Trustee's Relation to Senior Indebtedness..............................93
Section 11.05 Subrogation to Rights of Holders of Senior Indebtedness................93
Section 11.06 Provisions Solely To Define Relative Rights............................94
Section 11.07 Trustee To Effectuate Subordination....................................95
Section 11.08 No Waiver of Subordination Provisions..................................95
Section 11.09 Notice to Trustee......................................................96
Section 11.10 Reliance on Judicial Order or Certificate of Liquidating Agent.........96
Section 11.11 Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights.......................................97
Section 11.12 Article Applicable to Paying Agents....................................97
Section 11.13 No Suspension of Remedies..............................................97
ARTICLE 12 MISCELLANEOUS...................................................................97
Section 12.01 Trust Indenture Act Controls...........................................97
Section 12.02 Notices................................................................98
Section 12.03 Communications by Holders with Other Holders...........................99
Section 12.04 Certificate and Opinion as to Conditions Precedent....................100
Section 12.05 Statements Required in Certificate and Opinion........................100
Section 12.06 Rules by Trustee and Agents...........................................100
Section 12.07 Business Days; Legal Holidays.........................................101
Section 12.08 Governing Law.........................................................101
Section 12.09 No Adverse Interpretation of Other Agreements.........................101
Section 12.10 No Recourse Against Others............................................101
Section 12.11 Successors............................................................102
Section 12.12 Multiple Counterparts.................................................102
Section 12.13 Table of Contents, Headings, etc......................................102
Section 12.14 Separability..........................................................102
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C>
Exhibit A Form of Note..........................................................A-1
Exhibit B Form of Legend and Assignment for 144A Note...........................B-1
Exhibit C Form of Legend and Assignment for
Regulation S Note...................................................C-1
Exhibit D Form of Legend for Global Note........................................D-1
Exhibit E Form of Certificate to Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors................................................E-1
Exhibit F Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to
Regulation S........................................................F-1
Exhibit G Form of Guarantee.....................................................G-1
</TABLE>
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<PAGE> 9
INDENTURE, dated as of November 12, 1997, among TRANSWESTERN PUBLISHING
COMPANY LLC, a Delaware limited liability company (the "Company"), TWP CAPITAL
CORP. II, a Delaware corporation ("Capital" and, together with the Company, the
"Issuers"), the Guarantors (as hereinafter defined) and WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Issuers' 9 5/8% Senior
Subordinated Notes due 2007 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Additional Interest" means additional interest on the Notes which the
Issuers and the Guarantors, jointly and severally, agree to pay to the Holders
pursuant to Section 4 of the Registration Rights Agreement.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
the amount by which (x) the fair value of the property of such Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities), but excluding liabilities under the Guarantee, of such Guarantor
at such date and (y) the present fair salable value of the assets of such
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities and after giving effect to any
collection from any Subsidiary of such Guarantor in respect of the obligations
of such Subsidiary under the Guarantee), excluding Indebtedness in respect of
the Guarantee, as they become absolute and matured.
"Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For the purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
<PAGE> 10
-2-
"Agent" means the Registrar, any Paying Agent, or agent for service of
notices and demands.
"Asset Drop-Down" shall have the meaning provided in the Offering
Memorandum.
"Asset Sale" means the sale, transfer or other disposition (other than to
the Company or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions having a fair market value in excess of
$1,000,000 of (a) any Capital Stock of or other equity interest in any
Restricted Subsidiary of the Issuers, (b) all or substantially all of the
assets of the Issuers or of any Restricted Subsidiary thereof, (c) real
property or (d) all or substantially all of the assets of a division, line of
business or comparable business segment of the Issuers or any Restricted
Subsidiary thereof; provided that Asset Sales shall not include (i) sales,
leases, conveyances, transfers or other dispositions to the Company or to a
Restricted Subsidiary or to any other Person if after giving effect to such
sale, lease, conveyance, transfer or other disposition such other Person
becomes a Restricted Subsidiary; or (ii) the contribution of any assets to a
joint venture, partnership or other Person (which may be a Subsidiary) to the
extent such contribution constitutes a Permitted Investment (other than by
operation of clause (iv) of the definition thereof).
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Issuers or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes (including taxes required to be
distributed under the partnership agreement of the Company) measured by or
resulting from such Asset Sale, (b) payment of all brokerage commissions,
underwriting and other fees and expenses related to such Asset Sale, (c)
provision for minority interest holders in any Restricted Subsidiary as a
result of such Asset Sale and (d) deduction of appropriate amounts to be
provided by the Issuers or a Restricted Subsidiary as a reserve, in accordance
with GAAP, against any liabilities associated with the assets sold or disposed
of in such Asset Sale and retained by the Issuers or a Restricted Subsidiary
after such Asset Sale, including, without limitation, severance, healthcare,
pension and other post-employment benefit liabilities and liabilities related
to environmental matters or against any indemnification obligations associated
with the assets sold or disposed of in such Asset Sale, and (ii) promissory
notes and other non-cash consideration received by the Issuers or any
Restricted Subsidiary from such Asset Sale or other disposition upon the
liquidation or conversion of such notes or non-cash consideration into cash.
"Attributable Indebtedness" in respect of a Sale and Lease-Back
Transaction means, as at the time of determination, the greater of (i) the fair
value of the property subject to
<PAGE> 11
-3-
such arrangement (as determined by the Board of Directors of the Company) and
(ii) the present value of the total obligations (discounted at a rate of 10%,
compounded annually) of the lessee for rental payments during the remaining
term of the lease included in such Sale and Lease-Back Transaction (including
any period for which such lease has been extended).
"Available Asset Sale Proceeds" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sale that have not been applied
in accordance with clause (iii)(a) or (iii)(b) of Section 4.10(a) and that have
not been the basis for an Excess Proceeds Offer in accordance with clause
(iii)(c) of Section 4.10(a).
"Board of Directors" means (i) in the case of a Person that is a limited
partnership, the board of directors of its corporate general partner or any
committee authorized to act therefor (or, if the general partner is itself a
limited partnership, the board of directors of such general partner's corporate
general partner or any committee authorized to act therefor), (ii) in the case
of a Person that is a corporation, the board of directors of such Person or any
committee authorized to act therefore and (iii) in the case of any other
Person, the board of directors, management committee or similar governing body
or any authorized committee thereof responsible for the management of the
business and affairs of such Person.
"Board Resolution" means a copy of a resolution certified pursuant to an
Officers' Certificate to have been duly adopted by the Board of Directors of an
Issuer or a Guarantor, as appropriate, and to be in full force and effect, and
delivered to the Trustee.
"Capital" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into or exercisable for any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Equivalents" means (i) direct obligations of the United States of
America or any agency thereof, or obligations guaranteed or insured by the
United States of America;
<PAGE> 12
-4-
provided that in each case such obligations mature within one year from the
date of acquisition thereof, (ii) certificates of deposit maturing within one
year from the date of creation thereof issued by any U.S. national or state
banking institution having capital, surplus and undivided profits aggregating
at least $250,000,000 and at the time of investment rated at least A-1 by S&P
and P-1 by Moody's, (iii) commercial paper with a maturity of 180 days or less
issued by a corporation (except an Affiliate of the Company) organized under
the laws of any state of the United States or the District of Columbia and at
the time of investment rated at least A-1 by S&P or at least P-1 by Moody's,
(iv) repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the
United States of America or issued by an agency thereof and backed by the full
faith and credit of the United States of America, in each case maturing within
one year from the date of acquisition; provided that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency, and (v) tax-exempt auction rate
securities and municipal preferred stock, in each case, subject to reset no
more than 35 days after the date of acquisition and having a rating of at least
AA by S&P or Aa by Moody's at the time of investment.
"Change of Control" means the occurrence of one or more of the following
events: (i) any Person (including a Person's Affiliates and associates), other
than a Permitted Holder, becomes the beneficial owner (directly or indirectly)
(as defined under Rule 13d-3 or any successor rule or regulation promulgated
under the Exchange Act) of 50% or more of the total voting or economic power of
the Common Stock of the Company, (ii) any Person (including a Person's
Affiliates and associates), other than a Permitted Holder, becomes the
beneficial owner (directly or indirectly) of more than 33 1/3% of the total
voting power of the Common Stock of the Company, and the Permitted Holders
beneficially own (directly or indirectly), in the aggregate, a lesser
percentage of the total voting power of the Common Stock of the Company than
such other Person and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the
Board of Directors of the Company, (iii) the admission of any Person as a
general partner of Holdings after which Communications, together with one or
more Permitted Holders, do not have the sole power, directly or indirectly, to
take all of the actions they are entitled or required to take under the
partnership agreement of Holdings as in effect on the Issue Date, (iv) there
shall be consummated any consolidation or merger of either Issuer in which such
Issuer is not the continuing or surviving corporation or pursuant to which the
Common Stock of such Issuer would be converted into cash, securities or other
property, other than a merger or consolidation of such Issuer in which the
beneficial owners of the Common Stock of such Issuer outstanding immediately
prior to the consolidation or merger hold, directly or indirectly, at least a
majority of the Common Stock of the surviving corporation immediately after
such consolidation or merger, or (v) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of
<PAGE> 13
-5-
Communications (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of
Communications has been approved by a majority of the directors then still in
office who either were directors at the beginning of such period or whose
election or recommendation for election was previously so approved) cease to
constitute a majority of the Board of Directors of Communications.
"CIBC Merchant Fund" means the CIBC WG Argosy Merchant Fund 2, L.L.C.
"CIVC" means Continental Illinois Venture Corporation.
"Commodity Hedge Agreement" shall mean any option, hedge or other similar
agreement or arrangement designed to protect against fluctuations in commodity
or materials prices.
"Common Stock" of any Person means all Capital Stock of such Person that
is generally entitled to (i) vote in the election of directors of such Person
or (ii) if such Person is not a corporation, vote or otherwise participate in
the selection of the governing body, partners, managers or others that will
control the management and policies of such Person.
"Communications" means TransWestern Communications Company, Inc., a
Delaware corporation and the general partner of Holdings.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor.
"Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Subsidiaries on a consolidated basis
(including, but not limited to, Redeemable Dividends, whether paid or accrued,
on Preferred Stock of Subsidiaries, imputed interest included in Capitalized
Lease Obligations, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, the net
costs associated with hedging obligations, amortization of other financing fees
and expenses, the interest portion of any deferred payment obligation,
amortization of discount or premium, if any, and all other non-cash interest
expense (other than interest amortized to cost of sales)) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of any Person, plus the amount
of all dividends or distributions paid on Disqualified
<PAGE> 14
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Capital Stock (other than dividends paid or payable in shares of Capital Stock
of the Company), less the amortization of deferred financing costs.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP, plus,
in the case of the Company, payments by the Company to the Equity Compensation
Trust for the benefit of the beneficiaries thereof, minus Permitted Tax
Distributions (to the extent such Permitted Tax Distributions are made);
provided, however, that (a) the Net Income of any Person (the "other Person")
in which the Person in question or any of its Subsidiaries has less than a 100%
interest (which interest does not cause the net income of such other Person to
be consolidated into the net income of the Person in question in accordance
with GAAP) shall be included only to the extent of the amount of dividends or
distributions paid to the Person in question or the Subsidiary, (b) the Net
Income of any Subsidiary of the Person in question that is subject to any
restriction or limitation on the payment of dividends or the making of other
distributions (other than pursuant to the Notes or as permitted under Section
4.22) shall be excluded to the extent of such restriction or limitation, (c)
(i) the Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition and (ii) any net gain (but
not loss) resulting from an Asset Sale by the Person in question or any of its
Subsidiaries other than in the ordinary course of business shall be excluded
and (d) extraordinary, unusual and non-recurring gains and losses (including
any related tax effects on the Issuers) shall be excluded.
"Consolidated Net Worth" means, with respect to any Person at any date,
the consolidated stockholder's equity of such Person less the amount of such
stockholder's equity attributable to Disqualified Capital Stock of such Person
and its Subsidiaries, as determined in accordance with GAAP.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 10890.
"Default" means any condition or event that is, or with the passing of
time or giving of any notice expressly required under Section 6.01 (or both)
would be, an Event of Default.
"Depository" means, with respect to the Notes issued in the form of one or
more Global Notes, The Depository Trust Company or another Person designated as
Depository by the Issuers, which Person must be a clearing agency registered
under the Exchange Act.
<PAGE> 15
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"Designated Senior Indebtedness," as to the Company or any Guarantor, as
the case may be, means any Senior Indebtedness (a) under the Senior Credit
Facility, or (b)(i) which at the time of determination exceeds $25,000,000 in
aggregate principal amount (or accreted value in the case of Indebtedness
issued at a discount) outstanding or available under a committed facility, (ii)
which is specifically designated in the instrument evidencing such Senior
Indebtedness as "Designated Senior Indebtedness" by such Person and (iii) as to
which the Trustee has been given written notice of such designation.
"Discount Notes" means the 11 7/8% Senior Discount Notes due 2008 of
Holdings and TWP Capital Corp.
"Disqualified Capital Stock" means any Capital Stock of the Company or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness; provided that Capital Stock of the Company that is held by a
current or former employee of the Company subject to a put option and/or a call
option with the Company triggered by the termination of such employee's
employment with the Company and/or the Company's performance shall not be
deemed to be Disqualified Capital Stock solely by virtue of such call option
and/or put option. Without limitation of the foregoing, Disqualified Capital
Stock shall be deemed to include (i) any Preferred Stock of a Restricted
Subsidiary of the Company and (ii) any Preferred Stock of the Company, with
respect to either of which, under the terms of such Preferred Stock, by
agreement or otherwise, such Restricted Subsidiary or the Company is obligated
to pay current dividends or distributions in cash (other than Permitted Tax
Distributions) during the period prior to the maturity date of the Notes;
provided, however, that Preferred Stock of the Company or any Restricted
Subsidiary thereof that is issued with the benefit of provisions requiring a
change of control offer to be made for such Preferred Stock in the event of a
change of control of the Company or such Restricted Subsidiary, which
provisions have substantially the same effect as the provisions described in
Section 4.19, shall not be deemed to be Disqualified Capital Stock solely by
virtue of such provisions.
"EBITDA" means, for any Person, for any period, an amount equal to (a) the
sum of (i) Consolidated Net Income for such period, plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing Consolidated Net Income and any provision
for taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period (but only including Redeemable
Dividends in the calculation of such Consolidated Interest Expense to the
extent that
<PAGE> 16
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such Redeemable Dividends have not been excluded in the calculation of
Consolidated Net Income), plus (iv) depreciation for such period on a
consolidated basis, plus (v) amortization of intangibles for such period on a
consolidated basis, plus (vi) any other non-cash items reducing Consolidated
Net Income for such period, plus (vii) without duplication, Permitted Tax
Distributions, plus (viii) cash payments of expenses arising in connection with
the Recapitalization, minus (b) all non-cash items increasing Consolidated Net
Income for such period, all for such Person and its Subsidiaries determined in
accordance with GAAP, except that with respect to the Issuers each of the
foregoing items shall be determined on a consolidated basis with respect to the
Issuers and their Restricted Subsidiaries only; provided, however, that, for
purposes of calculating EBITDA during any fiscal quarter, cash income from a
particular Investment (other than in a Subsidiary which under GAAP is
consolidated) of such Person shall be included only (x) if cash income has been
received by such Person with respect to such Investment or (y) if the cash
income derived from such Investment is attributable to Temporary Cash
Investments.
"Equity Compensation Trust" means the Company's Equity Compensation Trust
for the benefit of certain of its employees, established pursuant to the Equity
Compensation Trust Agreement, dated as of November 4, 1993, as amended by an
agreement dated as of October 1, 1997 between the Company and the trustees
thereof, and any successor trust with terms substantially similar thereto (with
an additional requirement of continued employment status).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" shall have the meaning assigned thereto in the
Registration Rights Agreement.
"First Union" means First Union Corporation.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"Guarantee" means, as the context may require, individually, a guarantee,
or collectively, any and all guarantees, of the Obligations of the Company with
respect to the Notes by each Guarantor, if any, pursuant to the terms of
Article 10 hereof, substantially in the form set forth in Exhibit G.
"Guarantor" means each Restricted Subsidiary of the Issuers that hereafter
becomes a Guarantor pursuant to Section 4.14, and "Guarantors" means such
entities, collectively.
<PAGE> 17
-9-
"Guarantor Senior Indebtedness" means the principal of and premium, if
any, and interest (including, without limitation, interest accruing or that
would have accrued but for the filing of a bankruptcy, reorganization or other
insolvency proceeding whether or not such interest constitutes an allowable
claim in such proceeding) on, and any and all other fees, expense reimbursement
obligations, indemnities and other amounts due pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with, (a) any Guarantor's
direct incurrence of any Indebtedness or its guarantee of all Indebtedness of
the Company or any Restricted Subsidiaries, in each case owed to lenders under
the Senior Credit Facility, (b) all obligations of such Guarantor with respect
to any Interest Rate Agreement, (c) all obligations of such Guarantor to
reimburse any bank or other person in respect of amounts paid under letters of
credit, acceptances or other similar instruments, (d) all other Indebtedness of
such Guarantor which does not provide that it is to rank pari passu with or
subordinate to the Guarantees and (e) all deferrals, renewals, extensions and
refundings of, and amendments, modifications and supplements to, any of the
Guarantor Senior Indebtedness described above. Notwithstanding anything to the
contrary in the foregoing, Guarantor Senior Indebtedness will not include (i)
Indebtedness of such Guarantor to any of its Subsidiaries, (ii) Indebtedness
represented by the Guarantees, (iii) any Indebtedness which by the express
terms of the agreement or instrument creating, evidencing or governing the same
is junior or subordinate in right of payment to any item of Guarantor Senior
Indebtedness, (iv) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business or (v)
Indebtedness incurred in violation of this Indenture.
"Holdings" means TransWestern Holdings L.P., a Delaware limited
partnership, and owner of all of the membership units of the Company.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person (and
"incurrence," "incurred," "incurrable" and "incurring" shall have meanings
correlative to the foregoing); provided that a change in GAAP that results in
an obligation of such Person that exists at such time becoming Indebtedness
shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person,
any indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar
<PAGE> 18
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instruments or representing the balance deferred and unpaid of the purchase
price of any property (excluding, without limitation, any balances that
constitute accounts payable or trade payables or liabilities arising from
advance payments or customer deposits for goods and services sold by the
Company in the ordinary course of business, and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and shall also include, to the extent
not otherwise included (i) any Capitalized Lease Obligations, (ii) obligations
secured by a Lien to which the property or assets owned or held by such Person
is subject, whether or not the obligation or obligations secured thereby shall
have been assumed (provided, however, that if such obligation or obligations
shall not have been assumed, the amount of such Indebtedness shall be deemed to
be the lesser of the principal amount of the obligation or the fair market
value of the pledged property or assets), (iii) guarantees of items of other
Persons which would be included within this definition for such other Persons
(whether or not such items would appear upon the balance sheet of the
guarantor), (iv) all obligations for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction (provided
that in the case of any such letters of credit, the items for which such
letters of credit provide credit support are those of other Persons which would
be included within this definition for such other Persons), (v) in the case of
the Issuers, Disqualified Capital Stock of the Issuers or any Restricted
Subsidiary thereof, and (vi) obligations of any such Person under any Interest
Rate Agreement applicable to any of the foregoing (if and to the extent such
Interest Rate Agreement obligations would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP). The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided (i) that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the principal amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP and (ii) that Indebtedness shall not include
any liability for federal, state, local or other taxes. Notwithstanding any
other provision of the foregoing definition, any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary course
of business shall not be deemed to be "Indebtedness" of the Company or any
Restricted Subsidiary for purposes of this definition. Furthermore, guarantees
of (or obligations with respect to letters of credit supporting) Indebtedness
otherwise included in the determination of such amount shall not also be
included.
"Indenture" means this Indenture as amended, restated or supplemented from
time to time.
"Individual Investors" means the individuals listed on Schedule 1.01
hereto.
<PAGE> 19
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"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501 (a)(1), (2), (3) or
(7) promulgated under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Rate Agreement" shall mean any interest or foreign currency rate
swap, cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Investments" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business or acquired as part of the assets acquired by the Issuers in
connection with an acquisition of assets which is otherwise permitted by the
terms of this Indenture), loan or capital contribution to (by means of
transfers of property to others, payments for property or services for the
account or use of others or otherwise), the purchase of any stock, bonds,
notes, debentures, partnership or joint venture interests or other securities
of, the acquisition, by purchase or otherwise, of all or substantially all of
the business or assets or stock or other evidence of beneficial ownership of,
any Person or the making of any investment in any Person. Investments shall
exclude extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices.
"Issue Date" means the date the Notes are first issued by the Issuers and
authenticated by the Trustee under this Indenture.
"Issuer Request" means any written request signed in the names of each of
the Issuers by the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer or the Treasurer of each of the Issuers and
attested to by the Secretary or any Assistant Secretary of each of the Issuers.
"Issuers" means the parties named as such in the first paragraph of this
Indenture until a successor replaces such parties pursuant to Article 5 of this
Indenture and thereafter means the successor and any other obligor on the
Notes.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement (other than advance payments or customer deposits for goods and
services sold by the Company in the ordinary course of business), security
interest, lien, charge, easement, encumbrance, preference, priority, or other
security agreement or preferential arrangement of any kind or nature whatsoever
on or
<PAGE> 20
-12-
with respect to such property or assets (including, without limitation, any
Capitalized Lease Obligation, conditional sales, or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Management Subordinated Notes" means notes issued to current or former
employees of the Company in accordance with the terms of the Executive
Agreements between the Company and such current or former employees in
existence on the Issue Date or pursuant to agreements between Holdings, TCC or
the Company and then current or former employees with substantially similar
terms regarding such issuance entered into after the Issue Date, which notes
are expressly subordinated as to payment of principal, premium, if any, and
interest to the Notes.
"Maturity Date" means November 15, 2007.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by an
Issuer, the aggregate net proceeds received by such Issuer, after payment of
expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the Board of Directors of such Issuer,
at the time of receipt) and (b) in the case of any exchange, exercise,
conversion or surrender of outstanding securities of any kind for or into
shares of Capital Stock of the Company which is not Disqualified Capital Stock,
the net book value of such outstanding securities on the date of such exchange,
exercise, conversion or surrender (plus any additional amount required to be
paid by the holder to the Company upon such exchange, exercise, conversion or
surrender, less any and all payments made to the holders, e.g., on account of
fractional shares and less all expenses incurred by the Company in connection
therewith).
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"Non-U.S. Person" means a person who is not a U.S. person, as defined in
Regulation S.
"Notes" means the securities that are issued under this Indenture, as
amended or supplemented from time to time pursuant to this Indenture.
<PAGE> 21
-13-
"Obligations" means, with respect to any Indebtedness, any principal,
premium, interest, penalties, fees, indemnifications, reimbursements, damages
and other expenses payable under the documentation governing such Indebtedness.
"Offering" means the offering of the Notes as described in the Offering
Memorandum.
"Offering Memorandum" means the Offering Memorandum dated November 6, 1997
pursuant to which the Notes were offered.
"Officer," with respect to any Person (other than the Trustee), means the
Chief Executive Officer, the President, any Vice President and the Chief
Financial Officer, the Treasurer or the Secretary of such Person, or any other
officer designated by the Board of Directors of such Person, as the case may
be.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the President or any Vice President and
the Chief Financial Officer or any Treasurer of such Person that shall comply
with applicable provisions of this Indenture and delivered to the Trustee.
"100% Affiliate" of any specified Person means any Affiliate of such
Person that is a Wholly-Owned Subsidiary of such Person, of which such Person
is a Wholly-Owned Subsidiary or that is a Wholly-Owned Subsidiary of a third
Person of which the specified Person is also a Wholly-Owned Subsidiary.
"Opinion of Counsel" means a written opinion reasonably satisfactory in
form and substance to the Trustee from legal counsel which counsel is
reasonably acceptable to the Trustee stating the matters required by Section
12.05 and delivered to the Trustee.
"Payment Default" means any default, whether or not any requirement for
the giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default has occurred, in the payment of principal
of (or premium, if any) or interest on or any other amount payable in
connection with Designated Senior Indebtedness.
"Permitted Asset Swap" means any transfer of properties or assets by the
Company or any of its Subsidiaries in which 90% of the consideration received
by the transferor consists of properties or assets (other than cash) that will
be used in the business of the transferor; provided that (i) the aggregate fair
market value (as determined in good faith by the Board of Directors of the
Company) of the property or assets being transferred by the Company
<PAGE> 22
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or such Subsidiary is not greater than the aggregate fair market value (as
determined in good faith by the Board of Directors) of the property or assets
received by the Company or such Subsidiary in such exchange and (ii) the
aggregate fair market value (as determined in good faith by the Board of
Directors) of all property or assets transferred by the Company and any of its
Subsidiaries (A) in connection with any single transfer or series of related
transfers shall not exceed $2,000,000 and (B) in connection with all such
transfers following the Issue Date shall not exceed $5,000,000 in the
aggregate.
"Permitted Holders" means, collectively, (i) Holdings and Communications,
(ii) THL, CIVC, CIBC Merchant Fund, First Union and any Affiliate of (including
any equity fund advised by) any of the foregoing (other than any portfolio
company with operating assets) and (iii) the Individual Investors, each of the
spouses, children (adoptive or biological) or other lineal descendants of the
Individual Investors, the probate estate of any such individual and any trust,
so long as one or more of the foregoing individuals retains substantially all
of the controlling or beneficial interest thereunder.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted Subsidiary (A)
arising under or in connection with the Senior Credit Facility in an
amount not to exceed $125,000,000, which amount shall be reduced by any
mandatory prepayments actually made thereunder required as a result of any
Asset Sale or similar sale of assets (to the extent, in the case of
payments of revolving credit indebtedness, that the corresponding
commitments have been permanently reduced) and any scheduled payments
actually made thereunder or (B) that constitutes Acquisition Debt (as
defined in the Senior Credit Facility) under the Senior Credit Facility to
the extent such Indebtedness permanently reduces the aggregate commitments
available under the Senior Credit Facility;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness not covered by any other clause of this definition
which is outstanding on the date of this Indenture;
(iv) Indebtedness of the Company to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to the Company or another
Restricted Subsidiary;
(v) Interest Rate Agreements;
<PAGE> 23
-15-
(vi) Refinancing Indebtedness;
(vii) Indebtedness under Commodity Hedge Agreements entered into in
the ordinary course of business consistent with reasonable business
requirements and not for speculation;
(viii) Indebtedness consisting of guarantees made in the ordinary
course of business by the Company or its Subsidiaries of obligations of
the Issuers or any of their Subsidiaries, which obligations are otherwise
permitted under this Indenture;
(ix) contingent obligations of the Company or its Subsidiaries in
respect of customary indemnification and purchase price adjustment
obligations incurred in connection with an Asset Sale; provided that the
maximum assumable liability in respect of all such obligations shall at no
time exceed the gross proceeds actually received by the Company and its
Subsidiaries in connection with such Asset Sale;
(xi) Purchase Money Indebtedness and Capitalized Lease Obligations of
the Company and its Subsidiaries incurred to acquire property in the
ordinary course of business and any refinancings, renewals or replacements
of any such Purchase Money Indebtedness or Capitalized Lease Obligation
(subject to the limitations on the principal amount thereof set forth in
this clause (x)), the principal amount of which Purchase Money
Indebtedness and Capitalized Lease Obligations shall not in the aggregate
at any one time outstanding exceed 5% of the Company's consolidated total
assets stated in accordance with GAAP as of the end of the last preceding
fiscal quarter for which financial statements are available;
(xi) the Management Subordinated Notes; and
(xii) additional Indebtedness of the Company or any of its
Subsidiaries (other than Indebtedness specified in clauses (i) through
(xi) above) not to exceed $5,000,000 in the aggregate at any one time
outstanding.
"Permitted Investments" means, for any Person, Investments made on or
after the date of this Indenture consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
<PAGE> 24
-16-
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person, if as a result of such Investment (a) such Person
becomes a Restricted Subsidiary of the Company, (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or
a Restricted Subsidiary thereof or (c) such business or assets are owned
by the Company or a Restricted Subsidiary;
(iv) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to either or both of the Issuers or a Restricted
Subsidiary solely as partial consideration for the consummation of an
Asset Sale that is otherwise permitted by Section 4.10;
(v) Investments consisting of (a) purchases and acquisitions of
inventory, supplies, materials and equipment, or (b) licenses or leases of
intellectual property and other assets, in each case in the ordinary
course of business;
(vi) Investments consisting of (a) loans and advances to employees
for reasonable travel, relocation and business expenses in the ordinary
course of business not to exceed $1,000,000 in the aggregate at any one
time outstanding, (b) loans to employees of the Company for the sole
purpose of purchasing equity of the Company, (c) extensions of trade
credit in the ordinary course of business, and (d) prepaid expenses
incurred in the ordinary course of business;
(vii) without duplication, Investments consisting of Indebtedness
permitted pursuant to clause (iv) under the definition of Permitted
Indebtedness;
(viii) Investments existing on the date of this Indenture;
(ix) Investments of the Company under Interest Rate Agreements;
(x) Investments under Commodity Hedge Agreements entered into in the
ordinary course of business consistent with reasonable business
requirements and not for speculation;
(xi) Investments consisting of endorsements for collection or deposit
in the ordinary course of business; and
<PAGE> 25
-17-
(xii) Investments (other than Investments specified in clauses (i)
through (xi) above) in an aggregate amount, as valued at the time each
such Investment is made, not exceeding $5,000,000 for all such Investments
from and after the Issue Date; provided that the amount available for
Investments to be made pursuant to this clause (xii) shall be increased
from time to time to the extent any return on capital is received by the
Company or a Restricted Subsidiary on an Investment previously made in
reliance on this clause (xii).
"Permitted Liens" means (i) Liens on property or assets of, or any shares
of stock of or secured debt of, any corporation or other entity existing at the
time such corporation or other entity becomes a Restricted Subsidiary of the
Company or at the time such corporation or other entity is merged into the
Company or any of its Restricted Subsidiaries; provided that such Liens are not
incurred in connection with, or in contemplation of, such corporation becoming
a Restricted Subsidiary of the Company or merging into the Company or any of
its Restricted Subsidiaries, (ii) Liens securing Refinancing Indebtedness;
provided that any such Lien does not extend to or cover any Property, shares or
debt other than the Property, shares or debt securing the Indebtedness so
refunded, refinanced or extended, (iii) Liens in favor of the Issuers or any of
their Restricted Subsidiaries, (iv) Liens securing industrial revenue bonds,
(v) Liens to secure Purchase Money Indebtedness and Capitalized Lease
Obligations that are permitted under clause (x) of the definition of "Permitted
Indebtedness"; provided that (a) with respect to any Purchase Money
Indebtedness, any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost (including sales and excise taxes, installation and delivery charges and
other direct costs of, and other direct expenses paid or charged in connection
with, such purchase or construction) of such Property, (b) with respect to any
Purchase Money Indebtedness, the principal amount of the Indebtedness secured
by such Lien does not exceed 100% of such costs, and (c) such Lien does not
extend to or cover any Property other than the item of Property that is the
subject of such Purchase Money Indebtedness or Capitalized Lease Obligation, as
the case may be, and any improvements on such item, (vi) statutory liens or
landlords', carriers', warehousemen's, mechanics', suppliers', materialman's,
repairmen's or other like Liens arising in the ordinary course of business
which do not secure any Indebtedness and with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings, if a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor, (vii) Liens for taxes,
assessments or governmental charges that are being contested in good faith by
appropriate proceedings, (viii) Liens securing Senior Indebtedness or Guarantor
Senior Indebtedness, (ix) Liens existing on the Issue Date, (x) any extensions,
substitutions, replacements or renewals of the foregoing, (xi) Liens incurred
in the ordinary course of business in connection with worker's compensation,
unemployment insurance or other forms of government insurance or benefits, or
to secure the performance of letters of credit, bids, tenders, statutory
obligations, surety and appeal bonds,
<PAGE> 26
-18-
leases, government contracts and other similar obligations (other than
obligations for borrowed money) entered into in the ordinary course of
business, (xii) any attachment or judgment Lien not constituting an Event of
Default under this Indenture that is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established
in accordance with GAAP (if so required), (xiii) Liens arising from the filing,
for notice purposes only, of financing statements in respect of operating
leases, (xiv) Liens arising by operation of law in favor of depositary banks
and collecting banks, incurred in the ordinary course of business, (xv) Liens
consisting of restrictions on the transfer of securities pursuant to applicable
federal and state securities laws, (xvi) interests of lessors and licensors
under leases and licenses to which the Issuers or any of their Restricted
Subsidiaries is a party and (xvii) with respect to any real property occupied
by the Company or any of its Restricted Subsidiaries, all easements, rights of
way, licenses and similar encumbrances on or defects of title that do not
materially impair the use of such property for its intended purposes.
"Permitted Tax Distributions" means distributions by Holdings or the
Company to their respective partners or members from time to time in an amount
approximately equal to the income tax liability of such partners or members of
Holdings or the Company, as the case may be, resulting from the taxable income
of Holdings or the Company, as the case may be, (after taking into account, to
the extent they may reduce such tax liability, all of the prior tax losses of
Holdings or the Company, as the case may be, to the extent such losses have not
previously been deemed to reduce the taxable income of Holdings or the Company,
as the case may be, and thereby reduce distributions for taxes in accordance
herewith); such distribution for taxes shall be based on the approximate
highest combined tax rate that applies to any one of the partners or members of
Holdings or the Company, as the case may be.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
"Physical Notes" means certificated Notes in registered form in
substantially the form set forth in Exhibit A.
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Preferred Units" means the Preferred Units provided for in the Third
Amended and Restated Agreement of Limited Partnership of Holdings.
<PAGE> 27
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"Private Exchange Notes" shall have the meaning assigned thereto in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Rule 144A Notes and on any Physical Notes (other than Regulation S Notes)
delivered prior to the issuance of the Exchange Notes in the form set forth in
Exhibit B.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in
the most recent consolidated balance sheet of such Person and its Subsidiaries
under GAAP.
"Public Equity Offering" means a public offering by the Company, Holdings,
Capital, TWP Capital Corp. or Communications of shares of its Common Stock
(however designated and whether voting or non-voting) and any and all rights,
warrants or options to acquire such Common Stock; provided, however, that in
connection with any such Public Equity Offering by Communications, the net
proceeds of such Public Equity Offering are contributed to the Company as
common equity.
"Purchase Money Indebtedness" means any Indebtedness incurred by a Person
to finance (within 90 days from incurrence) the cost (including the cost of
construction) of an item of Property acquired in the ordinary course of
business, the principal amount of which Indebtedness does not exceed the sum of
(i) 100% of such cost and (ii) reasonable fees and expenses of such Person
incurred in connection therewith.
"Qualified Institutional Buyer" or "QIB" shall have the meaning specified
in Rule 144A promulgated under the Securities Act.
"Recapitalization" means the transactions described in the
Recapitalization Agreement.
"Recapitalization Agreement" means the Securities Purchase and Redemption
Agreement dated August 27, 1997 by and among Holdings, Communications, TWP
Recapitalization Corp., THL and certain limited partners of Holdings and
Communications, as amended as of September 30, 1997.
"Redeemable Dividend" means, for any dividend or distribution (other than
Permitted Tax Distributions) with regard to Disqualified Capital Stock, the
quotient of the dividend or distribution divided by the difference between one
and the maximum statutory
<PAGE> 28
-20-
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the issuer of such Disqualified Capital Stock.
"Redemption Date" when used with respect to any Note to be redeemed means
the date fixed for such redemption pursuant to the terms of the Notes.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Company outstanding on the Issue Date or other
Indebtedness permitted to be incurred by the Company or its Restricted
Subsidiaries pursuant to the terms of this Indenture, but only to the extent
that (i) the Refinancing Indebtedness is subordinated to the Notes to at least
the same extent as the Indebtedness being refunded, refinanced or extended, if
at all, (ii) the Refinancing Indebtedness is scheduled to mature either (a) no
earlier than the Indebtedness being refunded, refinanced or extended, or (b)
after the maturity date of the Notes, (iii) the portion, if any, of the
Refinancing Indebtedness that is scheduled to mature on or prior to the
maturity date of the Notes has a weighted average life to maturity at the time
such Refinancing Indebtedness is incurred that is equal to or greater than the
weighted average life to maturity of the portion of the Indebtedness being
refunded, refinanced or extended that is scheduled to mature on or prior to the
maturity date of the Notes, (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is equal to or less than the sum of (a) the
aggregate principal amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (b) the amount of accrued and unpaid
interest, if any, and premiums owed, if any, not in excess of preexisting
prepayment provisions on such Indebtedness being refunded, refinanced or
extended and (c) the amount of customary fees, expenses and costs related to
the incurrence of such Refinancing Indebtedness, and (v) such Refinancing
Indebtedness is incurred by the same Person that initially incurred the
Indebtedness being refunded, refinanced or extended, except that the Company
may incur Refinancing Indebtedness to refund, refinance or extend Indebtedness
of any Wholly-Owned Subsidiary of the Company.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of November 12, 1997 among the Issuers and CIBC Oppenheimer Corp. and
First Union Capital Markets Corp., as Initial Purchasers.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Responsible Officer," when used with respect to the Trustee, means an
officer or assistant officer assigned to the corporate trust department of the
Trustee (or any successor group of the Trustee) including any vice president,
assistant vice president, assistant secretary, treasurer or assistant treasurer
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a
<PAGE> 29
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particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Capital Stock
of the Issuers or any Restricted Subsidiary of the Issuers or any payment made
to the direct or indirect holders (in their capacities as such) of Capital
Stock of the Issuers or any Restricted Subsidiary of the Issuers (other than
(x) dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Disqualified Capital Stock), (y) Permitted Tax
Distributions and (z) in the case of Restricted Subsidiaries of the Company,
dividends or distributions payable to the Company or to a Wholly-Owned
Subsidiary of the Company), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company or any of its
Restricted Subsidiaries (other than Capital Stock owned by the Company or a
Wholly-Owned Subsidiary of the Company, excluding Disqualified Capital Stock),
(iii) the making of any principal payment on, or the purchase, defeasance,
repurchase, redemption or other acquisition or retirement for value, prior to
any scheduled maturity, scheduled repayment or scheduled sinking fund payment,
of any Indebtedness which is subordinated in right of payment to the Notes
other than subordinated Indebtedness acquired in anticipation of satisfying a
scheduled sinking fund obligation, principal installment or final maturity (in
each case due within one year of the date of acquisition), (iv) without
limiting the generality of the foregoing clause (iii), the making of any
principal or interest payment on the Management Subordinated Notes, (v) the
making of any payments to the Equity Compensation Trust, (vi) the making of any
Investment or guarantee of any Investment in any Person other than a Permitted
Investment, (vii) any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary on the basis of the Investment by the Issuers therein and (viii)
forgiveness of any Indebtedness of an Affiliate of the Issuers (other than a
Restricted Subsidiary) to the Issuers or a Restricted Subsidiary. For purposes
of determining the amount expended for Restricted Payments, cash distributed or
invested shall be valued at the face amount thereof and property other than
cash shall be valued at its fair market value determined by the Company's Board
of Directors.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Unrestricted Subsidiary or any Person that is to become a Subsidiary as a
Restricted Subsidiary if immediately after giving effect to such action (and
treating any Acquired Indebtedness as having been incurred at the time of such
action), the Issuers could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.06.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
<PAGE> 30
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"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of the
Company of any real or tangible personal Property, which Property has been or
is to be sold or transferred by the Company or such Restricted Subsidiary to
such Person in contemplation of such leasing.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the United States Securities and Exchange Commission as
constituted from time to time or any successor performing substantially the
same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit Agreement, dated as of October
1, 1997, among the Issuers, the lenders listed therein and Canadian Imperial
Bank of Commerce, as administrative agent, and First Union National Bank, as
documentation agent, as amended and restated as of November 6, 1997, together
with the documents related thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
adding Subsidiaries of the Issuers as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Senior Indebtedness" means the principal of and premium, if any, and
interest (including, without limitation, interest accruing or that would have
accrued but for the filing of a bankruptcy, reorganization or other insolvency
proceeding whether or not such interest constitutes an allowable claim in such
proceeding) on, and any and all other fees, expense reimbursement obligations,
indemnities and other amounts due pursuant to the terms of all agreements,
documents and instruments providing for, creating, securing or evidencing or
otherwise entered into in connection with (a) all Indebtedness of the Issuers
owed to lenders under the Senior Credit Facility, (b) all obligations of the
Company with respect to any Interest Rate Agreement, (c) all obligations of the
Company to reimburse any bank or other Person in respect of amounts paid under
letters of credit, acceptances or other similar instruments, (d) all other
Indebtedness of the Company which does not provide that it is to rank pari
passu with or subordinate to the Notes and (e) all deferrals, renewals,
extensions and refundings of, and amendments, modifications and supplements to,
any of the Senior Indebtedness described above. Notwithstanding anything to
the contrary in the foregoing, Senior Indebtedness will not include (i)
Indebtedness of the Company to any of its Subsidiaries, (ii) Indebtedness
represented by the
<PAGE> 31
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Notes, (iii) any Indebtedness which by the express terms of the agreement or
instrument creating, evidencing or governing the same is junior or subordinate
in right of payment to any item of Senior Indebtedness, (iv) any trade payable
arising from the purchase of goods or materials or for services obtained in the
ordinary course of business or (v) Indebtedness incurred in violation of this
Indenture.
"Subsidiary" of any specified Person means any corporation, partnership,
limited liability company, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired, (i) in the case of a
corporation, of which more than 50% of the total voting power of the Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, limited liability company, joint venture, association or other
business entity, with respect to which such first-named Person or any of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise or if in accordance with
GAAP such entity is consolidated with the first-named Person for financial
statement purposes.
"Temporary Cash Investments" means (i) Investments in marketable direct
obligations issued or guaranteed by the United States of America, or of any
governmental agency or political subdivision thereof, maturing within 365 days
of the date of purchase; (ii) Investments in certificates of deposit issued by
a bank organized under the laws of the United States of America or any state
thereof or the District of Columbia, in each case having capital, surplus and
undivided profits totaling more than $500,000,000 and rated at least A by S&P
and A-2 by Moody's maturing within 365 days of purchase; or (iii) Investments
not exceeding 365 days in duration in money market funds that invest
substantially all of such funds' assets in the Investments described in the
preceding clauses (i) and (ii).
"THL" means Thomas H. Lee Equity Fund III, L.P.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of this Indenture (except as provided in
Section 8.03 hereof).
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary by a resolution adopted by the Board
of Directors of the Company; provided that a Subsidiary organized or acquired
after the Issue Date may be so classified as an Unrestricted
<PAGE> 32
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Subsidiary only if such classification is in compliance with the covenant set
forth in Section 4.09 hereof. The Trustee shall be given prompt notice by the
Company of each resolution adopted by the Board of Directors of the Company
under this provision, together with a copy of each such resolution adopted.
"U.S. Government Obligations" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and shall
also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or a specific payment of
principal or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt.
"Wholly-Owned Subsidiary" of a specified Person means any Subsidiary (or,
if such specified Person is the Company, a Restricted Subsidiary), all of the
outstanding voting securities (other than directors' qualifying shares) of
which are owned, directly or indirectly, by such Person.
Section 1.02 Other Definitions.
The definitions of the following terms may be found in the sections
indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Affiliate Transaction" ........... 4.11(a)
"Agent Members" ................... 2.16(a)
"Bankruptcy Law" .................. 6.01
"Business Day" .................... 12.07
"CEDEL" ........................... 2.16(a)
"Change of Control Offer" ......... 4.19(a)
"Change of Control Payment Date" .. 4.19(b)
</TABLE>
<PAGE> 33
-25-
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Change of Control Purchase Price" ... 4.19(a)
"Covenant Defeasance" ................ 9.03
"Custodian" .......................... 6.01
"Euroclear" .......................... 2.16(a)
"Event of Default" ................... 6.01
"Excess Proceeds Offer" .............. 4.10(a)
"Global Notes" ....................... 2.16(a)
"Guarantee Payment Blockage Period" .. 10.07(b)
"Guarantor Representative" ........... 10.07(a)
"Initial Blockage Period" ............ 11.03(b)
"Initial Guarantee Blockage Period" .. 10.07(b)
"Legal Defeasance" ................... 9.02
"Legal Holiday" ...................... 12.07
"Offer Period" ....................... 4.10(b)
"Other Notes" ........................ 2.02
"Paying Agent" ....................... 2.03
"Payment Blockage Period" ............ 11.03(b)
"Purchase Date" ...................... 4.10(b)
"Registrar" .......................... 2.03
"Regulation S Global Notes" .......... 2.16(a)
"Regulation S Notes" ................. 2.02
"Reinvestment Date" .................. 4.10(a)
"Representative" ..................... 11.03(a)
"Restricted Global Note" ............. 2.16(a)
"Restricted Period" .................. 2.16(f)
"Rule 144A Notes" .................... 2.02
</TABLE>
Section 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the portion of
such provision required to be incorporated herein in order for this Indenture
to be qualified under the TIA is incorporated by reference in and made a part
of this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
<PAGE> 34
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"indenture securityholder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor on the indenture securities" means the Issuers, the Guarantors or
any other obligor on the Notes.
All other terms used in this Indenture that are defined by the TIA, defined in
the TIA by reference to another statute or defined by SEC rule have the
meanings therein assigned to them.
Section 1.04 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it herein, whether defined
expressly or by reference;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the plural
include the singular;
(v) words used herein implying any gender shall apply to every
gender; and
(vi) whenever in this Indenture there is mentioned, in any context,
principal, interest or any other amount payable under or with respect to
any Note, such mention shall be deemed to include mention of the payment
of Additional Interest to the extent that, in such context, Additional
Interest is, was or would be payable in respect thereof.
ARTICLE 2
THE NOTES
<PAGE> 35
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Section 2.01 Amount of Notes.
The Trustee shall authenticate Notes for original issue on the Issue Date
in the aggregate principal amount of $100,000,000, upon a written order of the
Company in the form of an Officers' Certificate of the Company. Such written
order shall specify the amount of Notes to be authenticated and the date on
which the Notes are to be authenticated.
Upon receipt of an Issuer Request and an Officers' Certificate certifying
that a registration statement relating to an exchange offer specified in the
Registration Rights Agreement is effective and that the conditions precedent to
a private exchange thereunder have been met, the Trustee shall authenticate an
additional series of Notes in an aggregate principal amount not to exceed
$100,000,000 for issuance in exchange for the Notes tendered for exchange
pursuant to such exchange offer registered under the Securities Act not bearing
the Private Placement Legend or pursuant to a Private Exchange. Exchange Notes
or Private Exchange Notes may have such distinctive series designations and
such changes in the form thereof as are specified in the Issuer Request
referred to in the preceding sentence.
Section 2.02 Form and Dating.
The Notes and the Trustee's certificate of authentication with respect
thereto shall be substantially in the form set forth in Exhibit A, which is
incorporated in and forms a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, rule or usage to which the
Issuers are subject. Any such notations, legends or endorsements shall be
furnished to the Trustee in writing. Without limiting the generality of the
foregoing, Notes offered and sold to Qualified Institutional Buyers in reliance
on Rule 144A ("Rule 144A Notes") shall bear the legend and include the form of
assignment set forth in Exhibit B, Notes offered and sold in offshore
transactions in reliance on Regulation S ("Regulation S Notes") shall bear the
legend and include the form of assignment set forth in Exhibit C, and Notes
offered and sold to Institutional Accredited Investors in transactions exempt
from registration under the Securities Act not made in reliance on Rule 144A or
Regulation S ("Other Notes") shall be represented by Physical Notes bearing the
Private Placement Legend. Each Note shall be dated the date of its
authentication.
The terms and provisions contained in the Notes shall constitute, and are
expressly made, a part of this Indenture and, to the extent applicable, the
Issuers and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and agree to be bound thereby.
<PAGE> 36
-28-
The Notes may be presented for registration of transfer and exchange at
the offices of the Registrar in the Borough of Manhattan.
Section 2.03 Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one Officer (each
of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Notes for each of the Issuers by manual
or facsimile signature.
If an Officer whose signature is on a Note was an Officer at the time of
such execution but no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid nevertheless.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. Notwithstanding the foregoing, if any
Note shall have been authenticated and delivered hereunder but never issued and
sold by the Issuers, and the Issuers shall deliver such Note to the Trustee for
cancellation as provided in Section 2.12, for all purposes of this Indenture
such Note shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Issuers to authenticate the Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate the Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Issuers and Affiliates of the Issuers.
Each Paying Agent is designated as an authenticating agent for purposes of
this Indenture.
The Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
Section 2.04 Registrar and Paying Agent.
The Issuers shall maintain an office or agency (which shall be located in
the Borough of Manhattan in The City of New York, State of New York) where
Notes may be presented for registration of transfer or for exchange (the
"Registrar"), and an office or agency
<PAGE> 37
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where Notes may be presented for payment (the "Paying Agent") and an office or
agency where notices and demands to or upon the Issuers, if any, in respect of
the Notes and this Indenture may be served. The Issuers hereby initially
designate the office of Wilmington Trust Company, c/o Harris Trust Company of
New York, 88 Pine Street, 19th Floor, Wall Street Plaza, New York, New York
10005, as their office or agency in the Borough of Manhattan, The City of New
York. The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Issuers may have one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. Neither the Issuers
nor any Affiliate thereof may act as Paying Agent. The Issuers may change any
Paying Agent or Registrar without notice to any Noteholder.
The Issuers shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Issuers shall notify the Trustee of the name and
address of any such Agent. If the Issuers fail to maintain a Registrar or
Paying Agent, or fail to give the foregoing notice, the Trustee shall act as
such and shall be entitled to compensation in accordance with Section 7.07.
The Issuers initially designate the Corporate Trust Office of the Trustee
as Registrar, Paying Agent and agent for service of notices and demands in
connection with the Notes and this Indenture.
Section 2.05 Paying Agent to Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the Noteholders
or the Trustee all money held by the Paying Agent for the payment of principal
of or premium or interest on the Notes (whether such money has been paid to it
by the Issuers or any other obligor on the Notes), and the Issuers and the
Paying Agent shall notify the Trustee of any default by the Issuers (or any
other obligor on the Notes) in making any such payment. Money held in trust by
the Paying Agent need not be segregated except as required by law and in no
event shall the Paying Agent be liable for any interest on any money received
by it hereunder. The Issuers at any time may require the Paying Agent to pay
all money held by it to the Trustee and account for any funds disbursed and the
Trustee may at any time during the continuance of any Event of Default
specified in Section 6.01(1) or (2), upon written request to the Paying Agent,
require such Paying Agent to pay forthwith all money so held by it to the
Trustee and to account for any funds disbursed. Upon making such payment, the
Paying Agent shall have no further liability for the money delivered to the
Trustee.
<PAGE> 38
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Section 2.06 Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Noteholders. If the Trustee is not the Registrar, the Issuers shall
furnish to the Trustee at least five Business Days before each Interest Payment
Date, and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the
names and addresses of the Noteholders.
Section 2.07 Transfer and Exchange.
Subject to Sections 2.16 and 2.17, when Notes are presented to the
Registrar with a request from the Holder of such Notes to register a transfer
or to exchange them for an equal principal amount of Notes of other authorized
denominations, the Registrar shall register the transfer as requested. Every
Note presented or surrendered for registration of transfer or exchange shall be
duly endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Issuers and the Registrar, duly executed by the Holder
thereof or his attorneys duly authorized in writing. To permit registrations
of transfers and exchanges, the Issuers shall issue and execute and the Trustee
shall authenticate new Notes evidencing such transfer or exchange at the
Registrar's request. No service charge shall be made to the Noteholder for any
registration of transfer or exchange. The Issuers may require from the
Noteholder payment of a sum sufficient to cover any transfer taxes or other
governmental charge that may be imposed in relation to a transfer or exchange,
but this provision shall not apply to any exchange pursuant to Section 2.11,
3.06, 4.10, 4.19 or 8.05 (in which events the Issuers shall be responsible for
the payment of such taxes). The Trustee shall not be required to exchange or
register a transfer of any Note for a period of 15 days immediately preceding
the selection of Notes to be redeemed or any Note selected for redemption.
Any Holder of the Global Note shall, by acceptance of such Global Note,
agree that transfers of the beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Global Note shall be required to be reflected in a book entry.
Each Holder of a Note agrees to indemnify the Issuers and the Trustee
against any liability that may result from the transfer, exchange or assignment
of such Holder's Note in violation of any provision of this Indenture and/or
applicable U.S. Federal or state securities law.
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Except as expressly provided herein, neither the Trustee nor the Registrar
shall have any duty to monitor the Issuers' compliance with or have any
responsibility with respect to the Issuers' compliance with any Federal or
state securities laws.
Section 2.08 Replacement Notes.
If a mutilated Note is surrendered to the Registrar or the Trustee, or if
the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken, the Issuers shall issue and the Trustee shall authenticate a
replacement Note if the Holder of such Note furnishes to the Issuers and the
Trustee evidence reasonably acceptable to them of the ownership and the
destruction, loss or theft of such Note and if the requirements of Section
8-405 of the New York Uniform Commercial Code as in effect on the date of this
Indenture are met. If required by the Trustee or the Issuers, an indemnity
bond shall be posted, sufficient in the judgment of both to protect the
Issuers, the Trustee or any Paying Agent from any loss that any of them may
suffer if such Note is replaced. The Issuers may charge such Holder for the
Issuers' reasonable out-of-pocket expenses in replacing such Note and the
Trustee may charge the Issuers for the Trustee's expenses (including, without
limitation, attorneys' fees and disbursements) in replacing such Note. Every
replacement Note shall constitute an additional contractual obligation of the
Issuers.
Section 2.09 Outstanding Notes.
The Notes outstanding at any time are all Notes that have been
authenticated by the Trustee except for (a) those canceled by it, (b) those
delivered to it for cancellation, (c) to the extent set forth in Sections 9.01
and 9.02, on or after the date on which the conditions set forth in Section
9.01 or 9.02 have been satisfied, those Notes theretofore authenticated and
delivered by the Trustee hereunder and (d) those described in this Section 2.09
as not outstanding. Subject to Section 2.10, a Note does not cease to be
outstanding because an Issuer or one of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee receives written notice that the replaced Note
is held by a bona fide purchaser in whose hands such Note is a legal, valid and
binding obligation of the Issuers.
If the Paying Agent holds, in its capacity as such, on any Maturity Date
or on any optional redemption date, money sufficient to pay all accrued
interest and principal with respect to the Notes payable on that date and is
not prohibited from paying such money to the Holders thereof pursuant to the
terms of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
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Section 2.10 Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any declaration of acceleration or notice of default or
direction, waiver or consent or any amendment, modification or other change to
this Indenture, Notes owned by an Issuer or any Affiliate of an Issuer shall be
disregarded as though they were not outstanding, except that for the purposes
of determining whether the Trustee shall be protected in relying on any such
declaration, notice, direction, waiver or consent or any amendment,
modification or other change to this Indenture, only Notes as to which a
Responsible Officer of the Trustee has received an Officers' Certificate
stating that such Notes are so owned shall be so disregarded. Notes so owned
which have been pledged in good faith shall not be disregarded if the pledgee
establishes the pledgee's right so to act with respect to the Notes and that
the pledgee is not either of the Issuers, any other obligor or guarantor on the
Notes or any of their respective Affiliates.
Section 2.11 Temporary Notes.
Until definitive Notes are prepared and ready for delivery, the Issuers
may prepare and the Trustee shall authenticate temporary Notes. Temporary
Notes shall be substantially in the form of definitive Notes but may have
variations that the Issuers consider appropriate for temporary Notes. Without
unreasonable delay, the Issuers shall prepare and the Trustee shall
authenticate definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.
Section 2.12 Cancellation.
The Issuers at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall (subject to the
record-retention requirements of the Exchange Act) destroy canceled Notes and
deliver a certificate of destruction thereof to the Issuers. The Issuers may
not reissue or resell, or issue new Notes to replace, Notes that the Issuers
have redeemed or paid, or that have been delivered to the Trustee for
cancellation.
Section 2.13 Defaulted Interest.
If the Issuers default on a payment of interest on the Notes, they shall
pay the defaulted interest, plus (to the extent permitted by law) any interest
payable on the defaulted interest, pursuant to Section 4.01 hereof, to the
Persons who are Noteholders on a subsequent
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special record date, which date shall be at least five Business Days prior to
the payment date. The Issuers shall fix such special record date and payment
date and provide the Trustee at least 20 days notice of the proposed amount of
defaulted interest to be paid and the special payment date and at the same time
the Issuers shall deposit with the Trustee the aggregate amount proposed to be
paid in respect of such defaulted interest. At least 15 days before such
special record date, the Issuers shall mail to each Noteholder a notice that
states the special record date, the payment date and the amount of defaulted
interest, and interest payable on defaulted interest, if any, to be paid. The
Issuers may make payment of any defaulted interest in any other lawful manner
not inconsistent with the requirements (if applicable) of any securities
exchange on which the Notes may be listed and, upon such notice as may be
required by such exchange, if, after written notice given by the Issuers to the
Trustee of the proposed payment pursuant to this sentence, such manner of
payment shall be deemed practicable by the Trustee.
Section 2.14 CUSIP Number.
The Issuers in issuing the Notes may use a "CUSIP" number, and if so, such
CUSIP number shall be included in notices of redemption or exchange as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Issuers shall
promptly notify the Trustee of any such CUSIP number used by the Issuers in
connection with the issuance of the Notes and of any change in the CUSIP
number.
Section 2.15 Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest Payment Date and
Maturity Date, the Issuers shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Trustee to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be. The principal and
interest on Global Notes shall be payable to the Depository or its nominee, as
the case may be, as the sole registered owner and the sole holder of the Global
Notes represented thereby. The principal and interest on Physical Notes shall
be payable at the office of the Paying Agent. The Issuers shall deliver an
Officers' Certificate to the Trustee, at least 5 business days before any
applicable payment date, setting forth the amount of Additional Interest due
per $1,000 aggregate principal amount of Notes.
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Section 2.16 Book-Entry Provisions for Global Notes.
(a) Rule 144A Notes initially shall be represented by one or more notes
in registered, global form without interest coupons (collectively, the
"Restricted Global Note"). Regulation S Notes initially shall be represented
by one or more notes in registered, global form without interest coupons
(collectively, the "Regulation S Global Note," and, together with the
Restricted Global Note and any other global notes representing Notes, the
"Global Notes"). The Global Notes shall bear legends as set forth in Exhibit
D. The Global Notes initially shall (i) be registered in the name of the
Depository or the nominee of such Depository, in each case for credit to an
account of an Agent Member (or, in the case of the Regulation S Global Notes,
Agent Members of the Depository holding for Euroclear System ("Euroclear") and
Cedel Bank, S.A. ("CEDEL")), (ii) be delivered to the Trustee as custodian for
such Depository and (iii) bear legends as set forth in Exhibit B with respect
to Restricted Global Notes and Exhibit C with respect to Regulation S Global
Notes.
Members of, or direct or indirect participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Trustee as its custodian,
or under the Global Notes, and the Depository may be treated by the Issuers,
the Trustee and any agent of the Issuers or the Trustee as the absolute owner
of the Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Trustee or any agent of the Issuers or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to transfer in whole, but
not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition, a Global Note
shall be exchangeable for Physical Notes if (i) the Depository (x) notifies the
Issuers that it is unwilling or unable to continue as depository for such
Global Note and the Issuers thereupon fail to appoint a successor depository or
(y) has ceased to be a clearing agency registered under the Exchange Act, (ii)
the Issuers, at their option, notify the Trustee in writing that they elect to
cause the issuance of such Physical Notes or (iii) there shall have occurred
and be continuing a Default or an Event of Default with respect to the Notes.
In all cases, Physical Notes delivered in exchange for any Global Note or
beneficial interests therein shall be registered in the names, and issued in
any approved denominations, requested by or on behalf of the Depository (in
accordance with its customary procedures).
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(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the
Issuers shall execute, and the Trustee shall upon receipt of a written order
from the Issuers authenticate and make available for delivery, one or more
Physical Notes of like tenor and amount.
(d) In connection with the transfer of Global Notes as an entirety to
beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed
to be surrendered to the Trustee for cancellation, and the Issuers shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in writing in exchange for its beneficial
interest in the Global Notes, an equal aggregate principal amount of Physical
Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Note delivered in exchange
for an interest in a Global Note pursuant to paragraph (b), (c) or (d) shall,
except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section 2.17,
bear the Private Placement Legend or, in the case of the Regulation S Global
Note, the legend set forth in Exhibit C, in each case, unless the Issuers
determine otherwise in compliance with applicable law.
(f) On or prior to the 40th day after the later of the commencement of the
offering of the Notes represented by a Regulation S Global Note and the
original issue date of such Notes (such period through and including such 40th
day, the "Restricted Period"), a beneficial interest in the Regulation S Global
Note may be held only through Euroclear or CEDEL, as indirect participants in
DTC, unless transferred to a Person who takes delivery in the form of an
interest in the corresponding Restricted Global Note, only upon receipt by the
Trustee of a written certification from the transferor to the effect that such
transfer is being made (i)(a) to a Person who the transferor reasonably
believes is a Qualified Institutional Buyer in a transaction meeting the
requirements of Rule 144A or (b) pursuant to another exemption from the
registration requirements under the Securities Act which is accompanied by an
opinion of counsel regarding the availability of such exemption and (ii) in
accordance with all applicable securities laws of any state of the United
States or any other jurisdiction.
(g) Beneficial interests in the Restricted Global Note may be transferred
to a Person who takes delivery in the form of an interest in the Regulation S
Global Note, whether before or after the expiration of the Restricted Period,
only if the transferor first delivers to the Trustee a written certificate to
the effect that such transfer is being made in accordance with Rule 903 or 904
of Regulation S or Rule 144 (if available) and that, if such transfer occurs
prior to the
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expiration of the Restricted Period, the interest transferred will be held
immediately thereafter through Euroclear or CEDEL.
(h) Any beneficial interest in one of the Global Notes that is transferred
to a Person who takes delivery in the form of an interest in another Global
Note shall, upon transfer, cease to be an interest in such Global Note and
become an interest in such other Global Note and, accordingly, shall thereafter
be subject to all transfer restrictions and other procedures applicable to
beneficial interests in such other Global Note for as long as it remains such
an interest.
(i) The Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
Section 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S.
Persons. The following provisions shall apply with respect to the registration
of any proposed transfer of a Note constituting a Restricted Note to any
Institutional Accredited Investor which is not a QIB or to any Non-U.S.
Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Note, whether or not such Note bears the Private
Placement Legend, if (x) the requested transfer is after November 12, 1999
or such other date as such Note shall be freely transferable under Rule
144 as certified in an Officers' Certificate or (y) (1) in the case of a
transfer to an Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit E hereto or
(2) in the case of a transfer to a Non-U.S. Person (including a QIB), the
proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit F hereto; provided that in the case
of a transfer of a Note bearing the Private Placement Legend for a Note
not bearing the Private Placement Legend, the Registrar has received an
Officers' Certificate authorizing such transfer; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of (x)
the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures,
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whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Registrar shall reflect on its books and records the date and an
increase in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note transferred or
the Issuers shall execute and the Trustee shall authenticate and make available
for delivery one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with respect
to the registration of any proposed registration of transfer of a Note
constituting a Restricted Note to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for
on such Holder's Note stating, or has otherwise advised the Issuers and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on such Holder's Note stating, or has otherwise
advised the Issuers and the Registrar in writing, that it is purchasing
the Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
QIB within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Issuers as it has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Restricted Global Note, upon receipt by
the Registrar of instructions given in accordance with the Depository's
and the Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of the
Restricted Global Note in an amount equal to the principal amount of the
Physical Notes to be transferred, and the Trustee shall cancel the
Physical Notes so transferred.
(c) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only
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Notes that bear the Private Placement Legend unless (i) it has received the
Officers' Certificate required by paragraph (a)(i)(x) of this Section 2.17,
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Issuers to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act or (iii) such Note has been sold
pursuant to an effective registration statement under the Securities Act and
the Registrar has received an Officers' Certificate from the Issuers to such
effect.
(c) General. By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture.
The Registrar shall retain for a period of two years copies of all
letters, notices and other written communications received pursuant to Section
2.16 or this Section 2.17. The Issuers shall have the right to inspect and
make copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable notice to the Registrar.
Section 2.18 Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months.
ARTICLE 3
REDEMPTION
Section 3.01 Notices to Trustee.
If the Issuers elect to redeem Notes pursuant to paragraph 6 of the Notes,
at least 45 days prior to the Redemption Date or during such other period as
the Trustee may agree to (which agreement shall not unreasonably be withheld)
the Issuers shall notify the Trustee in writing of the Redemption Date, the
principal amount of Notes to be redeemed and the redemption price, and deliver
to the Trustee an Officers' Certificate stating that such redemption will
comply with the conditions contained in paragraph 6 of the Notes, as
appropriate.
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Section 3.02 Selection by Trustee of Notes to Be Redeemed.
In the event that fewer than all of the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed, if the Notes are listed on a
national securities exchange, in accordance with the rules of such exchange or,
if the Notes are not so listed, either on a pro rata basis or by lot, or such
other method as it shall deem fair and equitable; provided, however, that the
Issuers shall have previously notified the Trustee in writing of any such
exchange on which the Notes are listed, and provided, further, that if a
partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portion thereof for redemption shall be made by the
Trustee on a pro rata basis, unless such a method is prohibited. The Trustee
shall promptly notify the Issuers of the Notes selected for redemption and, in
the case of any Notes selected for partial redemption, the principal amount
thereof to be redeemed. The Trustee may select for redemption portions of the
principal of the Notes that have denominations larger than $1,000. Notes and
portions thereof the Trustee selects shall be redeemed in amounts of $1,000 or
whole multiples of $1,000. For all purposes of this Indenture unless the
context otherwise requires, provisions of this Indenture that apply to Notes
called for redemption also apply to portions of Notes called for redemption.
Section 3.03 Notice of Redemption.
At least 30 days, and no more than 60 days, before a Redemption Date, the
Issuers shall mail, or cause to be mailed, a notice of redemption by
first-class mail to each Holder of Notes to be redeemed at his or her last
address as the same appears on the registry books maintained by the Registrar
pursuant to Section 2.03 hereof.
The notice shall identify the Notes to be redeemed (including the CUSIP
numbers thereof) and shall state:
(i) the Redemption Date and the amount of premium and accrued
interest to be paid;
(ii) the redemption price and the amount of premium and accrued
interest to be paid;
(iii) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date and upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion will be issued;
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(iv) the name and address of the Paying Agent;
(v) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(vi) that unless the Issuers default in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date;
(vii) the provision of paragraph 6 of the Notes pursuant to which the
Notes called for redemption are being redeemed; and
(viii) the aggregate principal amount of Notes that are being
redeemed.
At the Issuers' written request made at least five Business Days prior to
the date on which notice is to be given, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' sole expense.
Section 3.04 Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is mailed, Notes
called for redemption become due and payable on the Redemption Date and at the
redemption price, including any premium, plus interest accrued to the
Redemption Date. Upon surrender to the Paying Agent, such Notes shall be paid
at the redemption price, including any premium, plus interest accrued to the
Redemption Date, provided that if the Redemption Date is after a regular record
date and on or prior to the Interest Payment Date, the accrued interest shall
be payable to the Holder of the redeemed Notes registered on the relevant
record date, and provided, further, that if a Redemption Date is a Legal
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
Section 3.05 Deposit of Redemption Price.
On or prior to 10:00 A.M., New York City time, on each Redemption Date,
the Issuers shall deposit with the Paying Agent in immediately available funds
money sufficient to pay the redemption price of and accrued interest on all
Notes to be redeemed on that date other than Notes or portions thereof called
for redemption on that date which have been delivered by the Issuers to the
Trustee for cancellation.
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On and after any Redemption Date, if money sufficient to pay the
redemption price of and accrued interest on Notes called for redemption shall
have been made available in accordance with the preceding paragraph, the Notes
called for redemption will cease to accrue interest and the only right of the
Holders of such Notes will be to receive payment of the redemption price of
and, subject to the first proviso in Section 3.04, accrued and unpaid interest
on such Notes to the Redemption Date. If any Note surrendered for redemption
shall not be so paid, interest will be paid, from the Redemption Date until
such redemption payment is made, on the unpaid principal of the Note and any
interest not paid on such unpaid principal, in each case, at the rate and in
the manner provided in the Notes.
Section 3.06 Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Trustee shall
authenticate for a Holder a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
ARTICLE 4
COVENANTS
Section 4.01 Payment of Notes.
The Issuers shall pay the principal of and interest (including all
Additional Interest as provided in the Registration Rights Agreement) on the
Notes on the dates and in the manner provided in the Notes and this Indenture.
An installment of principal or interest shall be considered paid on the date it
is due if the Trustee or Paying Agent holds on that date money designated for
and sufficient to pay such installment.
The Issuers shall pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Notes.
Section 4.02 SEC Reports.
(a) The Issuers will file with the SEC all information, documents and
reports to be filed with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, in the case of the Company, whether or not the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act, and in the case of Capital, only to the extent subject to such filing
requirements; provided, however, that the Company shall not be required to make
any such
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filings prior to the date on which the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended January 31, 1998 would have been required to be
filed, if, at the time such filings would have been required to be made with
the SEC, either (i) the Company shall have provided to each Holder of the Notes
the information that would have been required to be filed or (ii) the Exchange
Registration Statement (as such term is defined in the Registration Rights
Agreement) has been filed with the SEC but has not yet been declared effective
and copies of the Exchange Offer Registration Statement and any amendments
thereto (to the extent such Registration Statement and/or amendments contain
additional information not disclosed in the Offering Memorandum that would have
been the subject of a filing required to be made under Section 13 or 15(d) of
the Exchange Act) have been provided to each Holder of the Notes, provided that
any exhibits to the Exchange Registration Statement (or any amendments thereto)
need not be delivered to any Holder of the Notes, but sufficient copies thereof
shall be furnished to the Trustee as reasonably requested to permit the Trustee
to deliver any such exhibits to any Holder of the Notes upon request. The
Issuers (at their own expense) will file with the Trustee within 15 days after
they file them with the SEC, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) which the
Issuers file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Upon qualification of this Indenture under the TIA, the Issuers shall also
comply with the provisions of TIA Section 314(a). Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Issuers' compliance with any of their covenants
hereunder (as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
(b) At the Issuers' expense, regardless of whether the Issuers are
required to furnish such reports and other information referred to in paragraph
(a) above to their equityholders pursuant to the Exchange Act, the Company
shall cause such reports and other information to be mailed to the Holders at
their addresses appearing in the register of Notes maintained by the Registrar
within 15 days after they file them with the SEC.
(c) The Issuers shall, upon request, provide to any Holder of Notes or any
prospective transferee of any such Holder any information concerning the
Issuers (including financial statements) necessary in order to permit such
Holder to sell or transfer Notes in compliance with Rule 144A under the
Securities Act; provided, however, that the Issuers shall not be required to
furnish such information in connection with any request made on or after the
date which is two years from the later of (i) the date such Note (or any
predecessor Note) was acquired from the Issuers or (ii) the date such Note (or
any predecessor Note) was last acquired from an "affiliate" of the Issuers
within the meaning of Rule 144 under the Securities Act.
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Section 4.03 Waiver of Stay, Extension or Usury Laws.
The Issuers covenant (to the extent that they may lawfully do so) that
they shall not at any time insist upon, or plead (as a defense or otherwise) or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Issuers from paying all or any portion of the principal of, premium, if any,
and/or interest on the Notes as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that they may lawfully do so)
the Issuers hereby expressly waive all benefit or advantage of any such law,
and covenant that they will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 4.04 Compliance Certificate.
(a) The Issuers shall deliver to the Trustee, within 120 days after the
end of each fiscal year and on or before 50 days after the end of the first,
second and third quarters of each fiscal year, an Officers' Certificate (one of
the signers on behalf of each of the Issuers of which shall be the principal
executive officer, principal financial officer or principal accounting officer
of such Issuer) stating that a review of the activities of the Issuers and
their Subsidiaries during such fiscal year or fiscal quarter, as the case may
be, has been made under the supervision of the signing Officers with a view to
determining whether the Issuers have kept, observed, performed and fulfilled
their obligations under this Indenture, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge the
Issuers have kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and are not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults
or Events of Default of which he or she may have knowledge and what action they
are taking or propose to take with respect thereto) and that to the best of his
or her knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal of or interest, if any, on the Notes
is prohibited or if such event has occurred, a description of the event and
what action the Issuers are taking or propose to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.02 above shall be accompanied by a
written statement of the Issuers' independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements nothing has come to
their attention which would lead them to believe that the Issuers have violated
any provisions
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of this Article 4 or Article 5 of this Indenture or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly for
any failure to obtain knowledge of any such violation.
(c) The Issuers will, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Issuers are taking or propose to take with respect
thereto.
(d) Both the Company's and Capital's fiscal year currently ends on April
30. The Company will provide notice to the Trustee of any change in fiscal
year.
Section 4.05 Taxes.
The Issuers shall, and shall cause each of their Subsidiaries to, pay
prior to delinquency all material taxes, assessments, and governmental levies
except as contested in good faith and by appropriate proceedings.
Section 4.06 Limitation on Additional Indebtedness.
The Issuers shall not, and shall not permit any Restricted Subsidiary of
the Issuers to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) unless (a) after giving effect to the incurrence of such
Indebtedness and the receipt and application of the proceeds thereof, the ratio
of the total Indebtedness of the Issuers and their Restricted Subsidiaries
(excluding any Indebtedness owed to a Restricted Subsidiary by any other
Restricted Subsidiary or the Issuers and any Indebtedness owed to the Issuers
by any Restricted Subsidiary) to the Issuers' EBITDA (determined on a pro forma
basis for the last four fiscal quarters of the Issuers and their consolidated
Restricted Subsidiaries for which financial statements are available at the
date of determination) is less than (i) 6.25 to 1 if the Indebtedness is
incurred prior to November 15, 2000 and (ii) 6.0 to 1 if the Indebtedness is
incurred on or after November 15, 2000; provided, however, that if the
Indebtedness which is the subject of a determination under this provision is
Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, property or assets, then such
ratio shall be determined by giving effect to (on a pro forma basis, as if the
transaction had occurred at the beginning of the four-quarter period) both the
incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Issuers or any Restricted Subsidiary (together with any
other Acquired Indebtedness or other Indebtedness incurred or assumed by the
Issuers and Restricted Subsidiaries in connection with acquisitions consummated
by the Issuers during such four-quarter period) and the inclusion in the
Issuers' EBITDA of the EBITDA of the
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acquired Person, business, property or assets and any pro forma expense and
cost reductions calculated on a basis consistent with Regulation S-X under the
Securities Act as in effect and as applied as of the Issue Date (together with
the EBITDA of, and pro forma expense and cost reductions relating to, any other
Person, business, property or assets acquired by the Issuers or any Restricted
Subsidiary during such four-quarter period), and (b) no Default or Event of
Default shall have occurred and be continuing at the time or as a consequence
of the incurrence of such Indebtedness.
Notwithstanding the foregoing, the Issuers and their Restricted
Subsidiaries may incur Permitted Indebtedness.
Section 4.07 Limitation on Preferred Stock of Restricted Subsidiaries.
The Issuers shall not permit any Restricted Subsidiary to issue any
Preferred Stock (except Preferred Stock to the Company or a Restricted
Subsidiary) or permit any Person (other than the Company or a Subsidiary) to
hold any such Preferred Stock unless the Company or such Restricted Subsidiary
would be entitled to incur or assume Indebtedness under the first paragraph of
Section 4.06 hereof in an aggregate principal amount equal to the aggregate
liquidation value of the Preferred Stock to be issued.
Section 4.08 Limitation on Capital Stock of Subsidiaries.
The Issuers shall not (i) sell, pledge, hypothecate or otherwise convey or
dispose of any Capital Stock of a Subsidiary (other than under the Senior
Credit Facility or under the terms of any Designated Senior Indebtedness) or
(ii) permit any of their Subsidiaries to issue any Capital Stock, other than to
the Issuers or a Wholly-Owned Subsidiary of the Company. The foregoing
restrictions shall not apply to an Asset Sale made in compliance with Section
4.10 hereof or the issuance of Preferred Stock in compliance with Section 4.07
hereof. In no event will the Company sell, pledge, hypothecate or otherwise
convey or dispose of any Capital Stock of Capital or will Capital issue any
Capital Stock.
Section 4.09 Limitation on Restricted Payments.
The Issuers will not make, and will not permit any of their Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment, unless:
(a) no Default or Event of Default shall have occurred and be continuing
at the time of or immediately after giving effect to such Restricted Payment;
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(b) immediately after giving pro forma effect to such Restricted Payment,
the Issuers could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under Section 4.06 hereof; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date does
not exceed the sum of (1) 50% of the cumulative Consolidated Net Income of the
Company subsequent to the Issue Date (or minus 100% of any cumulative deficit
in Consolidated Net Income during such period) plus (2) 100% of the aggregate
Net Proceeds and the fair market value of securities or other property received
by the Company from the issue or sale, after the Issue Date, of Capital Stock
(other than Disqualified Capital Stock or Capital Stock of the Company issued
to any Subsidiary of the Company) of the Company or any Indebtedness or other
securities of the Company convertible into or exercisable or exchangeable for
Capital Stock (other than Disqualified Capital Stock) of the Company which has
been so converted or exercised or exchanged, as the case may be, plus (3)
without duplication of any amounts included in clauses (1) and (2) above, 100%
of the aggregate net proceeds of any equity contribution received by the
Company from a holder of the Company's Capital Stock plus (4) $5,000,000. For
purposes of determining under this clause (c) the amount expended for
Restricted Payments, cash distributed shall be valued at the face amount
thereof and property other than cash shall be valued at its fair market value
determined, in good faith, by the Board of Directors of the Company.
The provisions of this Section 4.09 shall not prohibit: (i) the payment of
any distribution within 60 days after the date of declaration thereof, if at
such date of declaration such payment would comply with the provisions of this
Indenture; (ii) the retirement of any shares of Capital Stock of the Company or
subordinated Indebtedness by conversion into, or by or in exchange for, shares
of Capital Stock (other than Disqualified Capital Stock), or out of, the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of
the Company) of other shares of Capital Stock of the Company (other than
Disqualified Capital Stock); (iii) the redemption or retirement of Indebtedness
of the Issuers subordinated to the Notes in exchange for, by conversion into,
or out of the Net Proceeds of, a substantially concurrent sale or incurrence of
Indebtedness (other than any Indebtedness owed to a Subsidiary) of the Issuers
that is contractually subordinated in right of payment to the Notes to at least
the same extent as the subordinated Indebtedness being redeemed or retired;
(iv) the retirement of any shares of Disqualified Capital Stock by conversion
into, or by exchange for, shares of Disqualified Capital Stock, or out of the
Net Proceeds of the substantially concurrent sale (other than to a Subsidiary
of the Company) of other shares of Disqualified Capital Stock; (v) so long as
no Default or Event of Default shall have occurred and be continuing at the
time of or immediately after giving effect to such payment, the purchase,
redemption or other acquisition for value of shares of Capital Stock (other
than Disqualified Capital Stock) or options on such shares held by the Issuers'
or
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their Subsidiaries' officers or employees or former officers or employees (or
their estates or beneficiaries under their estates) upon the death, disability,
retirement or termination of employment of such current or former officers or
employees pursuant to the terms of an employee benefit plan or any other
agreement pursuant to which such shares of Capital Stock or options were issued
or pursuant to a severance, buy-sale or right of first refusal agreement with
such current or former officer or employee and payments of principal and
interest on the Management Subordinated Notes in accordance with the terms
thereof; provided that the aggregate cash consideration paid, or distributions
or payments made, pursuant to this clause (v) shall not exceed $2,000,000 in
any fiscal year or $10,000,000 in the aggregate from and after the Issue Date;
(vi) payments by the Company to the Equity Compensation Trust, in an aggregate
amount not to exceed $3,100,000, to be paid up to 12 months after the Issue
Date; (vii) the payment of management fees under the management agreement with
THL and its Affiliates, successors and assigns that do not exceed $500,000 per
year and the reimbursement of expenses pursuant thereto; (viii) distributions
to Holdings solely for the purpose of enabling Holdings to pay its, Capital's
or TCC's reasonable operating and administrative expenses (including
professional fees and expenses), the amount of which in any fiscal year will
not exceed 0.2% of the Company's consolidated net revenues for such fiscal
year; (ix) distributions not to exceed $100,000 in the aggregate to Holdings to
make payments as liquidated damages to the holders of the Discount Notes under
the registration rights agreement relating to the Discount Notes; (x) the
distribution of the proceeds of the offering of the Notes to Holdings on the
Issue Date to the extent necessary to repay outstanding Indebtedness under
Holdings' $75 million senior subordinated financing facility provided by CIBC
Oppenheimer Corp. and First Union and (xi) the redemption on the Issue Date of
approximately one-half of the outstanding Preferred Units with the proceeds
from the sale of the Discount Notes. Notwithstanding the foregoing, the amount
of any payments made in reliance on clause (v) above shall reduce the amount
otherwise available for Restricted Payments pursuant to subparagraph (c) above.
Not later than the date of making any Restricted Payment, the Issuers
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.09 were computed, which calculations
may be based upon the Issuers' latest available financial statements, and, to
the extent that the absence of a Default or an Event of Default is a condition
to the making of such Restricted Payment, that no Default or Event of Default
exists and is continuing and no Default or Event of Default will occur
immediately after giving effect to any Restricted Payments.
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Section 4.10 Limitation on Certain Asset Sales.
(a) The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, consummate an Asset Sale unless (i) such Issuer or such
Restricted Subsidiary, as the case may be, receives consideration at the time
of such sale or other disposition at least equal to the fair market value
thereof (as determined in good faith by the Board of Directors of the Company,
and evidenced by a Board Resolution); (ii) not less than 75% of the
consideration received by the Issuers or their Subsidiaries, as the case may
be, is in the form of cash or Temporary Cash Investments other than in the case
where the Company is undertaking a Permitted Asset Swap; and (iii) the Asset
Sale Proceeds received by such Issuer or such Restricted Subsidiary are applied
(a) first, to the extent the Company elects, or is required, to prepay, repay
or purchase debt or to reduce an unused commitment to lend under any then
existing Senior Indebtedness of the Company or any Restricted Subsidiary within
180 days following the receipt of the Asset Sale Proceeds from any Asset Sale,
but only to the extent that any such repayment shall result in a permanent
reduction of the commitments thereunder in an amount equal to the principal
amount so repaid; (b) second, to the extent of the balance of Asset Sale
Proceeds after application as described above, to the extent the Company or a
Restricted Subsidiary elects, to an investment in assets (including Capital
Stock or other securities purchased in connection with the acquisition of
Capital Stock or property of another Person) used or useful in businesses
similar or ancillary to the business of the Company or such Restricted
Subsidiary as conducted at the time of such Asset Sale, provided that such
investment occurs or the Issuers or a Restricted Subsidiary enter into
contractual commitments to make such investment, subject only to customary
conditions (other than the obtaining of financing), on or prior to the 181st
day following receipt of such Asset Sale Proceeds (the "Reinvestment Date") and
Asset Sale Proceeds contractually committed are so applied within 270 days
following the receipt of such Asset Sale Proceeds; and (c) third, if, on the
Reinvestment Date with respect to any Asset Sale, the Available Asset Sale
Proceeds exceed $10,000,000, the Issuers shall apply an amount equal to such
Available Asset Sale Proceeds to an offer to repurchase the Notes, at a
purchase price in cash equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase (an "Excess
Proceeds Offer").
(b) If the Issuers are required to make an Excess Proceeds Offer, the
Issuers shall mail, within 30 days following the Reinvestment Date, a notice to
the Holders stating, among other things: (1) that such Holders have the right
to require the Issuers to apply the Available Asset Sale Proceeds to repurchase
such Notes at a purchase price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase; (2)
the purchase date (the "Purchase Date"), which shall be no earlier than 30 days
and not later than 60 days from the date such notice is mailed; (3) the
instructions, determined by the Issuers, that each Holder must follow in order
to have such Notes repurchased; and (4) the
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calculations used in determining the amount of Available Asset Sale Proceeds to
be applied to the repurchase of such Notes. The Excess Proceeds Offer shall
remain open for a period of 20 Business Days following its commencement (the
"Offer Period"). The notice, which shall govern the terms of the Excess
Proceeds Offer, shall state:
(i) that the Excess Proceeds Offer is being made pursuant to this
Section 4.10 and the length of time the Excess Proceeds Offer will remain
open;
(ii) the purchase price and the Purchase Date;
(iii) that any Note not tendered or accepted for payment will
continue to accrue interest;
(iv) that any Note accepted for payment pursuant to the Excess
Proceeds Offer shall cease to accrue interest on and after the Purchase
Date and the deposit of the purchase price with the Trustee;
(v) that Holders electing to have a Note purchased pursuant to any
Excess Proceeds Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Issuers, a depositary, if appointed by the Issuers,
or a Paying Agent at the address specified in the notice prior to the
close of business on the Business Day preceding the Purchase Date;
(vi) that Holders will be entitled to withdraw their election if the
Issuers, depositary or Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Note the Holder delivered for purchase and a statement that such Holder is
withdrawing its election to have the Note purchased;
(vii) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Available Asset Sale Proceeds, the Issuers shall
select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Issuers so that only Notes
in denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(viii) that Holders whose Notes were purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered.
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On or before the Purchase Date, the Issuers shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, Notes or
portions thereof tendered pursuant to the Excess Proceeds Offer, deposit with
the Paying Agent U.S. legal tender sufficient to pay the purchase price plus
accrued interest, if any, on the Notes to be purchased and deliver to the
Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Issuers in accordance with the terms of this
Section 4.10. The Paying Agent shall promptly (but in any case not later than
5 days after the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Note tendered by such Holder and
accepted by the Issuers for purchase, and the Issuers shall promptly issue a
new Note, the Guarantors shall endorse the guarantee thereon and the Trustee
shall authenticate and mail or make available for delivery such new Note to
such Holder equal in principal amount to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered by
the Issuers to the Holder thereof. The Issuers will publicly announce the
results of the Excess Proceeds Offer on the Purchase Date by sending a press
release to the Dow Jones News Service or similar business news service in the
United States. If an Excess Proceeds Offer is not fully subscribed, the
Issuers may retain that portion of the Available Asset Sale Proceeds not
required to repurchase Notes and use such portion for general corporate
purposes, and such retained portion shall not be considered in the calculation
of "Available Asset Sale Proceeds" with respect to any subsequent offer to
purchase Notes.
Section 4.11 Limitation on Transactions with Affiliates.
(a) The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate (including entities in which the Issuers or any of its Restricted
Subsidiaries own a minority interest)(an "Affiliate Transaction") or extend,
renew, waive or otherwise modify the terms of any Affiliate Transaction entered
into prior to the Issue Date if such extension, renewal, waiver or other
modification is more disadvantageous to the Holders in any material respect
than the original agreement as in effect on the Issue Date unless (i) such
Affiliate Transaction is between or among the Issuers and/or their Wholly-Owned
Subsidiaries and/or Holdings (so long as Holdings owns at least 99% of the
voting and economic power of the Common Stock of the Company); or (ii) the
terms of such Affiliate Transaction are fair and reasonable to the Issuers or
such Restricted Subsidiary, as the case may be, and the terms of such Affiliate
Transaction are at least as favorable as the terms which could be obtained by
the Issuers or such Restricted Subsidiary, as the case may be, in a comparable
transaction made on an arm's-length basis between unaffiliated parties. In any
Affiliate Transaction involving an amount or having a value in excess of
$1,000,000 which is not permitted under clause (i) above, the Issuers must
obtain a resolution of the Board of Directors of the Company certifying that
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such Affiliate Transaction complies with clause (ii) above. In any Affiliate
Transaction with a value in excess of $5,000,000 which is not permitted under
clause (i) above (other than any sale by the Company of its Capital Stock that
is not Disqualified Capital Stock), the Issuers must obtain a written opinion
as to the fairness of such a transaction from an independent investment banking
firm.
(b) The limitations set forth in Section 4.11(a) shall not apply to (i)
any Restricted Payment that is not prohibited by Section 4.09 hereof, (ii) any
transaction pursuant to an agreement, arrangement or understanding existing on
the Issue Date and described in Schedule 4.11 hereto, (iii) any transaction,
approved by the Board of Directors of the Company or Capital, with an officer
or director of the Issuers or of any Subsidiary in his or her capacity as
officer or director entered into in the ordinary course of business or (iv)
transactions permitted by Section 5.01 hereof.
Section 4.12 Limitations on Liens.
The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Issuers or any Restricted Subsidiary or any shares of stock
(other than under the Senior Credit Facility) or debt of any Restricted
Subsidiary which owns property or assets, now owned or hereafter acquired,
unless (i) if such Lien secures Indebtedness which is pari passu with the
Notes, then the Notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligation is no longer secured
by a Lien or (ii) if such Lien secures Indebtedness which is subordinated to
the Notes, any such Lien shall be subordinated to the Lien granted to the
Holders of the Notes to the same extent as such subordinated Indebtedness is
subordinated to the Notes.
Section 4.13 Limitations on Investments.
The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, make any Investment other than (i) a Permitted Investment or
(ii) an Investment that is made as a Restricted Payment in compliance with
Section 4.09 hereof, after the Issue Date.
Section 4.14 Limitation on Creation of Subsidiaries.
The Issuers shall not create or acquire, nor permit any of their
Restricted Subsidiaries to create or acquire, any Subsidiary other than (i) a
Restricted Subsidiary that is acquired or created in connection with the
acquisition by the Company of a business primarily engaged in, or an asset
primarily utilized in, providing directory services and/or classified
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advertising, or (ii) an Unrestricted Subsidiary; provided, however, that each
Restricted Subsidiary acquired or created pursuant to clause (i) shall at the
time it has either assets or stockholder's equity in excess of $100,000 execute
a guarantee in the form attached as Exhibit G to this Indenture and reasonably
satisfactory in form and substance to the Trustee (and with such documentation
relating thereto as the Trustee shall require, including, without limitation, a
supplement or amendment to this Indenture and Opinions of Counsel as to the
enforceability of such guarantee), pursuant to which such Restricted Subsidiary
shall become a Guarantor.
Section 4.15 Limitation on Other Senior Subordinated Debt.
The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness (other than the Notes and the Guarantees, as the case may be) that
is both (i) subordinate in right of payment to any Senior Indebtedness of the
Issuers or their Restricted Subsidiaries, as the case may be, and (ii) senior
in right of payment to the Notes and the Guarantees, as the case may be. For
purposes of this Section 4.15, Indebtedness is deemed to be senior in right of
payment to the Notes and the Guarantees, as the case may be, if it is not
explicitly subordinate in right of payment to Senior Indebtedness at least to
the same extent as the Notes and the Guarantees, as the case may be, are
subordinate to Senior Indebtedness.
Section 4.16 Limitation on Sale and Lease-Back Transactions.
The Issuers shall not, and shall not permit any Restricted Subsidiary to,
enter into any Sale and Lease-Back Transaction unless (i) the consideration
received in such Sale and Lease-Back Transaction is at least equal to the fair
market value of the property sold, as determined, in good faith, by the Board
of Directors of the Company and (ii) the Issuers could incur the Attributable
Indebtedness in respect of such Sale and Lease-Back Transaction in compliance
with Section 4.06.
Section 4.17 Payments for Consent.
Neither the Issuers nor any of their Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or
agreed to be paid to all Holders of the Notes which so consent, waive or agree
to amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement.
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Section 4.18 Legal Existence.
Subject to Article 5 hereof, the Issuers shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) their legal
existence, and the corporate, partnership or other existence of each Restricted
Subsidiary, in accordance with the respective organizational documents (as the
same may be amended from time to time) of each Restricted Subsidiary and the
rights (charter and statutory), licenses and franchises of the Issuers and
their Restricted Subsidiaries; provided, however, that the Issuers shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of their Restricted Subsidiaries if the
Board of Directors of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Issuers and their
Restricted Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders.
Section 4.19 Change of Control.
(a) Within 20 days of the occurrence of a Change of Control, the Company
shall notify the Trustee in writing of such occurrence and shall make an offer
to purchase (the "Change of Control Offer") the outstanding Notes at a purchase
price equal to 101% of the principal amount thereof plus any accrued and unpaid
interest thereon to the Change of Control Payment Date (such purchase price
being hereinafter referred to as the "Change of Control Purchase Price") in
accordance with the procedures set forth in this Section 4.19.
If the Senior Credit Facility is in effect, or any amounts are owing
thereunder or in respect thereof, at the time of the occurrence of a Change of
Control, prior to the mailing of the notice to Holders described in paragraph
(b) below, but in any event within 20 days following any Change of Control, the
Issuers on a joint and several basis covenant to (i) repay in full all
obligations under or in respect of the Senior Credit Facility or offer to repay
in full all obligations under or in respect of the Senior Credit Facility and
repay the obligations under or in respect of the Senior Credit Facility of each
lender who has accepted such offer or (ii) obtain the requisite consent under
the Senior Credit Facility to permit the repurchase of the Notes pursuant to
this Section 4.19. The Issuers must first comply with the covenant described
in the preceding sentence before they shall be required to purchase Notes in
the event of a Change of Control; provided that the Issuers' failure to comply
with the covenant described in the preceding sentence constitutes an Event of
Default described in clause (3) under Section 6.01 hereof if not cured within
60 days after the notice required by such clause.
(b) Within 20 days of the occurrence of a Change of Control, the Company
also shall (i) cause a notice of the Change of Control Offer to be sent at
least once to the Dow
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Jones News Service or similar business news service in the United States and
(ii) send by first-class mail, postage prepaid, to the Trustee and to each
Holder of the Notes, at the address appearing in the register maintained by the
Registrar of the Notes, a notice stating:
(i) that the Change of Control Offer is being made pursuant to this
Section 4.19 and that all Notes tendered will be accepted for payment, and
otherwise subject to the terms and conditions set forth herein;
(ii) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 20 Business Days from the
date such notice is mailed (the "Change of Control Payment Date"));
(iii) that any Note not tendered will remain outstanding and continue
to accrue interest;
(iv) that, unless the Issuers default in the payment of the Change of
Control Purchase Price, any Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that Holders accepting the offer to have their Notes purchased
pursuant to a Change of Control Offer will be required to surrender the
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day
preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their acceptance if
the Paying Agent receives, not later than the close of business on the
third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Notes delivered for purchase,
and a statement that such Holder is withdrawing his election to have such
Notes purchased;
(vii) that Holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, provided that each Note purchased and each such
new Note issued shall be in an original principal amount in denominations
of $1,000 and integral multiples thereof;
(viii) any other procedures that a Holder must follow to accept a
Change of Control Offer or effect withdrawal of such acceptance; and
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(ix) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Issuers shall, to the extent
lawful, (i) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Issuers. The Paying Agent shall promptly mail to each
Holder of Notes so accepted payment in an amount equal to the purchase price
for such Notes, and the Issuers shall execute and issue, the Guarantors shall
endorse the Guarantee and the Trustee shall promptly authenticate and mail to
such Holder, a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered; provided that each such new Note shall be issued in an
original principal amount in denominations of $1,000 and integral multiples
thereof.
(c) (i) If either Issuer or any Subsidiary thereof has issued any
outstanding (A) Indebtedness that is subordinated in right of payment to the
Notes or (B) Preferred Stock, and such Issuer or Subsidiary is required to make
a change of control offer or to make a distribution with respect to such
subordinated Indebtedness or Preferred Stock in the event of a change of
control, the Issuers shall not consummate any such offer or distribution with
respect to such subordinated Indebtedness or Preferred Stock until such time as
the Issuers shall have paid the Change of Control Purchase Price in full to the
Holders of Notes that have accepted the Issuers' Change of Control Offer and
shall otherwise have consummated the Change of Control Offer made to Holders of
the Notes and (ii) the Issuers will not issue Indebtedness that is subordinated
in right of payment to the Notes or Preferred Stock with change of control
provisions requiring the payment of such Indebtedness or Preferred Stock prior
to the payment of the Notes in the event of a Change in Control under this
Indenture.
In the event that a Change of Control occurs and the Holders of Notes
exercise their right to require the Issuers to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Issuers will comply with the requirements of Rule 14e-1 as
then in effect with respect to such repurchase.
Section 4.20 Maintenance of Office or Agency.
The Issuers shall maintain an office or agency where Notes may be
surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Issuers in respect of the
Notes and this Indenture may be served. The Issuers shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Issuers shall fail to maintain any such
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required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee as set forth in Section
12.02.
The Issuers may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations. The Issuers
shall give prompt written notice to the Trustee of such designation or
rescission and of any change in the location of any such other office or
agency.
The Issuers hereby initially designate the Corporate Trust Office of the
Trustee as such office of the Issuers.
Section 4.21 Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.
(a) The Issuers shall, and shall cause each of their Restricted
Subsidiaries to, at all times cause all properties used or useful in the
conduct of their business to be maintained and kept in good condition, repair
and working order (reasonable wear and tear excepted) and supplied with all
necessary equipment, and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereto.
(b) The Issuers shall, and shall cause each of their Restricted
Subsidiaries to, maintain insurance (which may include self-insurance) in such
amounts and covering such risks as are usually and customarily carried with
respect to similar facilities according to their respective locations.
(c) The Issuers shall, and shall cause each of their Subsidiaries to, keep
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Issuers
and each Subsidiary of the Issuers, in accordance with GAAP consistently
applied to the Issuers and their Subsidiaries taken as a whole.
(d) The Issuers shall and shall cause each of their Subsidiaries to comply
with all statutes, laws, ordinances or government rules and regulations to
which they are subject, non-compliance with which would materially adversely
affect the business, earnings, assets or financial condition of the Issuers and
their Subsidiaries taken as a whole.
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Section 4.22 Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Issuers to (a)(i) pay dividends or make any other
distributions to the Issuers or any Restricted Subsidiary of the Issuers (A) on
its Capital Stock or (B) with respect to any other interest or participation
in, or measured by, its profits or (ii) repay any Indebtedness or any other
obligation owed to the Issuers or any Restricted Subsidiary of the Issuers, (b)
make loans or advances or capital contributions to the Issuers or any of their
Restricted Subsidiaries or (c) transfer any of its properties or assets to the
Issuers or any of their Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (i) encumbrances or restrictions
existing on the Issue Date to the extent and in the manner such encumbrances
and restrictions are in effect on the Issue Date (including without limitation
pursuant to the Senior Credit Facility or under the Discount Notes), (ii) the
Indenture, the Notes and the Guarantees, (iii) applicable law, (iv) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person (including any
Subsidiary of the Person), so acquired, (v) customary non-assignment provisions
in leases or other agreements entered in the ordinary course of business and
consistent with past practices, (vi) Refinancing Indebtedness; provided that
such payment restrictions are no more restrictive than those contained in the
agreements governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, (vii) customary restrictions in security
agreements or mortgages securing Indebtedness of the Issuers or a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the
property subject to such security agreements and mortgages or (viii) customary
restrictions with respect to a Restricted Subsidiary of the Issuers pursuant to
an agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary.
Section 4.23 Further Assurance to the Trustee.
The Issuers shall, upon the reasonable request of the Trustee, execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the provisions of this
Indenture.
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Section 4.24 Limitation on Conduct of Business of Capital.
Except to the extent permitted under Article 5, Capital shall not
hold any operating assets or other properties or conduct any business other
than to serve as an Issuer and co-obligor with respect to the Notes and shall
not own any Capital Stock of any other Person.
Section 4.25 Certain Consents and Filings.
On or before December 31, 1997, the Issuers shall have made, or
caused to have been made, all filings, and shall have received all required
consents of third parties, relating to the Asset Drop-Down, other than filings
and consents the absence of which, individually or in the aggregate, will not
have a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole, or on the legality, validity, binding effect or enforceability of
the Notes or this Indenture. The Issuers will deliver to the Trustee, within
10 days after such date, an Officers' Certificate stating that such filings
have been made and such consents received, subject only to the qualification in
the immediately preceding sentence.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01 Limitation on Consolidation, Merger and Sale of Assets.
(a) Neither of the Issuers will, nor will they permit any
Guarantor to, consolidate with, merge with or into, or transfer all or
substantially all of its assets (as an entirety or substantially as an entirety
in one transaction or a series of related transactions) to, any Person unless
(in the case of the Company or any Guarantor): (i) the Company or such
Guarantor, as the case may be, shall be the continuing Person, or the Person
(if other than the Company or such Guarantor) formed by such consolidation or
into which the Company or such Guarantor, as the case may be, is merged or to
which the properties and assets of the Company or such Guarantor, as the case
may be, are transferred shall be a corporation (or in the case of the Company,
a corporation or a limited partnership) organized and existing under the laws
of the United States or any State thereof or the District of Columbia and
shall expressly assume, in writing by a supplemental indenture, executed and
delivered to the Trustee, in form and substance satisfactory to the Trustee,
all of the obligations of the Company or such Guarantor, as the case may be,
under the Notes and this Indenture, and the obligations under this Indenture
shall remain in full force and effect; provided that at any time the Company
or its successor is a limited partnership there shall be a co-issuer of the
Notes that is a corporation; (ii) immediately before and
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immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction or series of transactions on a pro forma basis the
Consolidated Net Worth of the Company or the surviving entity as the case may
be is at least equal to the Consolidated Net Worth of the Company immediately
before such transaction or series of transactions; and (iv) immediately after
giving effect to such transaction on a pro forma basis the Company or such
Person could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to Section 4.06 hereof. Notwithstanding
anything in this Article 5 to the contrary, but subject to Section 4.19, (a)
any of the Company, Capital and Communications may merge with or into, or
consolidate with, another of them and subject only to compliance with clause
(i) of the immediately preceding sentence and (b) the Company may merge into,
consolidate with or transfer all or substantially all of its assets to another
entity, which entity shall have no significant assets (other than an ownership
interest in the Company) and no liabilities immediately prior to such
transaction, without regard to the requirements of clause (iv) of the
immediately preceding sentence.
(b) In connection with any consolidation, merger or transfer of
assets contemplated by this Section 5.01, the Issuers shall deliver, or cause
to be delivered, to the Trustee, in form and substance reasonably satisfactory
to the Trustee, an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and the supplemental
indenture in respect thereto comply with this Section 5.01 and that all
conditions precedent herein provided for relating to such transaction or
transactions have been complied with.
Section 5.02 Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company or any Guarantor in accordance
with Section 5.01 above, the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company or such Guarantor under this Indenture with the same
effect as if such successor corporation had been named as the Company or such
Guarantor herein, and thereafter the predecessor corporation shall be relieved
of all obligations and covenants under this Indenture and the Notes.
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ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.
An "Event of Default" occurs if
(i) there is a default in the payment of any principal of, or
premium, if any, on the Notes when the same becomes due and payable
whether at maturity, upon acceleration, redemption or otherwise, whether
or not such payment is prohibited by the provisions of Article 11 hereof;
(ii) there is a default in the payment of any interest on any Note
when the same becomes due and payable and the Default continues for a
period of 30 days, whether or not such payment is prohibited by the
provisions of Article 11 hereof;
(iii) either of the Issuers or any Guarantor defaults in the
observance or performance of any other covenant in the Notes or this
Indenture for 60 days after written notice from the Trustee or the
Holders of not less than 25% in the aggregate principal amount of the
Notes then outstanding;
(iv) there is a default in the payment at final maturity of
principal in an aggregate amount of $5,000,000 or more with respect to
any Indebtedness of either Issuer or any Restricted Subsidiary thereof,
or there is an acceleration of any such Indebtedness aggregating
$5,000,000 or more which default shall not be cured, waived or postponed
pursuant to an agreement with the holders of such Indebtedness within 60
days after written notice by the Trustee or any Holder, or which
acceleration shall not be rescinded or annulled within 20 days after
written notice to the Issuers of such Default by the Trustee or any
Holder;
(v) the entry of a final judgment or judgments which can no longer
be appealed for the payment of money in excess of $5,000,000 against
either of the Issuers or any Restricted Subsidiary thereof and such
judgment remains undischarged, for a period of 60 consecutive days during
which a stay of enforcement of such judgment shall not be in effect;
(vi) either of the Issuers or any Restricted Subsidiary pursuant
to or within the meaning of any Bankruptcy Law:
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(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in
an involuntary case,
(c) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become due;
(vii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against either of the Issuers or any
Restricted Subsidiary in an involuntary case,
(b) appoints a Custodian of either of the Issuers or any
Restricted Subsidiary or for all or substantially all of the
property of either of the Issuers or any Restricted Subsidiary, or
(c) orders the liquidation of either of the Issuers or any
Restricted Subsidiary,
and the order or decree remains unstayed and in effect for 60 days; or
(viii) any of the Guarantees ceases to be in full force and effect
or any of the Guarantees is declared to be null and void and
unenforceable or any of the Guarantees is found to be invalid or any of
the Guarantors denies in writing its liability under its Guarantee (other
than by reason of release of a Guarantor in accordance with the terms of
this Indenture).
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
The Trustee may withhold notice to the Holders of the Notes of any
Default (except in payment of principal or premium, if any, or interest on the
Notes) if the Trustee
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considers it to be in the best interest of the Holders of the Notes to do so.
The Trustee shall not be charged with knowledge of any Default, Event of
Default, Change of Control or Asset Sale in payment of Additional Interest
unless written notice thereof shall have been given to a Responsible Officer at
the corporate trust office of the Trustee by the Issuers or any other Person.
Section 6.02 Acceleration.
If an Event of Default (other than an Event of Default arising
under Section 6.01(6) or (7) with respect to either of the Issuers) occurs and
is continuing, the Trustee by notice to the Issuers, or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding may by
written notice to the Issuers and the Trustee declare to be immediately due and
payable the entire principal amount of all the Notes then outstanding plus
accrued but unpaid interest to the date of acceleration and (i) such amounts
shall become immediately due and payable or (ii) if there are any amounts
outstanding under or in respect of the Senior Credit Facility, such amounts
shall become due and payable upon the first to occur of an acceleration of
amounts outstanding under or in respect of the Senior Credit Facility or five
Business Days after receipt by the Company and the Representative of notice of
the acceleration of the Notes; provided, however, that after such acceleration
but before a judgment or decree based on such acceleration is obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Notes may rescind and annul such acceleration and its consequences
if all existing Events of Default, other than the nonpayment of accelerated
principal, premium, if any, or interest that has become due solely because of
the acceleration, have been cured or waived and if the rescission would not
conflict with any judgment or decree. No such rescission shall affect any
subsequent Default or impair any right consequent thereto. In case an Event of
Default specified in Section 6.01(6) or (7) with respect to either of the
Issuers occurs, such principal, premium, if any, and interest amount with
respect to all of the Notes shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the Holders of the
Notes.
Section 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, or premium, if any, and interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture and
may take any necessary action requested of it as Trustee to settle, compromise,
adjust or otherwise conclude any proceedings to which it is a party.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or
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any Noteholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
Section 6.04 Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of a
majority in principal amount of the Notes then outstanding have the right to
waive any existing Default or Event of Default or compliance with any provision
of this Indenture or the Notes. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 6.05 Control by Majority.
The Holders of a majority in principal amount of the Notes then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee by this Indenture. The Trustee, however, may refuse to
follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of another Noteholder
not taking part in such direction, and the Trustee shall have the right to
decline to follow any such direction if the Trustee, being advised by counsel,
determines that the action so directed may not lawfully be taken or if the
Trustee in good faith shall, by a Responsible Officer, determine that the
proceedings so directed may involve it in personal liability; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06 Limitation on Suits.
Subject to Section 6.07 below, a Noteholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(i) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
the Notes then outstanding make a written request to the Trustee to
pursue the remedy;
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(iii) such Holder or Holders offer and if requested provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer, and, if requested provision,
of indemnity; and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60 day period by the Holders of a
majority in aggregate principal amount of the Notes then outstanding.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal of, or premium, if any, and
interest of the Note (including Additional Interest) on or after the respective
due dates expressed in the Note, or to bring suit for the enforcement of any
such payment on or after such respective dates, is absolute and unconditional
and shall not be impaired or affected without the consent of the Holder.
Section 6.08 Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or interest
specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Issuers or the Guarantors (or any other obligor on the Notes) for the whole
amount of unpaid principal and accrued interest remaining unpaid, together with
interest on overdue principal and, to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
rate set forth in the Notes, and such further amounts as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relative to the Issuers or the
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Guarantors (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same
after deduction of its charges and expenses to the extent that any such charges
and expenses are not paid out of the estate in any such proceedings and any
custodian in any such judicial proceeding is hereby authorized by each
Noteholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
or reorganization, arrangement, adjustment or composition affecting the Notes
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceedings.
Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest (including Additional Interest,
if any) as to each, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes; and
THIRD: to the Issuers or, to the extent the Trustee collects any
amount from any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the
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costs of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made
by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 hereof or a suit by
Holders of more than 10% in principal amount of the Notes then outstanding.
Section 6.12 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Issuers, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE 7
TRUSTEE
Section 7.01 Duties of Trustee.
(a) If an Event of Default actually known to a Responsible Officer
of the Trustee has occurred and is continuing, the Trustee shall exercise such
of the rights and powers vested in it by this Indenture and use the same degree
of care and skill in their exercise as a prudent man would exercise or use under
the same circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and no implied
covenants or obligations shall be read into this Indenture against the
Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture but, in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall
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be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts
stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(ii) The Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.02, 6.05 or 6.06 hereof.
(iv) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its rights, powers or duties or to take or
omit to take any action under this Indenture or take any action at the
request or direction of Holders if it shall have reasonable grounds for
believing that repayment of such funds is not assured to it or it does
not receive an indemnity satisfactory to it in its sole discretion
against such risk, liability, loss, fee or expense which may be incurred
by it in connection with such performance.
(d) Whether or not therein expressly so provided, paragraphs (a),
(b), (c) and (e) of this Section 7.01 shall govern every provision of this
Indenture that in any way relates to the Trustee.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it in its sole
discretion against any loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers or
any Guarantor. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by the law.
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Section 7.02 Rights of Trustee.
Subject to Section 7.01 hereof:
(i) The Trustee may rely on any document reasonably believed by it
to be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the
document.
(ii) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both,
which shall conform to the provisions of Section 12.05 hereof. The
Trustee shall be protected and shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or
opinion.
(iii) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed by it with due care.
(iv) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(v) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection from liability in respect of any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
Section 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may make loans to, accept deposits from, perform
services for or otherwise deal with either of the Issuers or any Guarantor, or
any Affiliates thereof, with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee, however,
shall be subject to Sections 7.10 and 7.11 hereof.
Section 7.04 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes or
any Guarantee, it shall not be accountable for the Issuers' or any Guarantor's
use of the proceeds from the sale of Notes or any money paid to the Issuers or
any Guarantor pursuant to the terms of this Indenture and it shall not be
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responsible for any statement in the Notes, Guarantee or this Indenture other
than its certificate of authentication.
Section 7.05 Notice of Defaults.
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Noteholder notice of the Default within
90 days after it occurs. Except in the case of a Default in payment of the
principal of, or premium, if any, or interest on any Note the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determine(s) that withholding the notice is in the interests of the
Noteholders.
Section 7.06 Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after November 15 of any
year, commencing November 15, 1998, the Trustee shall mail to each Noteholder a
brief report dated as of such November 15 that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b)(2). The Trustee
shall also transmit by mail all reports as required by TIA Section 313(c) and
TIA Section 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by mail:
(i) to all registered Holders of Notes, as the names and addresses
of such Holders appear on the Registrar's books; and
(ii) to such Holder of Notes as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose.
A copy of each report at the time of its mailing to Noteholders
shall be filed with the SEC and each stock exchange on which the Notes are
listed. The Issuers shall promptly notify the Trustee when the Notes are listed
on any stock exchange.
Section 7.07 Compensation and Indemnity.
The Issuers and the Guarantors shall pay to the Trustee and Agents
from time to time such compensation as shall be agreed in writing between the
Company and the Trustee for its services hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust). The Issuers and the Guarantors shall reimburse the Trustee
and Agents upon request for all reasonable disbursements, expenses and
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advances incurred or made by it in connection with its duties under this
Indenture, including the reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel.
The Issuers and the Guarantors shall indemnify each of the Trustee and
any predecessor Trustee for, and hold each of them harmless against, any and
all loss, damage, claim, liability or expense, including without limitation
taxes (other than taxes based on the income of the Trustee or such Agent) and
reasonable attorneys' fees and expenses incurred by each of them in connection
with the acceptance or performance of its duties under this Indenture including
the reasonable costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder (including, without limitation, settlement costs). The
Trustee or Agent shall notify the Issuers and the Guarantors in writing
promptly of any claim asserted against the Trustee or Agent for which it may
seek indemnity. However, the failure by the Trustee or Agent to so notify the
Issuers and the Guarantors shall not relieve the Issuers and Guarantors of
their obligations hereunder except to the extent the Issuers and the Guarantors
are prejudiced thereby.
Notwithstanding the foregoing, the Issuers and the Guarantors need not
reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by the Trustee through its negligence or bad faith. To
secure the payment obligations of the Issuers and the Guarantors in this
Section 7.07, the Trustee shall have a lien prior to the Notes on all money or
property held or collected by the Trustee except such money or property held in
trust to pay principal of and interest on particular Notes. The obligations of
the Issuers and the Guarantors under this Section 7.07 to compensate, reimburse
and indemnify the Trustee, Agents and each predecessor Trustee and to pay or
reimburse the Trustee, Agents and each predecessor Trustee for expenses,
disbursements and advances shall be joint and several liabilities of the
Issuers and each of the Guarantors and shall survive the satisfaction,
discharge and termination of this Indenture, including any termination or
rejection hereof under any bankruptcy law or the resignation or removal of the
Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall include
any trustee appointed pursuant to Article 9.
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Section 7.08 Replacement of Trustee.
The Trustee may resign by so notifying the Issuers and the
Guarantors in writing. The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee by notifying the removed Trustee in
writing and may appoint a successor Trustee with the Issuers' written consent
which consent shall not be unreasonably withheld. The Issuers may remove the
Trustee at their election if:
(i) the Trustee fails to comply with Section 7.10 hereof;
(ii) the Trustee is adjudged a bankrupt or an insolvent;
(iii) a receiver or other public officer takes charge of the
Trustee or its property;
(iv) the Trustee otherwise becomes incapable of acting; or
(v) a successor corporation becomes successor Trustee pursuant to
Section 7.09 below.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall notify the holders of such
event and promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Issuers.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or
the Holders of a majority in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective,
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and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Noteholder. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Issuers obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
Section 7.09 Successor Trustee by Consolidation, Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, the successor corporation without
any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2) in every respect. The Trustee
shall have a combined capital and surplus of at least $100,000,000 as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b), including the provision in Section 310(b)(1).
Section 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311 (b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
Section 7.12 Paying Agents.
The Issuers shall cause each Paying Agent other than the Trustee to
execute and deliver to it and the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 7.12:
(a) that it will hold all sums held by it as agent for the payment
of principal of, or premium, if any, or interest on, the Notes (whether
such sums have been paid to it by the Issuers or by any obligor on the
Notes) in trust for the benefit of Holders of the Notes or the Trustee;
(b) that it will at any time during the continuance of any Event of
Default, upon written request from the Trustee, deliver to the Trustee
all sums so held in trust by it together with a full accounting thereof;
and
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(c) that it will give the Trustee written notice within three (3)
Business Days of any failure of the Issuers (or by any obligor on the
Notes) in the payment of any installment of the principal of, premium,
if any, or interest on, the Notes when the same shall be due and
payable.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01 Without Consent of Holders.
The Issuers and the Guarantors, when authorized by a Board
Resolution of each of them, and the Trustee may amend, waive or supplement this
Indenture or the Notes without notice to or consent of any Noteholder:
(i) to comply with Section 5.01 hereof;
(ii) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(iii) to comply with any requirements of the SEC under the TIA;
(iv) to cure any ambiguity, defect or inconsistency, or to make any
other change that does not adversely affect the rights of any
Noteholder;
(v) to make any other change that does not adversely affect the
rights of any Noteholders hereunder; or
(vi) to add a Guarantor.
The Trustee is hereby authorized to join with the Issuers and the
Guarantors in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this Indenture.
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Section 8.02 With Consent of Holders.
The Issuers (each when authorized by a Board Resolution), the
Guarantors (each when authorized by a Board Resolution) and the Trustee may
modify or supplement this Indenture or the Notes with the written consent of the
Holders of not less than a majority in aggregate principal amount of the
outstanding Notes. The Holders of not less than a majority in aggregate
principal amount of the outstanding Notes may waive compliance in a particular
instance by the Issuers or Guarantors with any provision of this Indenture or
the Notes. Subject to Section 8.04, without the consent of each Noteholder
affected, however, an amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, may not:
(i) reduce the amount of Notes whose Holders must consent to an
amendment, supplement or waiver to this Indenture or the Notes;
(ii) reduce the rate of or change the time for payment of interest
on any Note;
(iii) reduce the principal of or premium on or change the stated
maturity of any Note;
(iv) make any Note payable in money other than that stated in the
Note or change the place of payment from New York, New York;
(v) change the amount or time of any payment required by the Notes
or reduce the premium payable upon any redemption of the Notes in
accordance with Section 3.07 hereof, or change the time before which no
such redemption may be made;
(vi) waive a default in the payment of the principal of, or
interest on, or redemption payment with respect to, any Note (including
any obligation to make a Change of Control Offer or, after the Issuers'
obligation to purchase Notes arises thereunder, an Excess Proceeds Offer
or modify any of the provisions or definitions with respect to such
offers);
(vii) make any changes in Sections 6.04 or 6.07 hereof or this
sentence of Section 8.02; or
(viii) affect the ranking of the Notes or the Guarantee in a manner
adverse to the Holders.
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After an amendment, supplement or waiver under this Section 8.02 or
Section 8.01 becomes effective, the Issuers shall mail to the Holders a notice
briefly describing the amendment, supplement or waiver.
Upon the written request of the Issuers, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Noteholders as aforesaid and upon receipt by the
Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Issuers and the Guarantors in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture, in which case the Trustee may, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
Section 8.03 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
Section 8.04 Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may
revoke the consent as to his Note or portion of a Note, if the Trustee receives
the written notice of revocation before the date the amendment, supplement,
waiver or other action becomes effective.
The Issuers may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No
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such consent shall be valid or effective for more than 90 days after such
record date unless the consent of the requisite number of Holders has been
obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described in
any of clauses (1) through (8) of Section 8.02 hereof. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
Section 8.05 Notation on or Exchange of Notes.
If an amendment, supplement, or waiver changes the terms of a Note,
the Trustee (in accordance with the specific written direction of the Issuers)
shall request the Holder of the Note (in accordance with the specific written
direction of the Issuers) to deliver it to the Trustee. In such case, the
Trustee shall place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Issuers or the Trustee so
determines, the Issuers in exchange for the Note shall issue, the Guarantors
shall endorse, and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment supplement or waiver.
Section 8.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article 8 if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver the Trustee shall be
entitled to receive and, subject to Section 7.01 hereof, shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that such amendment, supplement or waiver is authorized or permitted by
this Indenture and is a legal, valid and binding obligation of the Issuers and
the Guarantors, enforceable against the Issuers and the Guarantors in accordance
with its terms (subject to customary exceptions).
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ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01 Discharge of Indenture.
The Issuers and the Guarantors may terminate their obligations
under the Notes, the Guarantees and this Indenture, except the obligations
referred to in the last paragraph of this Section 9.01, if there shall have been
canceled by the Trustee or delivered to the Trustee for cancellation all Notes
theretofore authenticated and delivered (other than any Notes that are asserted
to have been destroyed, lost or stolen and that shall have been replaced as
provided in Section 2.07 hereof) and the Issuers have paid all sums payable by
them hereunder or deposited all required sums with the Trustee.
After such delivery the Trustee upon Issuer request shall
acknowledge in writing the discharge of the Issuers' and the Guarantors'
obligations under the Notes, the Guarantees and this Indenture except for those
surviving obligations specified below.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Issuers in Sections 7.07, 9.05 and 9.06 hereof shall
survive.
Section 9.02 Legal Defeasance.
The Issuers may at their option, by Board Resolution of the Board
of Directors of each of the Issuers, be discharged from their obligations with
respect to the Notes and the Guarantors discharged from their obligations under
the Guarantees on the date the conditions set forth in Section 9.04 below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Issuers shall be deemed to have paid and discharged
the entire indebtedness represented by the Notes and to have satisfied all its
other obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Issuers, shall, subject to
Section 9.06 hereof, execute instruments in form and substance reasonably
satisfactory to the Trustee and Issuers acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of outstanding Notes to receive solely
from the trust funds described in Section 9.04 hereof and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
and interest on such Notes when such payments are due, (B) the Issuers'
obligations with respect to such Notes under Sections 2.03, 2.04, 2.05, 2.06,
2.07, 2.08, 2.09 and 4.20 hereof, (C) the rights, powers, trusts, duties, and
immunities of the Trustee hereunder (including claims of, or payments to, the
Trustee under or pursuant to Section 7.07
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hereof) and (D) this Article 9. Subject to compliance with this Article 9, the
Issuers may exercise their option under this Section 9.02 with respect to the
Notes notwithstanding the prior exercise of its option under Section 9.03 below
with respect to the Notes.
Section 9.03 Covenant Defeasance.
At the option of the Issuers, pursuant to a Board Resolution of the
Board of Directors of each of the Issuers, the Issuers and the Guarantors shall
be released from their respective obligations under Sections 4.02 through 4.19,
Sections 4.21 through 4.22 and Sections 4.24 through 4.25 hereof, inclusive, and
clauses (a)(ii), (iii) and (iv) of Section 5.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 9.04
hereof are satisfied (hereinafter, "Covenant Defeasance"). For this purpose,
such Covenant Defeasance means that the Issuers and the Guarantors may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such specified Section or portion thereof, whether
directly or indirectly by reason of any reference elsewhere herein to any such
specified Section or portion thereof or by reason of any reference in any such
specified Section or portion thereof to any other provision herein or in any
other document, but the remainder of this Indenture and the Notes shall be
unaffected thereby.
Section 9.04 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of Section
9.02 or Section 9.03 hereof to the outstanding Notes:
(i) the Issuers shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 hereof who shall agree to comply with the
provisions of this Article 9 applicable to it) as funds in trust for the
purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Notes, (A) money in an amount, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than the
due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall
be applied by the Trustee (or other qualifying trustee) to pay and
discharge, the principal of, premium, if any, and accrued interest on
the outstanding Notes at the maturity date of such principal, premium,
if any, or interest, or on dates for payment and redemption of such
principal, premium, if any, and interest selected in accordance with the
terms of this Indenture and of the Notes;
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(ii) no Event of Default or Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit, or shall
have occurred and be continuing at any time during the period ending on
the 91st day after the date of such deposit or, if longer, ending on the
day following the expiration of the longest preference period under any
Bankruptcy Law applicable to the Issuers in respect of such deposit (it
being understood that this condition shall not be deemed satisfied until
the expiration of such period);
(iii) such Legal Defeasance or Covenant Defeasance shall not cause
the Trustee to have a conflicting interest for purposes of the TIA with
respect to any securities of the Company;
(iv) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute default under any other
agreement or instrument to which the Issuers are a party or by which they
are bound;
(v) the Issuers shall have delivered to the Trustee an Opinion of
Counsel stating that, as a result of such Legal Defeasance or Covenant
Defeasance, neither the trust nor the Trustee will be required to
register as an investment company under the Investment Company Act of
1940, as amended;
(vi) in the case of an election under Section 9.02 above, the
Issuers shall have delivered to the Trustee an Opinion of Counsel stating
that (i) the Issuers have received from, or there has been published by,
the Internal Revenue Service a ruling to the effect that or (ii) there
has been a change in any applicable Federal income tax law with the
effect that, and such opinion shall confirm that, the Holders of the
outstanding Notes or persons in their positions will not recognize
income, gain or loss for Federal income tax purposes solely as a result
of such Legal Defeasance and will be subject to Federal income tax on the
same amounts, in the same manner, including as a result of prepayment,
and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(vii) in the case of an election under Section 9.03 hereof, the
Issuers shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders of the outstanding Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such
Covenant Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
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(viii) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under
Section 9.02 above or the Covenant Defeasance under Section 9.03 hereof
(as the case may be) have been complied with;
(ix) the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by
the Issuers with the intent of defeating, hindering, delaying or
defrauding any creditors of the Company or others;
(x) the Issuers shall have paid or duly provided for payment under
terms mutually satisfactory to the Issuers and the Trustee all amounts
then due to the Trustee pursuant to Section 7.07 hereof; and
(xi) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (to the extent matters of law are
involved), each stating that (x) all conditions precedent herein
provided for relating to either the legal defeasance under paragraph
9.02 above or the covenant defeasance under paragraph 9.03 above, as the
case may be, have been complied with and (y) if any other Indebtedness
of the Issuers shall then be outstanding or committed, such legal
defeasance or covenant defeasance will not violate the provisions of the
agreements or instruments evidencing such Indebtedness.
Section 9.05 Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 9.04 hereof in respect
of the outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent, to the Holders of such Notes, of
all sums due and to become due thereon in respect of principal, premium, if any,
and accrued interest, but such money need not be segregated from other funds
except to the extent required by law.
The Issuers and the Guarantors shall (on a joint and several basis)
pay and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
9.04 hereof or the principal, premium, if any, and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of the outstanding Notes.
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Anything in this Article 9 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon an Issuer
Request any money or U.S. Government Obligations held by it as provided in
Section 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 9.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Issuers' and each Guarantor's obligations under this
Indenture, the Notes and the Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to this Article 9 until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 9.01 hereof; provided, however, that if
the Issuers or the Guarantors have made any payment of principal of, premium, if
any, or accrued interest on any Notes because of the reinstatement of their
obligations, the Issuers or the Guarantors, as the case may be, shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
Section 9.07 Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under the provisions of this
Indenture shall, upon written demand of the Issuers, be paid to the Trustee, or
if sufficient moneys have been deposited pursuant to Section 9.01 hereof, to the
Issuers upon an Issuer Request (or, if such moneys had been deposited by the
Guarantors, to such Guarantors), and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
Section 9.08 Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or then
held by the Issuers or the Guarantors in trust for the payment of the principal
of, or premium, if any, or interest on any Note that are not applied but remain
unclaimed by the Holder of such Note for two years after the date upon which the
principal of, or premium, if any, or interest on such Note shall have
respectively become due and payable shall be repaid to the Issuers (or, if
appropriate, the Guarantors) upon an Issuer Request, or if such moneys are then
held by the Issuers or the
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Guarantors in trust, such moneys shall be released from such trust; and the
Holder of such Note entitled to receive such payment shall thereafter, as an
unsecured general creditor, look only to the Issuers and the Guarantors for the
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or any such Paying Agent, before being required to make any such
repayment, may, at the expense of the Issuers and the Guarantors, either mail
to each Noteholder affected, at the address shown in the register of the Notes
maintained by the Registrar pursuant to Section 2.04 hereof, or cause to be
published once a week for two successive weeks, in a newspaper published in the
English language, customarily published each Business Day and of general
circulation in the City of New York, New York, a notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such mailing or publication, any unclaimed
balance of such moneys then remaining will be repaid to the Issuers. After
payment to the Issuers or the Guarantors or the release of any money held in
trust by the Issuers or any Guarantors, as the case may be, Noteholders
entitled to the money must look only to the Issuers and the Guarantors for
payment as general creditors unless applicable abandoned property law
designates another person.
ARTICLE 10
GUARANTEE OF NOTES
Section 10.01 Guarantee.
Subject to the provisions of this Article 10, each Guarantor, by
execution of the Guarantee, will jointly and severally unconditionally guarantee
to each Holder and to the Trustee, (i) the due and punctual payment of the
principal of, and premium, if any, and interest on each Note, when and as the
same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal of,
and premium, if any, and interest on the Notes, to the extent lawful, and the
due and punctual performance of all other Obligations of the Issuers to the
Holders or the Trustee (including without limitation amounts due the Trustee
under Section 7.07) all in accordance with the terms of such Note and this
Indenture, and (ii) in the case of any extension of time of payment or renewal
of any Notes or any of such other Obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, at stated maturity, by acceleration or otherwise. Each Guarantor,
by execution of the Guarantee, will agree that its obligations thereunder and
hereunder shall be absolute and unconditional, irrespective of, and shall be
unaffected by, any invalidity, irregularity or unenforceability of any such Note
or this Indenture, any failure to enforce the provisions of any such Note or
this Indenture, any waiver, modification or indulgence granted to the Issuers
with respect thereto by
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the Holder of such Note or the Trustee, or any other circumstances which may
otherwise constitute a legal or equitable discharge of a surety or such
Guarantor.
Each Guarantor, by execution of the Guarantee, will waive
diligence, presentment, demand for payment, filing of claims with a court in the
event of merger or bankruptcy of the Issuers, any right to require a proceeding
first against the Issuers, protest or notice with respect to any such Note or
the Indebtedness evidenced thereby and all demands whatsoever, and will covenant
that this Guarantee will not be discharged as to any such Note except by payment
in full of the principal thereof, premium if any, and interest thereon and as
provided in Section 9.01 hereof. Each Guarantor, by execution of the Guarantee,
will further agree that, as between such Guarantor, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in Article 6 hereof for the
purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (ii) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by each Guarantor
for the purpose of this Guarantee. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article 6 hereof,
the Trustee shall promptly make a demand for payment on the Notes under the
Guarantee provided for in this Article 10 and not discharged.
A Guarantee shall not be valid or become obligatory for any
purpose with respect to a Note until the certificate of authentication on such
Note shall have been signed by or on behalf of the Trustee.
Section 10.02 Execution and Delivery of Guarantees.
A Guarantee shall be executed on behalf of a Guarantor by the
manual or facsimile signature of an Officer of such Guarantor.
If an Officer of a Guarantor whose signature is on the Guarantee
no longer holds that office, such Guarantee shall be valid nevertheless.
Section 10.03. Limitation of Guarantee.
The obligations of each Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, any guarantees of
Senior Indebtedness) and after giving effect to any collections from or payments
made by or on behalf of any other Guarantor in respect of the
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obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of
such Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in a pro rata amount based on the Adjusted Net Assets
of each Guarantor.
Section 10.04 Release of Guarantor.
A Guarantor shall be released from all of its obligations
under its Guarantee if:
(i) the Guarantor has sold all or substantially all of its assets
or the Company and its Restricted Subsidiaries have sold all of the
Capital Stock of the Guarantor owned by them, in each case in a
transaction in compliance with Sections 4.10 and 5.01 hereof; or
(ii) the Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, the Company or
another Guarantor in a transaction in compliance with Section 5.01
hereof;
and in each such case, such Guarantor has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to such transactions have been complied
with.
Section 10.05 Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness.
Each Guarantor, by execution of the Guarantee, will covenant and
agree, and each Holder of Notes, by its acceptance thereof, likewise covenants
and agrees, that to the extent and in the manner hereinafter set forth in this
Article 10, the Indebtedness represented by the Guarantee and the payment of the
principal of, premium, if any, and interest on the Notes pursuant to the
Guarantee by such Guarantor are hereby expressly made subordinate and subject in
right of payment as provided in this Article 10 to the prior indefeasible
payment and satisfaction in full in cash of all Guarantor Senior Indebtedness of
such Guarantor.
This Section 10.05 and the following Sections 10.06 through 10.10
shall constitute a continuing offer to all Persons who, in reliance upon such
provisions, become holders of or continue to hold Guarantor Senior Indebtedness
of any Guarantor; and such provisions are made for the benefit of the holders of
Guarantor Senior Indebtedness of each
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Guarantor; and such holders are made obligees hereunder and they or each of
them may enforce such provisions.
Section 10.06 Payment Over of Proceeds upon Dissolution, etc., of a Guarantor.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, arrangement, reorganization or
other similar case or proceeding in connection therewith, relative to any
Guarantor or to its creditors, as such, or to its assets, whether voluntary or
involuntary, or (b) any liquidation, dissolution or other winding-up of any
Guarantor, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy or (c) any general assignment for the benefit of
creditors or any other marshaling of assets or liabilities of any Guarantor,
then and in any such event:
(i) the holders of all Guarantor Senior Indebtedness of such
Guarantor shall be entitled to receive payment in full in cash of all
amounts due on or in respect of all such Guarantor Senior Indebtedness,
before the Holders of the Notes are entitled to receive or retain,
pursuant to the Guarantee of such Guarantor, any payment or distribution
of any kind or character by such Guarantor on account of any of its
Obligations on its Guarantee; and
(ii) any payment or distribution of assets of such Guarantor of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which the Holders or the Trustee would be
entitled but for the subordination provisions of this Article 10 shall
be paid by the liquidating trustee or agent or other Person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Guarantor
Senior Indebtedness of such Guarantor or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Guarantor Senior
Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of such Guarantor Senior
Indebtedness held or represented by each, to the extent necessary to
make payment in full in cash of all such Guarantor Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Guarantor Senior Indebtedness; and
(iii) in the event that, notwithstanding the foregoing provisions
of this Section 10.06, the Trustee or the Holder of any Note shall have
received any payment or distribution of assets of such Guarantor of any
kind or character, whether in cash, property or securities, including,
without limitation, by way of set-off or otherwise, in respect of any of
its Obligations on its Guarantee before all Guarantor Senior
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Indebtedness of such Guarantor is paid in full in cash, then and in such
event such payment or distribution shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution
of assets of such Guarantor for application to the payment of all such
Guarantor Senior Indebtedness remaining unpaid, to the extent necessary
to pay all of such Guarantor Senior Indebtedness in full in cash, after
giving effect to any concurrent payment or distribution to or for the
holders of such Guarantor Senior Indebtedness.
The consolidation of a Guarantor with, or the merger of a Guarantor
with or into, another Person or the liquidation or dissolution of a Guarantor
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article 5 hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of such Guarantor for the purposes of this
Article 10 if the Person formed by such consolidation or the surviving entity of
such merger or the Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in such Article 5 hereof.
Section 10.07 Suspension of Guarantee Obligations When Guarantor Senior
Indebtedness in Default.
(a) Unless Section 10.06 hereof shall be applicable, after the
occurrence of a Payment Default with respect to any Designated Senior
Indebtedness which constitutes Guarantor Senior Indebtedness, no payment or
distribution of any assets or securities of a Guarantor (or any Restricted
Subsidiary or Subsidiary of such Guarantor) of any kind or character (including,
without limitation, cash, property and any payment or distribution which may be
payable or deliverable by reason of the payment of any other Indebtedness of
such Guarantor being subordinated to its Obligations on its Guarantee) may be
made by or on behalf of such Guarantor (or any Restricted Subsidiary or
Subsidiary of such Guarantor), including, without limitation, by way of set-off
or otherwise, for or on account of its Obligations on its Guarantee, and neither
the Trustee nor any holder or owner of any Notes shall take or receive from any
Guarantor (or any Restricted Subsidiary or Subsidiary of such Guarantor),
directly or indirectly in any manner, payment in respect of all or any portion
of its Obligations on its Guarantee following the delivery by the representative
of the holders of, for so long as there shall exist any Designated Senior
Indebtedness under or in respect of the Senior Credit Facility, the holders of
Designated Senior Indebtedness under or in respect of the Senior Credit Facility
or, thereafter, the holders of Designated Senior Indebtedness which constitutes
Guarantor Senior
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Indebtedness (in either such case, the "Guarantor Representative") to the
Trustee of written notice of (i) the occurrence of a Payment Default on
Designated Senior Indebtedness or (ii) the occurrence of a Non-Payment Event of
Default on such Designated Senior Indebtedness and the acceleration of the
maturity of Designated Senior Indebtedness in accordance with its terms, and in
any such event, such prohibition shall continue until such Payment Default is
cured, waived in writing or ceases to exist or such acceleration has been
rescinded or otherwise cured. At such time as the prohibition set forth in the
preceding sentence shall no longer be in effect, subject to the provisions of
the following paragraph (b), such Guarantor shall resume making any and all
required payments in respect of its Obligations under its Guarantee.
(b) Unless Section 10.06 hereof shall be applicable, upon the
occurrence of a Non-Payment Event of Default on Designated Senior Indebtedness
guaranteed by a Guarantor (which guarantee constitutes Guarantor Senior
Indebtedness of such Guarantor), no payment or distribution of any assets of
such Guarantor of any kind or character (including, without limitation, cash,
property and any payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of such Guarantor being
subordinated to its Obligations on its Guarantee) shall be made by such
Guarantor, including, without limitation, by way of set-off or otherwise, for
or on account of any of its Obligations on its Guarantee, and neither the
Trustee nor any holder or owner of any Notes shall take or receive from any
Guarantor (or any Restricted Subsidiary or Subsidiary of such Guarantor),
directly or indirectly in any manner, payment in respect of all or any portion
of its Obligations on its Guarantee for a period (a "Guarantee Payment Blockage
Period") commencing on the date of receipt by the Trustee of written notice
from the Guarantor Representative of such Non-Payment Event of Default, unless
and until (subject to any blockage of payments that may then be in effect under
the preceding paragraph (a)) the earliest to occur of the following events:
(x) more than 179 days shall have elapsed since the date of receipt of such
written notice by the Trustee, (y) such Non-Payment Event of Default shall have
been cured or waived in writing or shall have ceased to exist or such
Designated Senior Indebtedness shall have been discharged or paid in full or
(z) such Guarantee Payment Blockage Period shall have been terminated by
written notice to such Guarantor or the Trustee from the Guarantor
Representative, after which, in the case of clause (x), (y) or (z), such
Guarantor shall resume making any and all required payments in respect of its
Obligations on its Guarantee. Notwithstanding any other provisions of this
Indenture, no Non-Payment Event of Default with respect to Designated Senior
Indebtedness which existed or was continuing on the date of the commencement of
any Guarantee Payment Blockage Period initiated by the Guarantor Representative
shall be, or be made, the basis for the commencement of a second Guarantee
Payment Blockage Period initiated by the Guarantor Representative, whether or
not initiated within the Initial Guarantee Blockage Period, unless such event
of default shall have been cured or waived for a period of not less than 90
consecutive days. In no event shall a Guarantee Payment Blockage Period extend
beyond 179 days from the date of the
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receipt by the Trustee of the notice referred to in this Section 10.07(b) or,
in the event of a Non-Payment Event of Default which formed the basis for a
Payment Blockage Period under Section 11.03(b) hereof, 179 days from the date
of the receipt by the Trustee of the notice referred to in Section 11.03(b)
(the "Initial Guarantee Blockage Period"). Any number of additional Guarantee
Payment Blockage Periods may be commenced during the Initial Guarantee Blockage
Period; provided, however, that no such additional Guarantee Payment Blockage
Period shall extend beyond the Initial Guarantee Blockage Period. After the
expiration of the Initial Guarantee Blockage Period, no Guarantee Payment
Blockage Period may be commenced under this Section 10.07(b) and no Payment
Blockage Period may be commenced under Section 11.03(b) hereof until at least
180 consecutive days have elapsed from the last day of the Initial Guarantee
Blockage Period.
(c) In the event that, notwithstanding the foregoing, the Trustee
or the Holder of any Note shall have received any payment from a Guarantor
prohibited by the foregoing provisions of this Section 10.07, then and in such
event such payment shall be paid over and delivered forthwith to the Guarantor
Representative initiating the Guarantee Payment Blockage Period, in trust for
distribution to the holders of Guarantor Senior Indebtedness or, if no amounts
are then due in respect of Guarantor Senior Indebtedness, promptly returned to
the Guarantor, or as a court of competent jurisdiction shall direct.
Section 10.08 Subrogation to Rights of Holders of Guarantor Senior
Indebtedness.
Upon the payment in full of all amounts payable under or in
respect of all Guarantor Senior Indebtedness of a Guarantor, the Holders shall
be subrogated to the rights of the holders of such Guarantor Senior Indebtedness
to receive payments and distributions of cash, property and securities of such
Guarantor made on such Guarantor Senior Indebtedness until all amounts due to be
paid under the Guarantee shall be paid in full. For the purposes of such
subrogation, no payments or distributions to holders of Guarantor Senior
Indebtedness of any cash, property or securities to which Holders of the Notes
or the Trustee would be entitled except for the provisions of this Article 10,
and no payments over pursuant to the provisions of this Article 10 to holders of
Guarantor Senior Indebtedness by Holders of the Notes or the Trustee, shall, as
among each Guarantor, its creditors other than holders of Guarantor Senior
Indebtedness and the Holders of the Notes, be deemed to be a payment or
distribution by such Guarantor to or on account of such Guarantor Senior
Indebtedness.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 10 shall
have been applied, pursuant to the provisions of this Article 10, to the payment
of all amounts payable under Guarantor Senior Indebtedness, then and in such
case, the Holders shall be entitled to receive from the holders of
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such Guarantor Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of Guarantor Senior Indebtedness in
excess of the amount sufficient to pay all amounts payable under or in respect
of such Guarantor Senior Indebtedness in full in cash.
Section 10.09 Guarantee Subordination Provisions Solely To Define Relative
Rights.
The subordination provisions of this Article 10 are and are
intended solely for the purpose of defining the relative rights of the Holders
of the Notes on the one hand and the holders of Guarantor Senior Indebtedness on
the other hand. Nothing contained in this Article 10 or elsewhere in this
Indenture or in the Notes is intended to or shall (a) impair, as among each
Guarantor, its creditors other than holders of its Guarantor Senior Indebtedness
and the Holders of the Notes, the obligation of such Guarantor, which is
absolute and unconditional, to make payments to the Holders in respect of its
Obligations on its Guarantee in accordance with its terms; or (b) affect the
relative rights against such Guarantor of the Holders of the Notes and creditors
of such Guarantor other than the holders of the Guarantor Senior Indebtedness;
or (c) prevent the Trustee or the Holder of any Note from exercising all
remedies otherwise permitted by applicable law upon a Default or an Event of
Default under this Indenture, subject to the rights, if any, under this Article
10 of the holders of Guarantor Senior Indebtedness (1) in any case, proceeding,
dissolution, liquidation or other winding-up, assignment for the benefit of
creditors or other marshaling of assets and liabilities of the Company referred
to in Section 10.06 hereof, to receive, pursuant to and in accordance with such
Section, cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder, or (2) under the conditions specified in Section 10.07
hereof, to prevent any payment prohibited by such Section or enforce their
rights pursuant to Section 10.07(c) hereof.
The failure by any Guarantor to make a payment in respect of its
obligations on its Guarantee by reason of any provision of this Article 10 shall
not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
Section 10.10 Application of Certain Article 11 Provisions.
The provisions of Sections 11.04, 11.07, 11.08, 11.09, 11.10,
11.12 and 11.13 hereof shall apply, mutatis mutandis, to each Guarantor and
their respective holders of Guarantor Senior Indebtedness and the rights, duties
and obligations set forth therein shall govern the rights, duties and
obligations of each Guarantor, the holders of Guarantor Senior Indebtedness, the
Holders and the Trustee with respect to the Guarantee and all references therein
to Article 11 hereof shall mean this Article 10.
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ARTICLE 11
SUBORDINATION OF NOTES
Section 11.01 Notes Subordinate to Senior Indebtedness.
The Issuers covenant and agree, and each Holder of Notes, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article 11, the Indebtedness
represented by the Notes and the payment of the principal of, premium, if any,
and interest on the Notes are hereby expressly made subordinate and subject in
right of payment as provided in this Article 11 to the prior indefeasible
payment and satisfaction in full in cash of all Senior Indebtedness.
This Article 11 shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of or continue to hold
Senior Indebtedness; and such provisions are made for the benefit of the holders
of Senior Indebtedness; and such holders are made obligees hereunder and they or
each of them may enforce such provisions.
Section 11.02 Payment Over of Proceeds upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, arrangement, reorganization or
other similar case or proceeding in connection therewith, relative to the
Issuers or to their creditors, as such, or to their assets, whether voluntary or
involuntary or (b) any liquidation, dissolution or other winding-up of the
Issuers, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any general assignment for the benefit of
creditors or any other marshaling of assets or liabilities of the Issuers, then
and in any such event:
(i) the holders of Senior Indebtedness shall be entitled to
receive payment and satisfaction in full in cash of all amounts due on
or in respect of all Senior Indebtedness, before the Holders of the
Notes are entitled to receive or retain any payment or distribution of
any kind or character on account of principal of, premium, if any, or
interest on the Notes; and
(ii) any payment or distribution of assets of the Issuers of any
kind or character, whether in cash, property or securities, by set-off
or otherwise, to which the Holders or the Trustee would be entitled but
for the provisions of this Article 11 shall be paid by the liquidating
trustee or agent or other Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
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otherwise, directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full in
cash of all Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution, or provision therefor, to the
holders of such Senior Indebtedness; and
(iii) in the event that, notwithstanding the foregoing provisions of
this Section 11.02, the Trustee or the Holder of any Note shall have
received any payment or distribution of assets of the Issuers of any kind
or character, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of principal of,
premium, if any, and interest on the Notes before all Senior Indebtedness
is paid in full in cash, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other Person making payment or distribution of assets of the Issuers for
application to the payment of all Senior Indebtedness remaining unpaid,
to the extent necessary to pay all Senior Indebtedness in full in cash,
after giving effect to any concurrent payment or distribution, or
provision therefor, to or for the holders of Senior Indebtedness.
The consolidation of either Issuer with, or the merger of either
Issuer with or into, another Person or the liquidation or dissolution of either
Issuer following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article 5 hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of such Issuer for the purposes of this
Article 11 if the Person formed by such consolidation or the surviving entity of
such merger or the Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in such Article 5 hereof.
Section 11.03 Suspension of Payment When Senior Indebtedness in Default.
(a) Unless Section 11.02 hereof shall be applicable, after the
occurrence of a Payment Default no payment or distribution of any assets or
securities of the Issuers or any Restricted Subsidiary of any kind or character
(including, without limitation, cash, property and any payment or distribution
which may be payable or deliverable by reason of the payment of
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any other Indebtedness of the Issuers being subordinated to the payment of the
Notes by the Issuers) may be made by or on behalf of the Issuers or any
Restricted Subsidiary, including, without limitation, by way of set-off or
otherwise, for or on account of the Notes, or for or on account of the
purchase, redemption or other acquisition of the Notes, and neither the Trustee
nor any holder or owner of any Notes shall take or receive from the Issuers or
any Restricted Subsidiary, directly or indirectly in any manner, payment in
respect of all or any portion of Notes following the delivery by the
representative of the holders of Designated Senior Indebtedness under or in
respect of the Senior Credit Facility, for so long as there shall exist any
Designated Senior Indebtedness under or in respect of the Senior Credit
Facility, and, thereafter, the holders of Designated Senior Indebtedness (in
either such case, the "Representative") to the Trustee of written notice of (i)
the occurrence of a Payment Default on Designated Senior Indebtedness or (ii)
the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness and the acceleration of the maturity of Designated Senior
Indebtedness in accordance with its terms, and in any such event, such
prohibition shall continue until such Payment Default is cured, waived in
writing or ceases to exist or such acceleration has been rescinded or otherwise
cured. At such time as the prohibition set forth in the preceding sentence
shall no longer be in effect, subject to the provisions of the following
paragraph (b), the Issuers shall resume making any and all required payments in
respect of the Notes, including any missed payments.
(b) Unless Section 11.02 hereof shall be applicable, upon the
occurrence of a Non-Payment Event of Default on Designated Senior Indebtedness,
no payment or distribution of any assets or securities of the Issuers of any
kind or character (including, without limitation, cash, property and any
payment or distribution which may be payable or deliverable by reason of the
payment of any other Indebtedness of the Issuers being subordinated to the
payment of the Notes by the Issuers) may be made by or on behalf of the
Issuers, including, without limitation, by way of set-off or otherwise, for or
on account of the Notes, or for or on account of the purchase, redemption,
defeasance or other acquisition of Notes, and neither the Trustee nor any
holder or owner of Notes shall take or receive from the Issuers or any
Restricted Subsidiary, directly or indirectly in any manner, payment in respect
of all or any portion of the Notes for a period (a "Payment Blockage Period")
commencing on the date of receipt by the Trustee of written notice from the
Representative of such Non-Payment Event of Default unless and until (subject
to any blockage of payments that may then be in effect under the preceding
paragraph (a)) the earliest to occur of the following events: (x) more than
179 days shall have elapsed since the date of receipt of such written notice by
the Trustee, (y) such Non-Payment Event of Default shall have been cured or
waived in writing or shall have ceased to exist or such Designated Senior
Indebtedness shall have been paid in full or (z) such Payment Blockage Period
shall have been terminated by written notice to the Issuers or the Trustee from
the Representative, after which, in the case of clause (x), (y) or (z), the
Issuers shall resume making any and all required payments in respect of the
Notes, including any missed payments.
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Notwithstanding any other provisions of this Indenture, no event of default
with respect to Designated Senior Indebtedness (other than a Payment Default)
which existed or was continuing on the date of the commencement of any Payment
Blockage Period initiated by the Representative shall be, or be made, the basis
for the commencement of a second Payment Blockage Period initiated by the
Representative, whether or not within the Initial Blockage Period, unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days. Notwithstanding any other provisions of this Indenture,
in no event shall a Payment Blockage Period commenced in accordance with the
provisions of this Indenture described in this paragraph extend beyond 179 days
from the date of the receipt by the Trustee of the notice referred to in this
Section 11.03(b) (the "Initial Blockage Period"). Any number of additional
Payment Blockage Periods may be commenced during the Initial Blockage Period;
provided, however, that no such additional Payment Blockage Period shall extend
beyond the Initial Blockage Period. After the expiration of the Initial
Blockage Period, no Payment Blockage Period may be commenced until at least 180
consecutive days have elapsed from the last day of the Initial Blockage Period.
(c) In the event that, notwithstanding the foregoing, the Trustee
or the Holder of any Note shall have received any payment prohibited by the
foregoing provisions of this Section 11.03, then and in such event such payment
shall be paid over and delivered forthwith to the Representative initiating the
Payment Blockage Period, in trust for distribution to the holders of Senior
Indebtedness or, if no amounts are then due in respect of Senior Indebtedness,
promptly returned to the Issuers, or otherwise as a court of competent
jurisdiction shall direct.
Section 11.04 Trustee's Relation to Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and the Trustee shall
not be liable to any holder of Senior Indebtedness if it shall mistakenly pay
over or deliver to Holders, the Issuers or any other Person moneys or assets to
which any holder of Senior Indebtedness shall be entitled by virtue of this
Article 11 or otherwise.
Section 11.05 Subrogation to Rights of Holders of Senior Indebtedness.
Upon the payment in full of all Senior Indebtedness, the Holders
of the Notes shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the
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principal of, premium, if any and interest on the Notes shall be paid in full.
For purposes of such subrogation, no payments or distributions to the holders
of Senior Indebtedness of any cash, property or securities to which the Holders
of the Notes or the Trustee would be entitled except for the provisions of this
Article 11, and no payments over pursuant to the provisions of this Article 11
to the holders of Senior Indebtedness by Holders of the Notes or the Trustee,
shall, as among the Issuers, their creditors other than holders of Senior
Indebtedness and the Holders of the Notes, be deemed to be a payment or
distribution by the Issuers to or on account of the Senior Indebtedness.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 11 shall
have been applied, pursuant to the provisions of this Article 11, to the payment
of all amounts payable under the Senior Indebtedness of the Issuers, then and in
such case the Holders shall be entitled to receive from the holders of such
Senior Indebtedness at the time outstanding any payments or distributions
received by such holders of such Senior Indebtedness in excess of the amount
sufficient to pay all amounts payable under or in respect of such Senior
Indebtedness in full in cash.
Section 11.06 Provisions Solely To Define Relative Rights.
The provisions of this Article 11 are and are intended solely for
the purpose of defining the relative rights of the Holders of the Notes on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Notes is
intended to or shall (a) impair, as among the Issuers, their creditors other
than holders of Senior Indebtedness and the Holders of the Notes, the obligation
of the Issuers, which is absolute and unconditional, to pay to the Holders of
the Notes the principal of, premium, if any, and interest on the Notes as and
when the same shall become due and payable in accordance with their terms; or
(b) affect the relative rights against the Issuers of the Holders of the Notes
and creditors of the Issuers other than the holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Note from exercising all remedies
otherwise permitted by applicable law upon a Default or an Event of Default
under this Indenture, subject to the rights, if any, under this Article 11 of
the holders of Senior Indebtedness (1) in any case, proceeding, dissolution,
liquidation or other winding-up, assignment for the benefit of creditors or
other marshaling of assets and liabilities of the Issuers referred to in Section
11.02 hereof, to receive, pursuant to and in accordance with such Section, cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder, or (2) under the conditions specified in Section 11.03, to prevent any
payment prohibited by such Section or enforce their rights pursuant to Section
11.03(c) hereof.
<PAGE> 103
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The failure to make a payment on account of principal of, premium,
if any, or interest on the Notes by reason of any provision of this Article 11
shall not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
Section 11.07 Trustee To Effectuate Subordination.
Each Holder of a Note by his acceptance thereof authorizes and
directs the Trustee on his behalf to take, in the Trustee's sole discretion,
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any
and all such purposes, including, in the event of any dissolution, winding-up,
liquidation or reorganization of the Issuers whether in bankruptcy, insolvency,
receivership proceedings, or otherwise, the timely filing of a claim for the
unpaid balance of the indebtedness of the Issuers owing to such Holder in the
form required in such proceedings and the causing of such claim to be approved.
If the Trustee does not file such a claim prior to 30 days before the expiration
of the time to file such a claim, the holders of Senior Indebtedness, or any
Representative, may file such a claim on behalf of Holders of the Notes.
Section 11.08 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Issuers or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Issuers with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section 11.08, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of the
Notes, without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article 11 or the
obligations hereunder of the Holders of the Notes to the holders of Senior
Indebtedness, do any one or more of the following: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (3) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other Person; provided, however, that in no
event shall any such actions limit the right of the Trustee or the Holders of
the Notes to take any action to accelerate the maturity of the Notes
<PAGE> 104
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pursuant to Article 6 hereof or to pursue any rights or remedies hereunder or
under applicable laws if the taking of such action does not otherwise violate
the terms of this Indenture.
Section 11.09 Notice to Trustee.
(a) The Issuers shall give prompt written notice to the Trustee
of any fact known to the Issuers which would prohibit the making of any payment
to or by the Trustee at its Corporate Trust Office in respect of the Notes.
Notwithstanding the provisions of this Article 11 or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Notes, unless and until the Trustee shall have received written
notice at least two Business Days prior to the date of any payment to the
Holders thereof from the Issuers or a holder of Senior Indebtedness or from any
trustee, fiduciary or agent therefor; and, prior to the timely receipt of any
such written notice, the Trustee, subject to the provisions of this Section
11.09, shall be entitled in all respects to assume that no such facts exist.
(b) Subject to the provisions of Section 7.01 hereof, the Trustee
shall be entitled to rely on the delivery to it of a written notice to the
Trustee and the Issuers by a Person representing itself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such
notice has been given by a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor); provided, however, that failure to give such
notice to the Issuers shall not affect in any way the right of the Trustee to
rely on such notice. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 11, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 11, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 11.10 Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Issuers
referred to in this Article 11, the Trustee, subject to the provisions of
Section 7.01 hereof, and the Holders shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making
<PAGE> 105
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such payment or distribution, delivered to the Trustee or to the Holders, for
the purpose of ascertaining the Persons entitled to participate in such payment
or distribution, the holders of Senior Indebtedness and other Indebtedness of
the Issuers, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
11.
Section 11.11 Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article 11 with respect to any Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder. Nothing in this Article 11 shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
Section 11.12 Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article 11 in addition to or in place of the Trustee.
Section 11.13 No Suspension of Remedies.
Nothing contained in this Article 11 shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Article 6 or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article 11 of
the holders, from time to time, of Senior Indebtedness.
ARTICLE 12
MISCELLANEOUS
Section 12.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
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Section 12.02 Notices.
Except for notice or communications to Holders any notice or
communication shall be given in writing and delivered in person, sent by
facsimile, delivered by commercial courier service or mailed by first-class
mail, postage prepaid, addressed as follows:
If to the Issuers or any Guarantor:
TransWestern Publishing Company LLC
8344 Clairemont Mesa Boulevard
San Diego, California 92111
Attention: Chief Financial Officer
Fax Number: (619) 292-4125
Copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: William S. Kirsch, P.C.
If to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 10890
Attention: Corporate Trust Administration
Fax Number: (302) 651-8882
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Copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Michele D. Ross, Esq.
Fax Number: (212) 715-8000
Such notices or communications shall be effective when received
and shall be sufficiently given if so given within the time prescribed in this
Indenture.
The Issuers, the Guarantors or the Trustee by written notice to
the others may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a Noteholder shall be
mailed to him by first-class mail, postage prepaid, at his address shown on the
register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication to a Noteholder is mailed in the manner provided
above, it shall be deemed duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service, or
by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 12.03 Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or the
Notes. The Issuers, the Guarantors, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
<PAGE> 108
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Section 12.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers or any Guarantor
to the Trustee to take any action under this Indenture, the Issuers or such
Guarantor shall furnish to the Trustee:
(i) an Officers' Certificate (which shall include the statements
set forth in Section 12.05 below) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel (which shall include the statements
set forth in Section 12.05 below) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 12.05 Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of such Person, it or he
has made such examination or investigation as is necessary to enable it
or him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
Section 12.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or meetings
of Noteholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
<PAGE> 109
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Section 12.07 Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day on
which banking institutions are not required to be open in the State of New York
or the State of Delaware. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
Section 12.08 Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 12.09 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan, security or debt agreement of the Issuers or any Subsidiary thereof. No
such indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 12.10 No Recourse Against Others.
No recourse for the payment of the principal of or premium, if
any, or interest on any of the Notes, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Issuers or any Guarantor in this Indenture or in
any supplemental indenture, or in any of the Notes, or because of the creation
of any Indebtedness represented thereby, shall be had against any stockholder,
officer, director or employee, as such, past, present or future, of the Issuers
or of any successor corporation or against the property or assets of any such
stockholder, officer, employee or director, either directly or through the
Issuers or any Guarantor, or any successor corporation thereof, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that this
Indenture and the Notes are solely obligations of the Issuers and the
Guarantors, and that no such personal liability whatever shall attach to, or is
or shall be incurred by, any stockholder, officer, employee or director of the
<PAGE> 110
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Issuers or any Guarantor, or any successor corporation thereof, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or the Notes
or implied therefrom, and that any and all such personal liability of, and any
and all claims against every stockholder, officer, employee and director, are
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issuance of the Notes. It is
understood that this limitation on recourse is made expressly for the benefit
of any such shareholder, employee, officer or director and may be enforced by
any of them.
Section 12.11 Successors.
All agreements of the Issuers and the Guarantors in this Indenture
and the Notes shall bind their respective successors. All agreements of the
Trustee, any additional trustee and any Paying Agents in this Indenture shall
bind its successor.
Section 12.12 Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 12.13 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 12.14 Separability.
Each provision of this Indenture shall be considered separable and
if for any reason any provision which is not essential to the effectuation of
the basic purpose of this Indenture or the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
<PAGE> 111
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IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed all as of the date and year first written above.
TRANSWESTERN PUBLISHING COMPANY LLC
By: /s/ Joan Fiorito
--------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
TWP CAPITAL CORP. II
By: /s/ Joan Fiorito
--------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
WILMINGTON TRUST COMPANY, as Trustee
By: /s/ Bruce L. Bisson
---------------------------
Name: Bruce L. Bisson
Title: Vice President
<PAGE> 112
EXHIBIT A
[FORM OF FACE OF NOTE]
Number CUSIP
TRANSWESTERN PUBLISHING COMPANY LLC
TWP CAPITAL CORP. II
9 5/8% SENIOR SUBORDINATED NOTE DUE 2007
TransWestern Publishing Company LLC, a Delaware limited partnership (the
"Company", which term includes any successor corporation), and TWP Capital
Corp. II, a Delaware corporation (jointly and severally, together with the
Company, the "Issuers"), for value received promise to pay to or
registered assigns the principal sum of ($ ), on
November 15, 2007.
Interest Payment Dates: May 15 and November 15, commencing May 15, 1998
Record Dates: May 1 and November 1
This Note shall not be valid or obligatory for any purpose until the
certificate of authentication shall have been executed by the Trustee by its
manual signature.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at
this place.
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<PAGE> 113
IN WITNESS WHEREOF, the Issuers have caused this Note to be
signed manually or by facsimile by their duly authorized Officers.
TRANSWESTERN PUBLISHING COMPANY LLC
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
TWP CAPITAL CORP. II
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
Certificate of Authentication:
This is one of the 9 5/8% Senior
Subordinated Notes due 2007 referred to in
the within-mentioned Indenture
Dated:
WILMINGTON TRUST COMPANY, as Trustee
By: __________________________________
Authorized Signatory
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<PAGE> 114
(REVERSE SIDE)
TRANSWESTERN PUBLISHING COMPANY LLC
TWP CAPITAL CORP. II
9 5/8% SENIOR SUBORDINATED NOTE DUE 2007
1. INTEREST.
TRANSWESTERN PUBLISHING COMPANY LLC, a Delaware limited partnership
(the "Company"), and TWP Capital Corp. II, a Delaware corporation (together with
the Company, the "Issuers"), jointly and severally promise to pay interest on
the principal amount of this Note semiannually on May 15 and November 15 of each
year (each an "Interest Payment Date"), commencing on May 15, 1998, at the rate
of 9 5/8% per annum. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of the original issuance of the Notes.
The Issuers shall pay interest on overdue principal, and on overdue
premium, if any, and overdue interest, to the extent lawful, at the rate equal
to 2% per annum in excess of the rate borne by the Notes.
2. METHOD OF PAYMENT.
The Issuers will pay interest on this Note provided for in Paragraph 1
above (except defaulted interest) to the person who is the registered Holder of
this Note at the close of business on the May 1 or November 1 preceding the
Interest Payment Date (whether or not such day is a Business Day). The Holder
must surrender this Note to a Paying Agent to collect principal payments. The
Issuers will pay principal, premium, if any, and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts; provided, however, that the Issuers may pay principal, premium,
if any, and interest by check payable in such money. They may mail an interest
check to the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, Wilmington Trust Company (the "Trustee") will act as Paying
Agent and Registrar. The Issuers may change any Paying Agent or Registrar
without notice to the Holders of the Notes. Neither the Issuers nor any of
their Subsidiaries or Affiliates may act as Paying Agent but may act as
Registrar.
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4. INDENTURE; RESTRICTIVE COVENANTS.
The Issuers issued this Note under an Indenture dated as of November
12, 1997 (the "Indenture") among the Issuers, the Guarantors and the Trustee.
The terms of this Note include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Section Section 77aaa-77bbbb) as in effect on the date of the Indenture. This
Note is subject to all such terms, and the Holder of this Note is referred to
the Indenture and said Trust Indenture Act for a statement of them. All
capitalized terms in this Note, unless otherwise defined, have the meanings
assigned to them by the Indenture.
The Notes are general unsecured obligations of the Issuers limited to
$100,000,000 aggregate principal amount. The Indenture imposes certain
restrictions on, among other things, the incurrence of indebtedness, the
incurrence of liens and the issuance of capital stock by Subsidiaries of the
Issuers, mergers and sale of assets, the payments of dividends on, or the
repurchase of, capital stock of the Issuers and their Restricted Subsidiaries,
certain other restricted payments by the Issuers and their Restricted
Subsidiaries, certain transactions with, and investments in, their affiliates,
certain sale and lease-back transactions and a provision regarding
change-of-control transactions.
5. SUBORDINATION.
The Indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinated and subject in right of payment
to the prior payment in full of all Senior Indebtedness as defined in the
Indenture, and this Note is issued subject to such provisions. Each Holder of
this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note shall cease to be so subordinate and subject
in right of payment upon any defeasance of this Note referred to in Paragraph 18
below.
6. OPTIONAL REDEMPTION.
The Issuers, at their option, may redeem the Notes, in whole or in
part, at any time on or after November 15, 2002 upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount), set forth below, together, in each case, with accrued and
unpaid interest to the Redemption Date, if redeemed during the twelve month
period beginning on November 15 of each year listed below:
Year Redemption Price
- ---- ----------------
2002 ............................................. 104.813%
2003 ............................................. 103.208%
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2004 ............................ 101.604%
2005 and thereafter ............. 100.000%
Notwithstanding the foregoing, the Issuers may redeem in the aggregate up
to 35% of the original principal amount of Notes at any time and from time to
time prior to November 15, 2000 at a redemption price equal to 109.625% of the
aggregate principal amount so redeemed, plus accrued interest to the Redemption
Date out of the Net Proceeds of one or more Public Equity Offerings; provided
that at least $65,000,000 of the principal amount of Notes remain outstanding
immediately after the occurrence of any such redemption and that any such
redemption occurs within 90 days following the closing of any such Public
Equity Offering.
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first class mail at least 30 days
but not more than 60 days prior to the redemption date to each Holder of Notes
to be redeemed at its registered address as it shall appear on the register of
the Notes maintained by the Registrar. On and after any Redemption Date,
interest will cease to accrue on the Notes or portions thereof called for
redemption unless the Issuers shall fail to redeem any such Note.
8. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales be used,
subject to further limitations contained therein, to make an offer to purchase
certain amounts of Notes in accordance with the procedures set forth in the
Indenture. The Issuers are also required to make an offer to purchase Notes
upon the occurrence of a Change of Control in accordance with procedures set
forth in the Indenture.
9. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement among the Issuers, CIBC
Oppenheimer Corp. and First Union Capital Markets Corp., as initial purchasers
of the Notes, the Issuers will be obligated to consummate an exchange offer
pursuant to which the Holder of this Note shall have the right to exchange this
Note for Notes of a separate series issued under the Indenture (or a trust
indenture substantially identical to the Indenture in accordance with the terms
of the Registration Rights Agreement) which have been registered under the
Securities Act, in like principal amount and having substantially identical
terms as the Notes. The Holders shall be entitled to receive certain
additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
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The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples thereof. A Holder may register the transfer or
exchange of Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Note
selected for redemption or register the transfer of or exchange any Note for a
period of 15 days before the mailing of notice of redemption of Notes to be
redeemed or any Note after it is called for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
11. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner of it
for all purposes.
12. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on any Note
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Issuers at their written request. After that, Holders entitled to
money must look to the Issuers for payment as general creditors unless an
"abandoned property" law designates another person.
13. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be
modified, amended or supplemented by the Issuers, the Guarantors and the Trustee
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding and any existing default or compliance with any
provision may be waived in a particular instance with the consent of the Holders
of a majority in principal amount of the Notes then outstanding. Without the
consent of Holders, the Issuers, the Guarantors and the Trustee may amend the
Indenture or the Notes or supplement the Indenture for certain specified
purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or making
any other change that does not materially and adversely affect the rights of any
Holder.
14. SUCCESSOR ENTITY.
When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.
15. DEFAULTS AND REMEDIES.
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<PAGE> 118
Events of Default are set forth in the Indenture. If an Event of
Default (other than an Event of Default pursuant to Section 6.01(6) or (7) of
the Indenture with respect to either of the Issuers) occurs and is continuing,
the Trustee by notice to the Issuers, or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding, may declare to be
immediately due and payable the entire principal amount of all the Notes then
outstanding plus accrued but unpaid interest to the date of acceleration and (i)
such amounts shall become immediately due and payable or (ii) if there are any
amounts outstanding under or in respect of the Senior Credit Facility, such
amounts shall become due and payable upon the first to occur of an acceleration
of amounts outstanding under or in respect of the Senior Credit Facility or five
Business Days after receipt by the Company and the Representative of notice of
the acceleration of the Notes; provided, however, that after such acceleration
but before judgment or decree based on such acceleration is obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Notes may, under certain circumstances, rescind and annul such
acceleration and its consequences if all existing Events of Default, other than
the nonpayment of principal, premium or interest that has become due solely
because of the acceleration, have been cured or waived and if the rescission
would not conflict with any judgment or decree. No such rescission shall affect
any subsequent Default or impair any right consequent thereto. In case an Event
of Default specified in Section 6.01(6) or (7) of the Indenture with respect to
either of the Issuers occurs, such principal amount, together with premium, if
any, and interest with respect to all of the Notes, shall be due and payable
immediately without any declaration or other act on the part of the Trustee or
the Holders of the Notes.
16. TRUSTEE DEALINGS WITH THE ISSUERS
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuers, any Guarantor or their Affiliates, and may otherwise deal with the
Issuers any Guarantor or their Affiliates, as if it were not Trustee.
17. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer,
employee or stockholder, as such, of the Issuers or any Guarantor shall not have
any liability for any obligations of the Issuers or any Guarantor under the
Notes or the Indenture or for any claim based on, in respect or by reason of,
such obligations or their creation. The Holder of this Note by accepting this
Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of this Note.
18. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Issuers with certain conditions set forth in
the Indenture.
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<PAGE> 119
19. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts to Minors
Act).
20. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Note Identification Procedures, the Issuers have caused CUSIP Numbers to be
printed on the Notes and have directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of the Notes. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
21. GOVERNING LAW.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH
OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
NOTE.
THE ISSUERS WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN REQUEST
AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
TRANSWESTERN PUBLISHING COMPANY LLC, 8344 Clairemont Mesa Boulevard, San Diego,
California 92111, Attention: Executive Vice President - Chief Financial
Officer.
22. GUARANTEES BY FUTURE SUBSIDIARIES.
The Notes will be entitled to the benefits of certain Guarantees by
future subsidiaries made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
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ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
____________________________________________________________________________
____________________________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
Date:_____ Your Signature:__________________________________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:___________________________________________________
<PAGE> 121
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by the
Company pursuant to Section 4.10 or Section 4.19 of the Indenture, check the
appropriate box:
[ ] Section 4.10 [ ] Section 4.19
If you want to have only part of the Note purchased by the pursuant
to Section 4.10 or Section 4.19 of the Indenture, state the amount you elect to
have purchased:
$__________
Date:________
Your Signature:___________________________________________________________
(Sign exactly as your name appears on the face of
this Note)
________________
Signature Guaranteed
<PAGE> 122
EXHIBIT B
[FORM OF LEGEND FOR 144A NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS NOTE AND THE LAST DATE ON
WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS, WAS THE OWNER OF THIS NOTE
(OR ANY PREDECESSOR OF SUCH NOTE), RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO AN ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (D)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE COMPANY AND THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT OR
(F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
ACT (IF AVAILABLE) AND (2) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS
OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
ACT.
B-1
<PAGE> 123
[FORM OF ASSIGNMENT FOR 144A NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
_________________________________________________________________________
_________________________________________________________________________
Agent to transfer this Note on the books of the Issuers. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act provided by
Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance
with (a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the
Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Sections 2.16 and 2.17 of the Indenture
shall have been satisfied.
Date: ________________ Your Signature:______________________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:_________________________________________________________
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<PAGE> 124
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: __________________ _______________________________________________
NOTICE: To be executed by an executive officer
B-3
<PAGE> 125
EXHIBIT C
[FORM OF LEGEND FOR REGULATION S NOTE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, UNLESS SO
REGISTERED, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
C-1
<PAGE> 126
[FORM OF ASSIGNMENT FOR REGULATION S NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
____________________________________________________________________________
____________________________________________________________________________
Agent to transfer this Note on the books of the Issuers. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act provided by
Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance
with (a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the
Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Sections 2.16 and 2.17 of the Indenture
shall have been satisfied.
Date: ________________ Your Signature:______________________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:_________________________________________________________
C-2
<PAGE> 127
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note for its
own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges
that it has received such information regarding the Issuers as the undersigned
has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: __________________ __________________________________________
NOTICE: To be executed by an executive
officer
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<PAGE> 128
EXHIBIT D
[FORM OF LEGEND FOR GLOBAL NOTE]
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Note or Regulation S Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF
THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUERS
OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IT REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
D-1
<PAGE> 129
EXHIBIT E
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, ____
Attention:
Re: TRANSWESTERN PUBLISHING COMPANY LLC (the
"Company") and TWP CAPITAL CORP. II (together
with the Company, the "Issuers") 9 5/8% Senior
Subordinated Notes due 2007 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
dated as of November 12, 1997 relating to the Notes and we agree to be
bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with, such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the Notes have not been registered under the
Securities Act, and that the Notes may not be offered, sold, pledged or
otherwise transferred except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we should sell any Notes, we will
do so only (i) to an Issuer or any subsidiary thereof, (ii) pursuant to
an effective registration statement under the Securities Act, (iii) in
accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined in Rule 144A), (iv) to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you
a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Notes, (v) outside the
United States to persons other than U.S. persons in offshore transactions
meeting the requirements of Rule 904 of Regulation S under the Securities
Act, or (vi) pursuant to any other exemption from registration under the
Securities Act (if available), and we further agree to provide to any
person purchasing any of the Notes
E-1
<PAGE> 130
from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Issuers such certifications, legal
opinions and other information as you and the Issuers may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will
bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting each are able to
bear the economic risk of our or their investment, as the case may be.
5. We are acquiring the Notes purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:_____________________________
Authorized Signature
E-2
<PAGE> 131
EXHIBIT F
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
__________, ____
Attention:
Re: TRANSWESTERN PUBLISHING COMPANY LLC (the
"Company") and TWP CAPITAL CORP. II (together
with the Company, the "Issuers") 9 5/8% Senior
Subordinated Notes due 2007 (the "Notes")
--------------------------------------------
Dear Sirs:
In connection with our proposed sale of $__________ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to
and in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a U.S. person or to a
person in the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
F-1
<PAGE> 132
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_________________________
Authorized Signature
F-2
<PAGE> 133
EXHIBIT G
[FORM OF GUARANTEE]
The undersigned (the "Guarantor") hereby unconditionally guarantees, on a
senior subordinated basis, jointly and severally with all other guarantors
under the Indenture dated as of November 12, 1997 by and among TransWestern
Publishing Company LLC, a Delaware limited partnership (the "Company"), TWP
Capital Corp. II, a Delaware corporation ("Capital" and, together with the
Company, the "Issuers"), and Wilmington Trust Company, as trustee (as amended,
restated or supplemented from time to time, the "Indenture"), to the extent set
forth in the Indenture and subject to the provisions of the Indenture, (a) the
due and punctual payment of the principal of and premium, if any, and interest
on the Notes, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on overdue principal of, and premium, if any, and
interest on the Notes, to the extent lawful, and the due and punctual
performance of all other obligations of the Issuers to the Noteholders or the
Trustee, all in accordance with the terms set forth in Article 10 of the
Indenture, and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantor to the Noteholders and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
10 of the Indenture and reference is hereby made to the Indenture for the
precise terms and limitations of this Guarantee.
Guarantor
By:___________________________
Name:
Title:
G-1
<PAGE> 1
IN WITNESS WHEREOF, the Issuers have caused this Note to be
signed manually or by facsimile by their duly authorized Officers.
TRANSWESTERN PUBLISHING COMPANY LLC
By:
Name:
Title:
By:
Name:
Title:
TWP CAPITAL CORP. II
By:
Name:
Title:
By:
Name:
Title:
Certificate of Authentication:
This is one of the 9 5/8% Senior
Subordinated Notes due 2007 referred to in
the within-mentioned Indenture
Dated:
WILMINGTON TRUST COMPANY, as Trustee
By:
--------------------------------------
Authorized Signatory
2
<PAGE> 2
(REVERSE SIDE)
TRANSWESTERN PUBLISHING COMPANY LLC
TWP CAPITAL CORP. II
9 5/8% SENIOR SUBORDINATED NOTE DUE 2007
1. INTEREST.
TRANSWESTERN PUBLISHING COMPANY LLC, a Delaware limited
partnership (the "Company"), and TWP Capital Corp. II, a Delaware corporation
(together with the Company, the "Issuers"), jointly and severally promise to pay
interest on the principal amount of this Note semiannually on May 15 and
November 15 of each year (each an "Interest Payment Date"), commencing on May
15, 1998, at the rate of 9 5/8% per annum. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of the original issuance of the Notes.
The Issuers shall pay interest on overdue principal, and on
overdue premium, if any, and overdue interest, to the extent lawful, at the rate
equal to 2% per annum in excess of the rate borne by the Notes.
2. METHOD OF PAYMENT.
The Issuers will pay interest on this Note provided for in
Paragraph 1 above (except defaulted interest) to the person who is the
registered Holder of this Note at the close of business on the May 1 or November
1 preceding the Interest Payment Date (whether or not such day is a Business
Day). The Holder must surrender this Note to a Paying Agent to collect principal
payments. The Issuers will pay principal, premium, if any, and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts; provided, however, that the Issuers may pay principal,
premium, if any, and interest by check payable in such money. They may mail an
interest check to the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
3
<PAGE> 3
Initially, Wilmington Trust Company (the "Trustee") will act as
Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar
without notice to the Holders of the Notes. Neither the Issuers nor any of their
Subsidiaries or Affiliates may act as Paying Agent but may act as Registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Issuers issued this Note under an Indenture dated as of
November 12, 1997 (the "Indenture") among the Issuers, the Guarantors and the
Trustee. The terms of this Note include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S. Code SectionSection 77aaa-77bbbb) as in effect on the date of the
Indenture. This Note is subject to all such terms, and the Holder of this Note
is referred to the Indenture and said Trust Indenture Act for a statement of
them. All capitalized terms in this Note, unless otherwise defined, have the
meanings assigned to them by the Indenture.
The Notes are general unsecured obligations of the Issuers
limited to $100,000,000 aggregate principal amount. The Indenture imposes
certain restrictions on, among other things, the incurrence of indebtedness, the
incurrence of liens and the issuance of capital stock by Subsidiaries of the
Issuers, mergers and sale of assets, the payments of dividends on, or the
repurchase of, capital stock of the Issuers and their Restricted Subsidiaries,
certain other restricted payments by the Issuers and their Restricted
Subsidiaries, certain transactions with, and investments in, their affiliates,
certain sale and lease-back transactions and a provision regarding
change-of-control transactions.
5. SUBORDINATION.
The Indebtedness evidenced by the Notes is, to the extent and in
the manner provided in the Indenture, subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness as defined in
the Indenture, and this Note is issued subject to such provisions. Each Holder
of this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the
4
<PAGE> 4
Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such
purpose; provided, however, that the Indebtedness evidenced by this Note shall
cease to be so subordinate and subject in right of payment upon any defeasance
of this Note referred to in Paragraph 18 below.
6. OPTIONAL REDEMPTION.
The Issuers, at their option, may redeem the Notes, in whole or
in part, at any time on or after November 15, 2002 upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount), set forth below, together, in each case, with accrued and
unpaid interest to the Redemption Date, if redeemed during the twelve month
period beginning on November 15 of each year listed below:
<TABLE>
<CAPTION>
Year Redemption Price
- ---- ----------------
<S> <C>
2002............................................................. 104.813%
2003............................................................. 103.208%
2004............................................................. 101.604%
2005 and thereafter.............................................. 100.000%
</TABLE>
Notwithstanding the foregoing, the Issuers may redeem in the
aggregate up to 35% of the original principal amount of Notes at any time and
from time to time prior to November 15, 2000 at a redemption price equal to
109.625% of the aggregate principal amount so redeemed, plus accrued interest to
the Redemption Date out of the Net Proceeds of one or more Public Equity
Offerings; provided that at least $65,000,000 of the principal amount of Notes
remain outstanding immediately after the occurrence of any such redemption and
that any such redemption occurs within 90 days following the closing of any such
Public Equity Offering.
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first class mail at least
30 days but not more than 60 days prior to the redemption date to each Holder of
Notes to be redeemed at its registered address as it shall appear on the
register of the Notes maintained by the Registrar. On and after any Redemption
Date, interest will cease to accrue on the Notes or portions
5
<PAGE> 5
thereof called for redemption unless the Issuers shall fail to redeem any such
Note.
8. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales be
used, subject to further limitations contained therein, to make an offer to
purchase certain amounts of Notes in accordance with the procedures set forth in
the Indenture. The Issuers are also required to make an offer to purchase Notes
upon the occurrence of a Change of Control in accordance with procedures set
forth in the Indenture.
9. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement among the Issuers,
CIBC Oppenheimer Corp. and First Union Capital Markets Corp., as initial
purchasers of the Notes, the Issuers will be obligated to consummate an exchange
offer pursuant to which the Holder of this Note shall have the right to exchange
this Note for Notes of a separate series issued under the Indenture (or a trust
indenture substantially identical to the Indenture in accordance with the terms
of the Registration Rights Agreement) which have been registered under the
Securities Act, in like principal amount and having substantially identical
terms as the Notes. The Holders shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in denominations
of $1,000 and integral multiples thereof. A Holder may register the transfer or
exchange of Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Note
selected for redemption or register the transfer of or exchange any Note for a
period of 15 days before the mailing of notice of redemption of Notes to be
redeemed or any Note after it is called for redemption in whole
6
<PAGE> 6
or in part, except the unredeemed portion of any Note being redeemed in part.
11. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner of
it for all purposes.
12. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on any
Note remains unclaimed for two years, the Trustee or Paying Agent will pay the
money back to the Issuers at their written request. After that, Holders entitled
to money must look to the Issuers for payment as general creditors unless an
"abandoned property" law designates another person.
13. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be
modified, amended or supplemented by the Issuers, the Guarantors and the Trustee
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding and any existing default or compliance with any
provision may be waived in a particular instance with the consent of the Holders
of a majority in principal amount of the Notes then outstanding. Without the
consent of Holders, the Issuers, the Guarantors and the Trustee may amend the
Indenture or the Notes or supplement the Indenture for certain specified
purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or making
any other change that does not materially and adversely affect the rights of any
Holder.
14. SUCCESSOR ENTITY.
When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.
15. DEFAULTS AND REMEDIES.
7
<PAGE> 7
Events of Default are set forth in the Indenture. If an Event of
Default (other than an Event of Default pursuant to Section 6.01(6) or (7) of
the Indenture with respect to either of the Issuers) occurs and is continuing,
the Trustee by notice to the Issuers, or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding, may declare to be
immediately due and payable the entire principal amount of all the Notes then
outstanding plus accrued but unpaid interest to the date of acceleration and (i)
such amounts shall become immediately due and payable or (ii) if there are any
amounts outstanding under or in respect of the Senior Credit Facility, such
amounts shall become due and payable upon the first to occur of an acceleration
of amounts outstanding under or in respect of the Senior Credit Facility or five
Business Days after receipt by the Company and the Representative of notice of
the acceleration of the Notes; provided, however, that after such acceleration
but before judgment or decree based on such acceleration is obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Notes may, under certain circumstances, rescind and annul such
acceleration and its consequences if all existing Events of Default, other than
the nonpayment of principal, premium or interest that has become due solely
because of the acceleration, have been cured or waived and if the rescission
would not conflict with any judgment or decree. No such rescission shall affect
any subsequent Default or impair any right consequent thereto. In case an Event
of Default specified in Section 6.01(6) or (7) of the Indenture with respect to
either of the Issuers occurs, such principal amount, together with premium, if
any, and interest with respect to all of the Notes, shall be due and payable
immediately without any declaration or other act on the part of the Trustee or
the Holders of the Notes.
16. TRUSTEE DEALINGS WITH THE ISSUERS
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuers, any Guarantor or their Affiliates, and may otherwise deal with the
Issuers any Guarantor or their Affiliates, as if it were not Trustee.
17. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer,
employee or stockholder, as such, of the Issuers or any
8
<PAGE> 8
Guarantor shall not have any liability for any obligations of the Issuers or any
Guarantor under the Notes or the Indenture or for any claim based on, in respect
or by reason of, such obligations or their creation. The Holder of this Note by
accepting this Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Note.
18. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Issuers with certain conditions set forth in
the Indenture.
19. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of a
Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants
by the entireties), JT TEN (joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts to Minors
Act).
20. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on
Uniform Note Identification Procedures, the Issuers have caused CUSIP Numbers to
be printed on the Notes and have directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of the Notes. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
21. GOVERNING LAW.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE.
9
<PAGE> 9
THE ISSUERS WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
TRANSWESTERN PUBLISHING COMPANY LLC, 8344 Clairemont Mesa Boulevard, San Diego,
California 92111, Attention: Executive Vice President - Chief Financial
Officer.
22. GUARANTEES BY FUTURE SUBSIDIARIES.
The Notes will be entitled to the benefits of certain Guarantees
by future subsidiaries made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
10
<PAGE> 10
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
Date: Your Signature:
--------------
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:
<PAGE> 11
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by the
Company pursuant to Section 4.10 or Section 4.19 of the Indenture, check the
appropriate box:
Section 4.10 Section 4.19
If you want to have only part of the Note purchased by the
pursuant to Section 4.10 or Section 4.19 of the Indenture, state the amount you
elect to have purchased:
$
-----------------------------
Date:
-------------------------
Your Signature:
(Sign exactly as your name appears on
the face of this Note)
- ------------------------------
Signature Guaranteed
<PAGE> 1
EXHIBIT 4.3
- --------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
by and among
TRANSWESTERN PUBLISHING COMPANY LLC,
TWP CAPITAL CORP. II,
TRANSWESTERN HOLDINGS L.P.
and
TRANSWESTERN COMMUNICATIONS COMPANY, INC.
and
THE INITIAL PURCHASERS NAMED HEREIN
_______________________________
Dated as of November 6, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C> <C>
Section 1.1. Definitions .......................................... 1
Section 1.2. Accounting Terms; Financial Statements ............... 5
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE OF
NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASERS
Section 2.1. Issue of Notes ........................................ 5
Section 2.2. Purchase, Sale and Delivery of Notes .................. 6
Section 2.3. Registration Rights of Holders of Notes ............... 7
Section 2.4. Offering by the Initial Purchasers .................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties
of the Issuers ....................................... 7
Section 3.2. Resale of Notes ....................................... 21
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations
of the Initial Purchasers ............................ 22
Section 4.2. Conditions Precedent to Obligations
of the Issuers ....................................... 24
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Issuers............................... 24
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes.............................. 27
</TABLE>
-i-
<PAGE> 3
ARTICLE VII
INDEMNITY
<TABLE>
<S> <C> <C>
Section 7.1. Indemnity ........................................... 28
Section 7.2. Contribution ........................................ 31
Section 7.3. Registration Rights Agreement ....................... 32
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions .............................. 32
Section 8.2. Termination ......................................... 32
Section 8.3. No Waiver; Modifications in Writing ................. 33
Section 8.4. Information Supplied by the Initial
Purchasers ......................................... 34
Section 8.5. Communications ...................................... 34
Section 8.6. Execution in Counterparts ........................... 35
Section 8.7. Successors .......................................... 35
Section 8.8. Governing Law ....................................... 35
Section 8.9. Severability of Provisions .......................... 35
Section 8.10. Headings ........................................... 36
SIGNATURE PAGE .................................................... 37
SCHEDULE I
Exhibit A
Disclosure Schedule
</TABLE>
-ii-
<PAGE> 4
SECURITIES PURCHASE AGREEMENT, dated as of November 6, 1997 (the
"Agreement"), among TRANSWESTERN PUBLISHING COMPANY LLC, a Delaware limited
liability company (the "Company"), TWP CAPITAL CORP. II, a Delaware corporation
("Capital" and together with the Company, the "Issuers"), TRANSWESTERN HOLDINGS
L.P., a Delaware limited partnership ("Holdings"), TRANSWESTERN COMMUNICATIONS
COMPANY, INC., a Delaware corporation and the manager of the Company and the
general partner of Holdings ("Communications"), and CIBC OPPENHEIMER CORP.
("CIBC") and FIRST UNION CAPITAL MARKETS CORP. ("First Union") (the "Initial
Purchasers").
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Accredited Investor" has the meaning provided therefor in Section 3.2 of
this Agreement.
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder.
"Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
"Agreement" means this Agreement, as the same may be amended, supplemented
or modified in accordance with the terms hereof and in effect.
"Asset Drop-Down" means Holdings' contribution of assets to the Company on
or prior to November 6, 1997.
"Basic Documents" means, collectively, the Indenture, the Notes, the
Registration Rights Agreement and this Agreement.
<PAGE> 5
-2-
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into or exercisable for any of the foregoing.
"Closing" has the meaning provided therefor in Section 2.2 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Act.
"Commonly Controlled Entity" has the meaning provided therefor in Section
3.1(y) of this Agreement.
"Default" means any event, act or condition which, with notice or lapse of
time or both, would constitute an Event of Default.
"Employee Benefit Plan" has the meaning provided therefor in Section
3.1(y) of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
pursuant thereto, as amended from time to time.
"Event of Default" means any event defined as an Event of Default in the
Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"Exchange Notes" shall have the meaning provided therefor in the
Registration Rights Agreement.
"Facilities" means any and all real property (including without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by the Issuers,
Holdings and Communications or any of their respective predecessors in
interest.
<PAGE> 6
-3-
"Final Memorandum" has the meaning provided therefor in Section 2.1 of
this Agreement.
"Indemnified Party" has the meaning provided therefor in Section 7.1(c) of
this Agreement.
"Indemnifying Party" has the meaning provided therefor in Section 7.1(c)
of this Agreement.
"Indenture" means the indenture dated as of November 12, 1997 among the
Issuers, and Wilmington Trust Company, as Trustee, under which the Notes will
be issued.
"Initial Purchasers" has the meaning set forth in the introductory
paragraph to this Agreement.
"Intellectual Property Rights" has the meaning provided therefor in
Section 3.1(r) of this Agreement.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement (other than advance payments or customer deposits for goods and
services sold by Holdings or the Company in the ordinary course of business),
security interest, lien, charge, easement, encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including without
limitation, any Capitalized Lease Obligations (as defined in the Indenture)),
conditional sales, or other title retention agreement having substantially the
same economic effect as any of the foregoing.
"Material Adverse Effect" means (i) a material adverse effect on the
business, assets, condition (financial or otherwise), results of operations or
properties of the Issuers and Communications, taken as a whole, or (ii) a
material adverse effect on the legality, validity, binding effect or
enforceability of this Agreement or the Basic Documents.
"Material Contract" has the meaning provided therefor in Section 3.1(p) of
this Agreement.
"Memorandum" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Notes" means the 9 5/8% Senior Subordinated Notes due 2007 of the
Issuers.
<PAGE> 7
-4-
"Offering" has the meaning assigned thereto in the Memorandum.
"Offering Materials" has the meaning provided therefor in Section 7.1 of
this Agreement.
"Partnership Interest" means any general or limited partnership interest
and any interest as a member of a limited liability company or a limited
liability partnership.
"Person" means any individual, corporation, partnership, limited liability
company. joint venture, joint-stock company, trust, unincorporated organization
or association or government (including any agency or political subdivision
thereof).
"PORTAL" means the Private Offering, Resales, and Trading through
Automated Linkages Market.
"Preliminary Memorandum" has the meaning provided therefor in Section 2.1
of this Agreement.
"Private Exchange Notes" has the meaning provided therefor in the
Registration Rights Agreement.
"Proceeding" has the meaning provided therefor in Section 7.1(c) of this
Agreement.
"QIB" has the meaning provided therefor in Section 3.2 of this Agreement.
"Registration Rights Agreement" means the registration rights agreement
among the Issuers and the Initial Purchasers relating to the Notes.
"Regulation S" means Regulation S under the Act.
"State" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having jurisdiction to
enforce such State's securities laws.
"tax" has the meaning provided therefor in Section 3.1(w) of this
Agreement.
"Taxpayers" has the meaning provided therefor in Section 3.1(w) of this
Agreement.
<PAGE> 8
-5-
"Third Amended Partnership Agreement" has the meaning provided therefor in
Section 3.1(c) of this Agreement.
"Time of Purchase" has the meaning provided therefor in Section 2.2 of
this Agreement.
"TransWestern Delivered Documents" has the meaning provided therefor in
Section 3.1(e) of this Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Commission thereunder.
Section 1.2. Accounting Terms; Financial Statements. All accounting terms
used herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with sound accounting practice. The term
"sound accounting practice" shall mean such accounting practice as, in the
opinion of the independent accountants regularly retained by the Company,
conforms at the time to generally accepted accounting principles in the United
States applied on a consistent basis except for changes with which such
accountants concur. All determinations to which accounting principles apply
shall be made in accordance with sound accounting practice.
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE
OF NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASERS
Section 2.1. Issue of Notes. The Company and Capital have authorized the
issuance of $100,000,000 aggregate principal amount of the Notes which are to
be issued pursuant to the Indenture. Each Note will be substantially in the
form of the Note set forth as Exhibit A to the Indenture.
The Notes will be offered and sold to the Initial Purchasers without being
registered under the Act, in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Issuers have prepared a
preliminary offering memorandum dated October 17, 1997 (the "Preliminary
Memorandum") and prepared a final offering memorandum dated November 6, 1997
(the "Final Memorandum" and, together with the Preliminary Memorandum, the
"Memorandum") setting forth or including a description of the terms of the
Notes, the terms of the offering, a description of the Issuers and any
<PAGE> 9
-6-
material developments relating to the Issuers occurring after the date of the
most recent financial statements included therein.
Section 2.2. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Issuers agree that
they will sell to each Initial Purchaser, and each Initial Purchaser agrees,
acting severally and not jointly, that it will purchase from the Issuers at the
Time of Purchase, the principal amount of the Notes set forth opposite the name
of such Initial Purchaser on Schedule I hereto at a price equal to 97.0% of the
principal amount thereof.
The purchase, sale and delivery of the Notes will take place at a closing
(the "Closing") at the offices of Cahill Gordon & Reindel, 80 Pine Street, New
York, New York 10005, at 9:00 A.M., New York time, on November 12, 1997, or
such later date and time, if any, as the Initial Purchasers and the Company
shall agree. The time at which such Closing is concluded is herein called the
"Time of Purchase."
One or more certificates in definitive form for the Notes that the Initial
Purchasers have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchasers
request upon notice to the Company at least 24 hours prior to the Closing,
shall be delivered by or on behalf of the Issuers to the Initial Purchasers,
against payment by or on behalf of the Initial Purchasers of the purchase price
therefor by wire transfer of immediately available funds wired in accordance
with the written instructions of the Company. The Issuers will make such
certificate or certificates for the Notes available for checking and packaging
by the Initial Purchasers at the offices of CIBC or First Union, or such other
place as CIBC and First Union may designate, at least 24 hours prior to the
Closing.
Section 2.3 Registration Rights of Holders of Notes. The Initial
Purchasers and their direct and indirect transferees of the Notes will have
such rights with respect to the registration thereof under the Act and
qualification of the Indenture under the Trust Indenture Act as are set forth
in the Registration Rights Agreement.
Section 2.4 Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Notes at the price and upon the terms set
forth in the Final Memorandum, as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchasers is advisable.
<PAGE> 10
-7-
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1 Representations and Warranties of the Issuers The
Company, Capital and Communications jointly and severally represent and
warrant to and agree with each of the Initial Purchasers as follows:
(a) Final Memorandum. The Final Memorandum, as of its date does not,
and at the Time of Purchase will not, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
set forth in this Section 3.1(a) do not apply to statements or omissions
made in reliance upon and in conformity with information relating to the
Initial Purchasers furnished to the Company in writing by the Initial
Purchasers expressly for use in the Final Memorandum or any amendment or
supplement thereto as set forth in Section 8.4 hereof. The statistical
and market-related data included in the Final Memorandum are based on or
derived from sources which the Issuers and Holdings believe to be
reliable and accurate or represents the Issuers' and Holdings good faith
estimates that are made on the basis of data derived from such sources.
The Notes, the Indenture and the Registration Rights Agreement conform in
all material respects to the description thereof in the Final Memorandum.
(b) Financial Statements. The audited financial statements of the
Company set forth in the Final Memorandum are in accordance with the
books and records of the Company, fairly present in all material respects
the financial position, results of operations, member deficit and cash
flows of the Company at the dates and for the periods to which they
relate and have been prepared in accordance with generally accepted
accounting principles consistently applied (except as otherwise stated
therein); the unaudited financial statements of the Company set forth in
the Final Memorandum were prepared in a manner consistent with the
Company's historical practices and in the reasonable judgment of
management fairly present in all material respects the financial position
and results of operations of the Company at the date and for the period
to which they relate, subject only to year end adjustments, the absence
of footnote disclosures and adjustment required by generally accepted
accounting principles; the summary and selected financial
<PAGE> 11
-8-
data in the Final Memorandum present fairly the financial information
shown therein and have been prepared and compiled on a basis consistent
with audited and unaudited financial statements included therein, except
as otherwise stated therein; and the adjusted financial information and
the related notes thereto included in the Final Memorandum have been
prepared using reasonable assumptions and have been prepared in
accordance with the applicable requirements of the Act and include all
adjustments necessary to present fairly such financial information.
Ernst & Young LLP, which has reported upon the audited financial
statements included in the Memorandum, is an independent public
accounting firm as required by the Act and the rules and regulations
thereunder.
(c) Organization. The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the power and authority to carry on its
business as now being conducted and to own and operate the properties and
assets now owned and being operated by it. The Company has delivered to
the Initial Purchasers complete and correct copies of its Certificate of
Formation and Limited Liability Company Agreement (the "LLC Agreement")
as in effect on the date hereof.
Holdings is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
power and authority to carry on its business as now being conducted and
to own and operate the properties and assets now owned and being operated
by it. Holdings has delivered to the Initial Purchasers complete and
correct copies of its Certificate of Limited Partnership and the Third
Amended and Restated Agreement of Limited Partnership, as amended as of
November 4, 1997 (the "Third Amended Partnership Agreement") as in effect
on the date hereof. Holdings is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which such
qualification is necessary under the applicable law as a result of the
conduct of its business or the ownership of its properties except where
the failure to be so qualified, licensed or in good standing does not
have a Material Adverse Effect.
Capital is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the
corporate power and authority to carry on its business as now being
conducted and to own and operate the properties and assets now owned and
being operated by it.
<PAGE> 12
-9-
Capital has delivered to the Initial Purchasers complete and correct
copies of its Certificate of Incorporation and By-Laws as in effect on
the date hereof. Capital is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which such qualification
is necessary under the applicable law except where the failure to be so
qualified, licensed or in good standing does not have a Material Adverse
Effect.
Communications is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
corporate power and authority to carry on its business as now being
conducted and to own and operate the properties and assets now owned and
being operated by it. Communications has delivered to the Initial
Purchasers complete and correct copies of its Certificate of
Incorporation and By-Laws as in effect on the date hereof. Communications
is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which such qualification is necessary under the
applicable law except where the failure to be so qualified, licensed or
in good standing does not have a Material Adverse Effect.
(d) Capitalization, Equity Ownership. As of the Time of Purchase
(after giving effect to the Offering), the Company will have the
capitalization as set forth in the Final Memorandum, except as otherwise
noted therein, the authorized capital stock of Capital will consist of
1,000 shares of its common stock (all of which will be issued and
outstanding and owned and held by the Company), Holdings will have the
capitalization as set forth in the Final Memorandum and the authorized
capital stock of Communications will consist of 30,000 shares of its
common stock (9,800.05 of which will be issued and outstanding); except
as described in the Final Memorandum, all of the issued and outstanding
securities of the Company, Holdings and Communications have been duly
authorized and validly issued and are fully paid and non-assessable and
none of them have been issued in violation of any preemptive or other
right; and, except as contemplated in this Agreement or the other
agreements, instruments or documents delivered in connection with the
transactions contemplated hereby, neither the Company, Holdings, Capital
nor Communications is a party to or bound by any contract, agreement or
arrangement to issue, sell or otherwise dispose of or redeem, purchase or
otherwise acquire any Capital Stock, Partnership Interest or any other
security of the Company, Holdings, Capital or Communications or any other
security exercisable or exchangeable for or convertible
<PAGE> 13
-10-
into any Capital Stock, Partnership Interest or any other security of
the Company, Holdings, Capital or Communications.
(e) Authority. The Company, Holdings, Capital and Communications
have the power to enter into the Basic Documents (to the extent a party
thereto) and all other agreements, instruments and documents executed and
delivered by the Company, Holdings, Capital or Communications pursuant
thereto (collectively, the "TransWestern Delivered Documents") and to
carry out their respective obligations thereunder, including without
limitation issuing the Notes in the manner and for the purpose
contemplated by this Agreement. The execution, delivery and performance
of the TransWestern Delivered Documents and the consummation of the
transactions contemplated thereby have been duly authorized by the
Company, Holdings, Capital and Communications (to the extent a party
thereto), and no other proceeding or approval on the part of the Company,
Holdings, Capital or Communications is necessary to authorize the
execution and delivery of the TransWestern Delivered Documents or the
performance of any of the transactions contemplated thereby.
(f) Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by the Issuers, Holdings and Communications and
(assuming the due authorization, execution and delivery thereof by the
Initial Purchasers), is a valid and legally binding agreement of the
Issuers, enforceable against each of them in accordance with its terms
except (i) that the enforcement hereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity and the discretion of the
court before which any proceeding therefor may be brought and (ii) as any
rights to indemnity or contribution hereunder may be limited by federal
and state securities laws and public policy considerations.
(g) Indenture. The Indenture has been duly authorized by the
Issuers and, when executed and delivered by the Issuers (assuming the due
authorization, execution and delivery thereof by the Trustee), will
constitute a valid and legally binding agreement of the Issuers,
enforceable against each of them in accordance with its terms except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of
<PAGE> 14
-11-
equity and the discretion of the court before which any proceeding
therefor may be brought.
(h) Registration Rights Agreement. The Registration Rights
Agreement has been duly authorized by the Issuers and, when executed and
delivered by the Issuers (assuming the due authorization, execution and
delivery thereof by the Initial Purchasers), will constitute a valid and
legally binding agreement of the Issuers, enforceable against each of
them in accordance with its terms except (i) that the enforcement thereof
may be subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and to general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought and (ii) as any rights to indemnity or
contribution thereunder may be limited by federal and state securities
laws and public policy considerations.
(i) Notes. The Notes, the Exchange Notes and the Private Exchange
Notes have each been duly authorized by the Issuers and, when executed
by the Issuers and authenticated by the Trustee in accordance with the
provisions of the Indenture and, in the case of the Notes, delivered to
and paid for by the Initial Purchasers in accordance with the terms of
this Agreement, will be entitled to the benefits of the Indenture and
will constitute valid and legally binding obligations of the Issuers
enforceable in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(j) Other Documents. Each other TransWestern Delivered Document
executed and delivered by the Issuers, Holdings or Communications (to the
extent a party thereto) has been duly and validly authorized, executed
and delivered by the Issuers, Holdings and Communications (to the extent
a party thereto) and constitutes or will constitute a valid and legally
binding obligation of the Issuers, Holdings and Communications (to the
extent a party thereto), enforceable against them in accordance with its
terms, except (i) that the enforcement thereof may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to
<PAGE> 15
-12-
creditors' rights generally, and to general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought and (ii) as any rights to indemnity and contribution hereunder
and thereunder may be limited by applicable law.
(k) Solvency. Immediately after the consummation of the
transactions contemplated by this Agreement (including the use of
proceeds from the sale of Notes at the Time of Purchase), the fair value
and present fair saleable value of the assets of each of the Company and
Holdings (on a consolidated basis) will exceed the sum of its stated
liabilities and identified contingent liabilities; each of the Company
and Holdings (on a consolidated basis) will not be, after giving effect
to the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (including the use
of proceeds from the sale of Notes at the Time of Purchase), (i) left
with unreasonably small capital with which to carry on its business as it
is proposed to be conducted, (ii) unable to pay its debts (contingent or
otherwise) as they mature or (iii) otherwise insolvent.
(l) Absence of Certain Changes. Subsequent to the date as of which
information is given in the Final Memorandum, except as described in the
Final Memorandum, there has not been (i) any event or condition that has
a Material Adverse Effect, (ii) any transaction entered into by the
Issuers, other than in the ordinary course of business, that has a
Material Adverse Effect, or (iii) any dividend or distribution of any
kind declared, paid or made by the Company on its Membership Interests
other than Permitted Tax Distributions and other distributions permitted
under the Indenture.
(m) No Violation. Neither the execution, delivery or performance
of any of the TransWestern Delivered Documents nor the consummation of
any of the transactions contemplated thereby (i) will violate or conflict
with the LLC Agreement of the Company or the Certificate of Limited
Partnership or the Third Amended Partnership Agreement of Holdings, (ii)
will violate or conflict with Capital's or Communications' Certificate of
Incorporation or By-Laws, (iii) other than as a result of the Asset
Drop-Down, will, as of the Time of Purchase, result in any breach of or
default under any provision of any material contract or agreement to
which the Company, Holdings, Capital or Communications is a party or by
which the Company, Holdings, Capital or Communications is bound or to
which any property or assets of the Company,
<PAGE> 16
-13-
Holdings, Capital or Communications is subject to (iv) violates, is
prohibited by or requires the company the Company, Holdings, Capital or
Communications to obtain or make any consent, authorization, approval,
registration or filing under any statute, law, ordinance, regulation
(including without limitation Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System), rule, judgment, decree or order
of any court or governmental agency, board, bureau, body, department or
authority, or of any other person, presently in effect or in effect at the
Time of Purchase, (v) will cause any acceleration of maturity of any note,
instrument or other indebtedness to which the Company, Holdings, Capital or
Communications is a party or by which the Company, Holdings, Capital or
Communications is bound or with respect to which the Company, Holdings,
Capital or Communications is an obligor or guarantor, or (vi) except as
contemplated by this Agreement and the other Basic Documents, will result
in the creation or imposition of any Lien upon or give to any other person
any interest or right (including any right of termination or cancellation)
in or with respect to the equity or any of the properties, assets,
business, agreements or contracts of the Company, Holdings, Capital or
Communications, other than any violation, conflict, breach, default,
acceleration or Lien which individually or in the aggregate does not have a
Material Adverse Effect.
(n) Title and Condition of Properties and Assets. As of the date
hereof, except as a result of the Asset Drop-Down, the Company, Holdings
and Communications have good and valid title to all of their respective
owned assets and properties which are material to their business, taken
as a whole, and Capital has no operating assets. As of the Time of
Purchase, except as a result of the Asset Drop-Down, the Company,
Holdings and Communications will have good and valid title to all of
their respective assets and properties which are material to their
business, taken as a whole, (except as sold or otherwise disposed of in
the ordinary course of business), subject to no Liens other than
Permitted Liens (as defined in the Indenture).
(o) Leased Property. Except as a result of the Asset Drop-Down,
each lease of real property or personal property that is material to the
business of the Company, Holdings and Communications, taken as a whole,
is in full force and effect and is valid and enforceable in accordance
with its terms. Except as a result of the Asset Drop-Down, there is not
under any such lease any default by the Company, Holdings or
Communications, or any event that with notice or lapse of time or both
would constitute such a default by the Company,
<PAGE> 17
-14-
Holdings or Communications and with respect to which the Company,
Holdings or Communications has not taken adequate steps to prevent such
default from occurring, except for any such default as has not had a
Material Adverse Effect; all of such events, if any, and the aforesaid
steps taken by the Company, Holdings or Communications are set forth in
the Final Memorandum. There is not under any such lease any default by
any other party thereto or any event that with notice or lapse of time or
both would constitute such a default thereunder by such party, which
default has a Material Adverse Effect. Neither the Company, Holdings nor
Communications owns any real property.
(p) Litigation. Except as set forth in the Final Memorandum,
there are no actions, suits, proceedings or investigations, either at law
or in equity, or before any commission or other administrative authority
in any United States jurisdiction, of any kind now pending or, to the
best of the Company's, Holdings', Capital's or Communications' knowledge,
threatened involving the Company, Holdings, Capital or Communications
that (i) seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance and sale of the Notes by the Issuers or
any of the other material transactions contemplated hereby, (ii)
questions the legality or validity of any such transactions or seeks to
recover damages or obtain other relief in connection with any such
transactions or (iii) which has individually or in the aggregate, a
Material Adverse Effect.
(q) Patents, Copyrights and Trademarks. There are no material
copyrights, patents, trade names, trademarks and service marks,
identifying whether registered or at common law, and all applications
therefor that are pending or in the process of preparation (collectively,
the "Intellectual Property Rights"), that are directly or indirectly
owned, licensed, used, required for use or controlled in whole or in part
by the Company, Holdings or Communications and no licenses and other
agreements allowing the Company, Holdings or Communications to use
Intellectual Property Rights of third parties in the United States that
are not accurately described in the Final Memorandum. Except as
otherwise described in the Final Memorandum, the Company and Holdings are
the sole and exclusive owners of the Intellectual Property Rights
described therein, free and clear of any Lien (other than Permitted
Liens) and such Intellectual Property Rights have not been and are not
being challenged in any way or involved in any pending or threatened
unfair competition proceeding. Except as set forth in the Final
Memorandum, there has been and is no claim challenging the scope,
<PAGE> 18
-15-
validity or enforceability of any of the Intellectual Property Rights.
Neither the Company, Holdings nor Communications has infringed, or is
infringing or is subject to any unfair competition claim with respect to
any service mark or trade name registration or application therefor,
trademark, trademark registration or application therefor, copyright,
copyright registration or application therefor, patent, patent
registration or application therefor, or any other proprietary or
intellectual property right of any person or entity and neither the
Company, Holdings nor Communications has received or has any knowledge,
after due inquiry, of any such claim or other notice of any such
violation or infringement.
(r) Compliance with Laws, Etc. The Company, Holdings, Capital and
Communications are in compliance with, and the execution and delivery of
this Agreement and the other TransWestern Delivered Documents and the
consummation by the Company, Holdings, Capital and Communications of the
transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes in the manner and for the purpose
contemplated by this Agreement) will comply with, all federal, state and
local statutes, laws, ordinances, regulations, rules, permits, judgments,
orders or decrees applicable to the Company, Holdings, Capital or
Communications and there does not exist any basis for any claim of
default under or violation of any such statute, law, ordinance,
regulation, rule, judgment, order or decree except such noncompliance,
defaults or violations, if any, that in the aggregate do not have a
Material Adverse Effect. Except as set forth in the Final Memorandum,
the Company, Holdings, Capital and Communications are in compliance with
(i) all applicable requirements of all United States, state and local
governmental authorities with respect to environmental protection,
including, without limitation, regulations establishing quality criteria
and standards for air, water, land and hazardous materials, (ii) all
applicable requirements of the Occupational Safety and Health Act of 1970
within the United States and rules, regulations and orders thereunder and
(iii) all applicable laws and related rules and regulations of all United
States jurisdictions affecting labor union activities, civil rights or
employment, including, without limitation, in the United States, the
Civil Rights Act of 1964, the Age Discrimination in Employment Act of
1967, the Equal Employment Opportunity Act of 1972, the Employee
Retirement Income Security Act of 1974, the Equal Pay Act and the
National Labor Relations Act, in each case, other than any such
noncompliance which in the aggregate has a Material Adverse Effect.
Neither of the
<PAGE> 19
-16-
Issuers nor Holdings is currently or, after giving effect to the
consummation of the transactions contemplated by this Agreement and the
Basic Documents, will be (i) in violation of its respective
organizational documents, or (ii) in default (nor will an event occur
which with notice or passage of time or both would constitute such a
default) under or in violation of any indenture or loan or credit
agreement or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets may be bound or
affected (except as set forth in the Final Memorandum), which default or
violation (individually or in the aggregate) (x) materially and adversely
affects the legality, validity or enforceability of this Agreement or any
of the Basic Documents or (y) has a Material Adverse Effect. As of the
Closing, neither the Company, Holdings, Capital nor Communications is
engaged in any printing or manufacturing activities.
(s) Governmental Authorizations and Regulations. There are no
material licenses, franchises, permits and other governmental
authorizations held by the Company, Holdings, Capital or Communications
with respect to the conduct of their respective businesses that are not
accurately described in the Final Memorandum. Except as set forth in the
Final Memorandum, no authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency, securities exchange or
any regulatory authority is required in connection with the execution,
delivery or performance by the Issuers and Holdings of this Agreement or
any of the other Basic Documents or any of the transactions contemplated
thereby, except (i) as may be required under state securities or "blue
sky" laws or the laws of any foreign jurisdiction in connection with the
offer and sale of the Notes, (ii) as may be required in connection with
the Asset Drop-Down or (iii) as does not (individually or in the
aggregate) have a Material Adverse Effect. All such authorizations,
consents, approvals, licenses, qualifications, exemptions, filings,
declarations and registrations set forth in the Final Memorandum (other
than as disclosed therein) which are required to have been obtained by
the date hereof have been obtained or made, as the case may be, and are
in full force and effect and not the subject of any pending or, to the
knowledge of the Company, threatened attack by appeal or direct
proceeding or otherwise.
(t) Labor Matters. No employees of the Company, Holdings, Capital
or Communications are currently represented
<PAGE> 20
-17-
by a labor union or labor organization, no labor union or labor
organization has been certified or recognized as a representative of any
such employees, and neither the Company, Holdings, Capital nor
Communications has any obligation under any collective bargaining
agreement or other agreement with any labor union or labor organization
that, in any way, affects the Company, Holdings, Capital or
Communications.
(u) Employees. Except as set forth in the Final Memorandum, there
has been no resignation or termination of employment of any officer or
key employee of the Company, Holdings, Capital or Communications and
neither the Company, Holdings, Capital nor Communications has any
knowledge of any impending or threatened resignation or termination of
employment in any case that would have a Material Adverse Effect. Except
as set forth in the Final Memorandum, neither the Company, Holdings,
Capital nor Communications has entered into any severance or similar
arrangement in respect of any present or former employees required to be
disclosed therein.
(v) Brokers. Except as described in the Final Memorandum, there
are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the Company,
Holdings, Capital or Communications.
(w) Tax Matters. Holdings and Communications (hereinafter referred
to collectively as the "Taxpayers") have duly filed all tax reports and
returns required to be filed by them, including all federal, state, local
and foreign tax returns and reports, and the Taxpayers have paid in full
all taxes required to be paid by such Taxpayers before such payment
became delinquent other than taxes being contested in good faith and for
which adequate reserves have been established in accordance with GAAP,
except where the failure to file such return or pay such tax does not
have a Material Adverse Effect.
(x) Investment Company. Neither of the Issuers, Holdings nor
Communications is and immediately after the Time of Purchase none of them
will be, "investment companies" or, to the Company's knowledge, companies
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(y) ERISA. The execution and delivery of this Agreement and the
other Basic Documents and the sale of the
<PAGE> 21
-18-
Notes to the Initial Purchasers will not involve any non-exempt
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code on the part of the Issuers. The preceding
representation is made in reliance on and subject to the accuracy of the
Initial Purchasers' representations and warranties in Section 3.2 hereof.
No Reportable Event (as defined in Section 4043 of ERISA) has occurred
during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Employee
Benefit Plan, and the Issuers and Commonly Controlled Entities have
complied in all material respects with the applicable provisions of ERISA
and the Code in connection with the Employee Benefit Plans. The present
value of all accrued benefits under each Employee Benefit Plan subject to
Title IV of ERISA (based on the current liability, interest rate and
other assumptions used in preparation of the plan's Form 5500 Annual
Report) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of
the assets of such plan allocable to such accrued benefits. Neither of
the Issuers, nor any Commonly Controlled Entity (as defined below) has
had a complete or partial withdrawal from any Multiemployer Plan (as
defined in Section 4001(a)(3) of ERISA), and neither the Issuers, nor any
Commonly Controlled Entity would become subject to any liability under
ERISA if the Issuers, or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date
most closely preceding the date on which such representation is made or
deemed made. No such Multiemployer Plan is in reorganization or
insolvent. There are no material liabilities of the Issuers or any
Commonly Controlled Entity for post-retirement benefits to be provided to
their current and former employees under Plans which are welfare benefit
plans (as described in Section 3(1) of ERISA). With respect to each
Employee Benefit Plan, no event has occurred and there exists no
conditions or set of circumstances in connection with which the Company
or any of its subsidiaries may, directly or indirectly (through a
Commonly Controlled Entity or otherwise) be subject to material liability
under the Code, ERISA or any other applicable law, except for liability
for benefit claims and funding obligations payable in the ordinary
course. "Commonly Controlled Entity" means any person or entity that,
together with any Issuer, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code. "Employee Benefit Plan" means an
employee benefit plan, as defined in Section 3(3) of ERISA, which is
maintained or contributed to by an Issuer, or any Commonly
<PAGE> 22
-19-
Controlled Entity or to which an Issuer, or any Commonly Controlled
Entity may have liability.
(z) The Offering. No form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) was
used by the Issuers or their representatives in connection with the offer
and sale of the Notes. Neither of the Issuers nor any Person authorized
to act for any of them has, either directly or indirectly, sold or
offered for sale any of the Notes or any other similar security of the
Issuers to, or solicited any offers to buy any thereof from, or has
otherwise approached or negotiated in respect thereof with, any Person or
Persons other than with or through the Initial Purchasers; and the
Issuers agree that neither they nor any Person acting on their behalf
will sell or offer for sale any Notes to, or solicit any offers to buy
any Notes from, or otherwise approach or negotiate in respect thereof
with, any Person or Persons so as thereby to bring the issuance or sale
of any of the Notes within the provisions of Section 5 of the Act.
Assuming the accuracy of the Initial Purchasers' representations and
warranties set forth in Section 3.2 hereof, and the due performance by
the Initial Purchasers of the covenants and agreements set forth in
Section 3.2 hereof, the offer and sale of the Notes to the Initial
Purchasers in the manner contemplated by this Agreement and the
Memorandum does not require registration under the Act and the Indenture
does not require qualification under the Trust Indenture Act. No
securities of the Issuers are of the same class (within the meaning of
Rule 144A under the Act) as the Notes and listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a
U.S. automated interdealer quotation system. Neither of the Issuers has
taken, nor will either of them take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Notes. Neither of the
Issuers nor any of their respective Affiliates or any person acting on
its or their behalf (other than the Initial Purchasers) has engaged in
any directed selling efforts (as that term is defined in Regulation S
with respect to the Notes and the Company and their respective Affiliates
and any person acting on its or their behalf (other than the Initial
Purchasers) have acted in accordance with the offering restrictions
requirements of Regulation S.
(aa) Insurance. Holdings and/or the Company carry insurance
(including self insurance) in such amounts and covering such risks as in
their reasonable determination is
<PAGE> 23
-20-
adequate for the conduct of their business and the value of their
properties.
(bb) Asset-Drop-Down. On or prior to the date hereof, there were
transferred by Holdings to the Company all of the following assets owned
by Holdings as of such date: receivables, customer lists and inventory
located at property owned or leased by Holdings; after giving effect to
such transfer the Company has good title to such assets, and none of such
assets are subject to any Lien except Permitted Liens (as defined in the
Indenture). Except as set forth on the Disclosure Schedule attached
hereto, the Issuers have a valid leasehold interest in all their real
property used in their business, and good title to, or a valid leasehold
interest in, all their other material property (other than assets
described in the preceding sentence) used in their business, and none of
such property described in this sentence is subject to any Lien (except
Permitted Liens), except insofar as the failure to have such title or
leasehold interest or the presence of any non-permitted Lien would not
reasonably be expected to have a Material Adverse Effect.
Section 3.2. Resale of Notes. Each of the Initial Purchasers
represents and warrants (as to itself only) that it is a "qualified institution
al buyer" as defined in Rule 144A of the Act ("QIB"). Each of the Initial
Purchasers agrees with the Issuers (as to itself only) that (a) it has not and
will not solicit offers for, or offer or sell, the Notes by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act; and (b) it has and will solicit offers for the
Notes only from, and will offer the Notes only to (A) in the case of offers
inside the United States, (i) Persons whom the Initial Purchasers reasonably
believe to be QIBs or, if any such Person is buying for one or more
institutional accounts for which such Person is acting as fiduciary or agent,
only when such Person has represented to the Initial Purchasers that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A or (ii) a limited number of other institutional investors reasonably
believed by the Initial Purchasers to be "Accredited Investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) of the Act) that, prior to their purchase of
the Notes, deliver to the Initial Purchasers a letter containing the
representations and agreements set forth in Annex A to the Final Memorandum and
(B) in the case of offers outside the United States, to Persons other than U.S.
Persons ("foreign purchasers," which term shall include dealers or other
professional fiduciaries
<PAGE> 24
-21-
in the United States acting on a discretionary basis for foreign beneficial
owners (other than an estate or trust)); provided, however, that, in the case
of this clause (B), in purchasing such Notes such Persons are deemed to have
represented and agreed as provided under the caption "Notice to Investors"
contained in the Final Memorandum.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the Initial
Purchasers. The obligation of each Initial Purchaser to purchase the Notes to
be purchased at the Closing is subject, at the Time of Purchase, to the
satisfaction of the following conditions:
(a) At the Time of Purchase, the Initial Purchasers shall have
received the opinions, dated as of the Time of Purchase and addressed
to the Initial Purchasers, of Kirkland & Ellis, counsel for the Issuers,
in form and substance reasonably satisfactory to counsel for the Initial
Purchasers, to the effect as set forth on Exhibit A hereto.
(b) The Initial Purchasers shall have received an opinion,
addressed to the Initial Purchasers in form and substance satisfactory
to the Initial Purchasers and dated the Time of Purchase, of Cahill
Gordon & Reindel, counsel to the Initial Purchasers.
(c) The Initial Purchasers shall have received from Ernst & Young
LLP a comfort letter or letters dated the date hereof and the Closing in
form and substance reasonably satisfactory to counsel to the Initial
Purchasers.
(d) The representations and warranties made by the Issuers,
Holdings and Communications herein shall be true and correct in all
material respects (except for changes expressly provided for in this
Agreement) on and as of the Time of Purchase with the same effect as
though such representations and warranties had been made on and as of the
Time of Purchase, the Issuers shall have complied in all material
respects with all agreements as set forth in or contemplated hereunder
and in the Basic Documents required to be performed by it at or prior to
the Time of Purchase and the Company shall have furnished to each Initial
Purchaser a certificate, dated the Time of Purchase, to such effect.
<PAGE> 25
-22-
(e) Subsequent to the date of the Final Memorandum, (i) there shall
not have been any change which has a Material Adverse Effect and (ii)
the Issuers and Holdings shall not have taken any voluntary, affirmative
action to conduct their respective businesses other than in the ordinary
course.
(f) At the Time of Purchase and after giving effect to the
consummation of the transactions contemplated by this Agreement and the
Basic Documents, there shall exist no Default or Event of Default.
(g) The purchase of and payment for the Notes by the Initial
Purchasers hereunder shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation (including,
without limitation, Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System).
(h) At the Time of Purchase, the Initial Purchasers shall have
received a certificate, dated the Time of Purchase, from the Company,
Holdings, Capital and Communications stating that the conditions
specified in Sections 4.1(d), (e), (f) and (g) have been satisfied or
duly waived at the Time of Purchase.
(i) Each of the Basic Documents shall have been executed and
delivered by all the respective parties thereto and shall be in full
force and effect.
(j) All proceedings required in order to issue the Notes and
consummate the transactions contemplated by this Agreement and all
documents and papers relating thereto shall be reasonably satisfactory to
the Initial Purchasers and counsel to the Initial Purchasers. The
Initial Purchasers and counsel to the Initial Purchasers shall have
received copies of such papers and documents of the Issuers as they may
reasonably request in connection therewith, all in form and substance
reasonably satisfactory to them.
(k) The sale of the Notes hereunder shall not have been enjoined
(temporarily or permanently) at the Time of Purchase.
On or before the Closing, the Initial Purchasers and counsel to the
Initial Purchasers shall have received such further documents, opinions,
certificates and schedules or other instruments relating to the business,
corporate, legal and financial affairs of the Issuers as they may reasonably
request.
<PAGE> 26
-23-
Section 4.2. Conditions Precedent to Obligations of the Issuers.
The obligations of the Issuers to deliver the Notes shall be subject to the
accuracy as of the date hereof and at the Time of Purchase (as if made on and
as of the time of Purchase) of the representations and warranties of the
Initial Purchasers herein (delivery of the purchase price by the Initial
Purchasers for the Notes being an affirmation by the Initial Purchasers of the
accuracy of their representations and warranties).
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Issuers. The Issuers covenant and
agree with each of the Initial Purchasers that:
(a) The Issuers will not amend or supplement the Final Memorandum
or any amendment or supplement thereto of which the Initial Purchasers
shall not previously have been advised and furnished a copy for a
reasonable period of time prior to the proposed amendment or supplement
and as to which the Initial Purchasers shall not have given their
consent, which consent shall not be unreasonably withheld. The Issuers
will promptly, upon the reasonable request of the Initial Purchasers or
counsel to the Initial Purchasers, make any amendments or supplements to
the Preliminary Memorandum or the Final Memorandum that may be necessary
or advisable in connection with the resale of the Notes by the Initial
Purchasers.
(b) The Issuers will cooperate with the Initial Purchasers in
arranging for the qualification of the Notes for offering and sale under
the securities or "blue sky" laws of such jurisdictions as the Initial
Purchasers may designate and will continue such qualifications in effect
for as long as may be reasonably necessary to complete the resale of the
Notes; provided, however, that in connection therewith, the Issuers shall
not be required to qualify as a foreign corporation, to take any acts
which would require it to qualify to do business or to execute a general
consent to service of process in any jurisdiction or subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by
the Initial Purchasers of the Notes, the Exchange Notes or the Private
Exchange Notes, any event occurs or information becomes known as a result
of which the
<PAGE> 27
-24-
Final Memorandum as then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Final Memorandum to
comply with applicable law, the Issuers will promptly notify the Initial
Purchasers thereof (who thereafter will not use such Final Memorandum
until appropriately amended or supplemented) and will prepare, at the
expense of the Issuers, an amendment or supplement to the Final
Memorandum that corrects such statement or omission or effects such
compliance.
(d) The Issuers will, without charge, provide to the Initial
Purchasers and to counsel to the Initial Purchasers as many copies of
the Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) The Issuers will apply the net proceeds from the sale of the
Notes as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For and during the period ending on the date no Notes are
outstanding, the Issuers will furnish to the Initial Purchasers copies of
all reports and other communications (financial or otherwise) furnished
by the Issuers to the Trustee or the holders of the Notes and, promptly
after available, copies of any reports or financial statements furnished
to or filed by the Issuers with the Commission or any national securities
exchange on which any class of securities of the Company may be listed.
(g) Prior to the Time of Purchase, the Company will furnish to the
Initial Purchasers, as soon as they have been prepared in final form, a
copy of any unaudited interim financial statements of the Company for any
period subsequent to the period covered by the most recent financial
statements appearing in the Final Memorandum.
(h) None of the Issuers nor any of their Affiliates will sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect
of any "security" (as defined in the Act) which could be integrated with
the sale of the Notes in a manner which would require the registration
under the Act of the Notes.
<PAGE> 28
-25-
(i) The Issuers will not solicit any offer to buy or offer to sell
the Notes by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or in
any manner involving a public offering within the meaning of Section 4(2)
of the Act.
(j) For so long as any of the Notes remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Act and not saleable in full under Rule 144 under the Act (or any
successor provision), the Issuers will make available, upon request, to
any seller of such Notes the information specified in Rule 144A(d)(4)
under the Act, unless the Issuers are then subject to Section 13 or 15(d)
of the Exchange Act.
(k) The Issuers will use their best efforts to (i) permit the
Notes to be included for quotation on PORTAL and (ii) permit the Notes
to be eligible for clearance and settlement through The Depository Trust
Company.
(l) The Issuers, Holdings and Communications (to the extent a party
thereto) will do and perform all things required to be done and performed
by them under this Agreement and the other Basic Documents prior to or
after the Closing, subject to the qualifications and limitations in the
writing that expresses such obligations, and to satisfy all conditions
precedent on their part to the obligations of the Initial Purchasers
under this Agreement to purchase and accept delivery of the Notes.
(m) In connection with Notes offered and sold in an offshore
transaction (as defined in Regulation S), the Issuers will not register
any transfer of such Notes not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Notes in the form of
definitive securities.
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes. The Issuers, jointly and
severally, agree to pay all costs and expenses incident to the performance of
their obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section
<PAGE> 29
-26-
8.2 hereof, including, but not limited to, all costs and expenses incident to
(i) the Company's cost of preparation, printing, reproduction, execution and
delivery of this Agreement, each of the other Basic Documents, any amendment or
supplement to or modification of any of the foregoing and any and all other
documents furnished pursuant hereto or thereto or in connection herewith or
therewith, (ii) any costs of printing the Preliminary Memorandum and the Final
Memorandum and any amendment or supplement thereto, any other marketing related
materials, (iii) all arrangements relating to the delivery to the Initial
Purchasers of copies of the foregoing documents, (iv) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Issuers, (v) preparation (including printing), issuance and
delivery to the Initial Purchasers of the Notes, (vi) the qualification of the
Notes under state securities and "blue sky" laws, including filing fees, word
processing and reproduction costs of any "blue sky" memoranda and fees (not to
exceed $15,000) and disbursements of counsel to the Initial Purchasers relating
thereto, (vii) one-half of the expenses in connection with any meetings with
prospective investors in the Notes, (viii) fees and expenses of the Trustee,
including fees and expenses of counsel to the Trustee, (ix) all expenses and
listing fees incurred in connection with the application for quotation of the
Notes on PORTAL, (x) any fees charged by investment rating agencies for the
rating of the Notes, and (xi) except as limited by Article VII, all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses), if any, of the successful enforcement of this Agreement, the Notes
or any other agreement furnished pursuant hereto or thereto or in connection
herewith or therewith. In addition, the Issuers shall pay any and all stamp,
transfer and other similar taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement, any other Basic
Document or the issuance of the Notes, and shall save and hold each Initial
Purchaser harmless from and against any and all liabilities with respect to or
resulting from any delay in paying, or omission to pay, such taxes.
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity.
(a) Indemnification by the Issuers. The Issuers and Holdings,
jointly and severally, agree and covenant to hold harmless and indemnify each
of the Initial Purchasers and any Affiliates thereof (including any director,
officer, employee,
<PAGE> 30
-27-
agent or controlling Person of any of the foregoing) from and against any
losses, claims, damages, liabilities and expenses (including expenses of
investigation) to which such Initial Purchaser and its Affiliates may become
subject arising out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in the Memorandum and any amendments
or supplements thereto, the Basic Documents or any application or other
documents filed with the Commission or any State Commission (collectively, the
"Offering Materials") or arising out of or based upon the omission or alleged
omission to state in any of the Offering Materials a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Issuers and Holdings shall not be liable under this
paragraph (a) to the extent that such losses, claims, damages or liabilities
arose out of or are based upon an untrue statement or omission made in any of
the documents referred to in this paragraph (a) in reliance upon and in
conformity with the information relating to the Initial Purchasers furnished in
writing by such Initial Purchasers for inclusion therein; provided, further,
that the Issuers and Holdings shall not be liable under this paragraph (a) to
the extent that such losses, claims, damages or liabilities arose out of or are
based upon an untrue statement or omission made in any Memorandum that is
corrected in the Final Memorandum (or any amendment or supplement thereto) if
the person asserting such loss, claim, damage or liability purchased Notes from
an Initial Purchaser in reliance on such Memorandum but was not given the Final
Memorandum (or any amendment or supplement thereto) on or prior to the
confirmation of the sale of such Notes. The Issuers and Holdings, on a joint
and several basis, further agree to reimburse each Initial Purchaser for any
reasonable legal and other expenses as they are incurred by it in connection
with investigating, preparing to defend or defending any lawsuits, claims or
other proceedings or investigations arising in any manner out of or in
connection with such Person being an Initial Purchaser; provided that if the
Issuers or Holdings reimburse an Initial Purchaser hereunder for any expenses
incurred in connection with a lawsuit, claim or other proceeding for which
indemnification is sought, such Initial Purchaser hereby agrees to refund such
reimbursement of expenses to the extent that the losses, claims, damages or
liabilities are not entitled to indemnification hereunder. The Issuers and
Holdings further agree that the indemnification, contribution and reimbursement
commitments set forth in this Article VII shall apply whether or not an Initial
Purchaser is a formal party to any such lawsuits, claims or other proceedings.
The indemnity, contribution and expense reimbursement obligations of the
Issuers and Holdings under this Article VII shall be in addition to any
liability the Issuers or Holdings may otherwise have.
<PAGE> 31
-28-
(b) Indemnification by the Initial Purchasers. Each of the Initial
Purchasers agrees and covenants, severally and not jointly, to hold harmless
and indemnify the Issuers and Holdings and any Affiliates thereof (including
any director, officer, employee, agent or controlling Person of any of the
foregoing) from and against any losses, claims, damages, liabilities and
expenses insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement of any material fact contained in
the Offering Materials, or upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or omission was made in reliance upon and in conformity with
the information relating to such Initial Purchaser furnished in writing by such
Initial Purchaser for inclusion therein. The indemnity, contribution and
expense reimbursement obligations of the Initial Purchasers under this Article
VII shall be in addition to any liability the Initial Purchasers may otherwise
have.
(c) Procedure. If any Person shall be entitled to indemnity
hereunder (each an "Indemnified Party"), such Indemnified Party shall give
prompt written notice to the party or parties from which such indemnity is
sought (each an "Indemnifying Party") of the commencement of any action, suit,
investigation or proceeding, governmental or otherwise (a "Proceeding"), with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure so to notify the
Indemnifying Parties shall not relieve the Indemnifying Parties from any
obligation or liability except to the extent that the Indemnifying Parties have
been prejudiced materially by such failure. The Indemnifying Parties shall
have the right, exercisable by giving written notice to an Indemnified Party
promptly after the receipt of written notice from such Indemnified Party of
such Proceeding, to assume, at the Indemnifying Parties' expense, the defense
of any such Proceeding, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that an Indemnified Party or parties (if
more than one such Indemnified Party is named in any Proceeding) shall have the
right to employ separate counsel in any such Proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or parties unless: (1) the Indemnifying
Parties agree to pay such fees and expenses; or (2) the Indemnifying Parties
fail promptly to assume the defense of such Proceeding or fail to employ
counsel reasonably satisfactory to such Indemnified Party or parties; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party or parties and the Indemnifying Party or an
Affiliate of the
<PAGE> 32
-29-
Indemnifying Party and such Indemnified Parties, and the Indemnified Parties
shall have been advised in writing by counsel that there may be one or more
legal defenses available to such Indemnified Party or parties that are
different from or additional to those available to the Indemnifying Parties, in
which case, if such Indemnified Party or parties notifies the Indemnifying
Parties in writing that it elects to employ separate counsel at the expense of
the Indemnifying Parties, the Indemnifying Parties shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Parties, it being understood, however, that, unless there exists a
conflict among Indemnified Parties, the Indemnifying Parties shall not, in
connection with any one such Proceeding or separate but substantially similar
or related Proceedings in the same jurisdiction, arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for such Indemnified Party or Parties, or for fees
and expenses that are not reasonable. No Indemnified Party or Parties will
settle any Proceeding without the consent of the Indemnifying Party or Parties
(but such consent shall not be unreasonably withheld). No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened Proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability or claims
that are the subject of such Proceeding.
Section 7.2. Contribution. If for any reason the indemnification
provided for in Section 7.1 of this Agreement is unavailable to an Indemnified
Party, or insufficient to hold it harmless, in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other, but
also the relative fault of the Indemnifying and Indemnified Parties in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Indemnifying and
Indemnified Parties shall be deemed to be in the same proportion as the total
proceeds from the offering of the Notes (net of the Initial Purchasers'
discounts and commissions but before deducting expenses) received by the
Issuers bear to the
<PAGE> 33
-30-
total discounts and commissions received by each Initial Purchaser. The
relative fault of the Indemnifying and Indemnified Parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Indemnifying or
Indemnified Parties and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages and liabilities referred to above shall be deemed to include any legal
or other fees or expenses incurred by such party in connection with
investigating or defending any such claim.
The Issuers, Holdings and each of the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to the immediately
preceding paragraph were determined pro rata or per capita or by any other
method of allocation which does not take into account the equitable
considerations referred to in such paragraph. Notwithstanding any other
provision of this Section 7.2, no Initial Purchaser shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under
this Agreement, less the aggregate amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of the untrue or alleged
untrue statements or the omissions or alleged omissions to state a material
fact. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
Section 7.3. Registration Rights Agreement. Notwithstanding
anything to the contrary in this Article 7, the indemnification and
contribution provisions of the Registration Rights Agreement shall govern any
claim with respect thereto.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions. The representations,
warranties and covenants of the Issuers, Holdings, Communications and the
Initial Purchasers made herein, the indemnity and contribution agreements
contained herein and each of the provisions of Articles VI, VII and VIII shall
remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of the Issuers, any Initial
<PAGE> 34
-31-
Purchaser or any Indemnified Party, (b) acceptance of any of the Notes and
payment therefor, (c) any termination of this Agreement other than pursuant to
Section 8.2, or (d) disposition of the Notes by the Initial Purchasers whether
by redemption, exchange, sale or otherwise. With respect to any termination of
this Agreement pursuant to Section 8.2, this Agreement and the obligations
contemplated hereby shall terminate without liability to any party, and no
party shall have any continuing obligation hereunder or liability to any other
party hereto, except that each of the provisions of Articles VI, VII, and VIII
shall remain operative and in full force and effect regardless of any
termination pursuant thereto.
Section 8.2. Termination. (a) This Agreement may be terminated in
the sole discretion of the Initial Purchasers by notice to the Company given
prior to the Time of Purchase in the event that the Issuers shall have failed,
refused or been unable to perform all obligations and satisfy all conditions on
their part to be performed or satisfied hereunder at or prior thereto or, if at
or prior to the Closing:
(i) the Issuers or Holdings shall have sustained any loss or
interference with respect to their businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work stoppage
or any legal or governmental proceeding, which loss or interference, in
the sole judgment of the Initial Purchasers, has a Material Adverse
Effect, or there shall have been, in the sole judgment of the Initial
Purchasers, any event or development that, individually or in the
aggregate, has a Material Adverse Effect (including without limitation a
Change of Control (as defined in the Indenture)), except in each case as
described in the Final Memorandum (exclusive of any amendment or
supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or the
Nasdaq National Market shall have been suspended or minimum or maximum
prices shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or
<PAGE> 35
-32-
any other national or international calamity or emergency, or (C) any
material change in the financial markets of the United States which, in
the case of (A), (B) or (C) above and in the sole judgment of the Initial
Purchasers, makes it impracticable or inadvisable to proceed with the
offering or the delivery of the Notes as contemplated by the Final
Memorandum; or
(v) any securities of the Company or Holdings shall have been
downgraded or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 8.2 shall
be without liability of any party to any other party except as provided in
Section 8.1 hereof.
Section 8.3. No Waiver; Modifications in Writing. No failure or
delay on the part of the Issuers or either Initial Purchaser in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to the Issuers or any Initial Purchaser
at law or in equity or otherwise. No waiver of or consent to any departure by
the Issuers from any provision of this Agreement shall be effective unless
signed in writing by the party hereto entitled to the benefit thereof, provided
that notice of any such waiver shall be given to each party hereto as set forth
below. Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of each of the Issuers and each Initial Purchaser.
Any amendment, supplement or modification of or to any provision of this
Agreement, any waiver of any provision of this Agreement, and any consent to
any departure by the Issuers from the terms of any provision of this Agreement,
shall be effective only in the specific instance and for the specific purpose
for which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on the Issuers in any case shall entitle the
Issuers to any other or further notice or demand in similar or other
circumstances.
Section 8.4. Information Supplied by the Initial Purchasers. The
statements set forth in the first paragraph on page i and in the fourth and
fifth sentences of the fifth paragraph and the eighth paragraph under the
heading "Plan of Distribution" in the Final Memorandum (to the extent such
<PAGE> 36
-33-
statements relate to the Initial Purchasers) constitute the only information
furnished by the Initial Purchasers to the Company for the purposes of Sections
3.1(a) and 7.1(a) and (b) hereof.
Section 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if to the
Initial Purchasers, shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, addressed to CIBC Oppenheimer Corp., 425 Lexington Avenue, 3rd floor,
New York, New York 10017, and First Union Capital Markets Corp., 301 South
College Street, Charlotte, North Carolina, with a copy to Cahill Gordon &
Reindel, 80 Pine Street, New York, New York, 10005, Attention: Roger Meltzer,
Esq. and (b) if to the Issuers or Communications, shall be given by similar
means to TransWestern Publishing Company LLC, TWP Capital Corp. II,
TransWestern Holdings L.P. and TransWestern Communications Company, Inc., 8344
Clairemont Mesa Boulevard, San Diego, CA 92111, Attn: Chief Financial Officer,
with copies to Kirkland & Ellis, 200 East Randolph Drive, Chicago, IL 60601,
Attn: William S. Kirsch, P.C. In each case notices, demands and other
communications shall be deemed given when received.
Section 8.6. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 8.7. Successors. This Agreement shall inure to the benefit
of and be binding upon the Initial Purchasers, the Issuers and their respective
successors and legal representatives, and nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other Person any
legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such Persons and for the benefit of no other Person
except that (i) the indemnities of the Issuers contained in Section 7.1(a) of
this Agreement shall also be for the benefit of the directors, officers,
employees and agents of the Initial Purchasers and any Person or Persons who
control the Initial Purchasers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Initial
Purchasers contained in Section 7.1(b) of this Agreement shall also be for the
benefit of the directors of the Issuers, their directors, officers, employees
and agents and any Person or Persons who control the Issuers within the meaning
of
<PAGE> 37
-34-
Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Notes from the Initial Purchasers will be deemed a successor because of such
purchase.
Section 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 8.9. 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 without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Headings. The Article and Section headings and Table
of Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
TRANSWESTERN PUBLISHING COMPANY LLC
By: /s/ Joan Fiorito
------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
TWP CAPITAL CORP. II
By: /s/ Joan Fiorito
------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
TRANSWESTERN HOLDINGS L.P.
By: TRANSWESTERN COMMUNICATIONS
COMPANY, INC., its general
partner
By: /s/ Joan Fiorito
------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
TRANSWESTERN COMMUNICATIONS
COMPANY, INC.
By: /s/ Joan Fiorito
------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
CIBC OPPENHEIMER CORP.
By: /s/ Walter McLallen
------------------------------------
Name: Walter McLallen
Title: Managing Director
FIRST UNION CAPITAL MARKETS CORP.
By: /s/ Eric Lloyd
------------------------------------
Name: Eric Lloyd
Title: Director
<PAGE> 39
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
INITIAL PURCHASER OF NOTES
- ----------------- ----------------
<S> <C>
CIBC Oppenheimer Corp. $ 66,700,000
First Union Capital Markets Corp. 33,300,000
--------------
Total $ 100,000,000
--------------
</TABLE>
<PAGE> 40
DISCLOSURE SCHEDULE
On or prior to the date hereof, Holdings and the Company executed a bill
of sale to transfer all of Holdings' right, title, and interest in all of its
tangible and intangible assets to the Company, it being understood that certain
consents, approvals, qualifications, filings, notices, licenses and permits are
required in connection therewith but have not been obtained, made, delivered or
received, as the case may be.
<PAGE> 1
EXHIBIT 4.4
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of November 12, 1997
by and among
TRANSWESTERN PUBLISHING COMPANY, LLC
and
TWP CAPITAL CORP. II
and
THE INITIAL PURCHASERS
named herein
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions........................................................... 1
2. Exchange Offer........................................................ 5
3. Shelf Registration.................................................... 8
4. Additional Interest................................................... 10
5. Registration Procedures............................................... 12
6. Registration Expenses................................................. 22
7. Indemnification....................................................... 23
8. Rules 144 and 144A.................................................... 27
9. Underwritten Registrations............................................ 27
10. Miscellaneous......................................................... 27
(a) Remedies.............................................................. 27
(b) Enforcement........................................................... 28
(c) No Inconsistent Agreements............................................ 28
(d) Adjustments Affecting Registrable Notes............................... 28
(e) Amendments and Waivers................................................ 28
(f) Notices............................................................... 28
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
(g) Successors and Assigns................................................ 29
(h) Counterparts.......................................................... 29
(i) Headings.............................................................. 29
(j) GOVERNING LAW......................................................... 29
(k) Severability.......................................................... 30
(l) Entire Agreement...................................................... 30
(m) Joint and Several Obligations......................................... 30
(n) Notes Held by the Issuers or Their Affiliates......................... 30
</TABLE>
-ii-
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of November 12,
1997, by and among TRANSWESTERN PUBLISHING COMPANY, LLC, a Delaware limited
liability company (the "Company"), TWP CAPITAL CORP. II, a Delaware corporation
("Capital II" and, together with the Company, the "Issuers"), and CIBC
OPPENHEIMER ("CIBC") and FIRST UNION CAPITAL MARKETS CORP., as initial
purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the Securities Purchase
Agreement, dated as of November 6, 1997 among the Issuers, TransWestern
Publishing Company, LLC, TWP Capital Corp. II, TransWestern Holdings, L.P. and
TransWestern Communications Company, Inc. and the Initial Purchasers (the
"Purchase Agreement") relating to the sale by the Company to the Initial
Purchasers of $100,000,000 aggregate principal amount of the Issuers' 9 5/8%
Senior Subordinated Notes due 2007 (the "Notes"). In order to induce the
Initial Purchasers to enter into the Purchase Agreement, the Issuers have
agreed to provide the registration rights set forth in this Agreement to the
Initial Purchasers and their direct and indirect transferees and assigns. The
execution and delivery of this Agreement is a condition to the Initial
Purchasers' obligation to purchase the Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
Advice: See Section 5.
Applicable Period: See Section 2(b).
Capital II: See the introductory paragraph to this Agreement.
Closing: See the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Consummation Date: The 180th day after the Issue Date.
Effectiveness Date: The 135th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
<PAGE> 5
-2-
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 45th day after the Issue Date.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of November 12, 1997, among the
Issuers and Wilmington Trust, as trustee, pursuant to which the Notes are being
issued, as amended or supplemented from time to time in accordance with the
terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Notes are sold to the
Initial Purchasers pursuant to the Purchase Agreement.
Issuers: See the introductory paragraph to this Agreement.
NASD: See Section 5(t).
Notes: See the introductory paragraph to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
<PAGE> 6
-3-
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes upon original issuance of the Notes and
at all times subsequent thereto and, if issued, the Private Exchange Notes,
until in the case of any such Notes or any such Private Exchange Notes, as the
case may be, (i) a Registration Statement covering such Notes or such Private
Exchange Notes has been declared effective by the SEC and such Notes or such
Private Exchange Notes, as the case may be, have been exchanged and/or disposed
of in accordance with such effective Registration Statement, (ii) such Notes or
such Private Exchange Notes, as the case may be, are sold in compliance with
Rule 144, (iii) in the case of any Note, such Note has been exchanged for an
Exchange Note or Exchange Notes pursuant to an Exchange Offer or (iv) such
Notes or such Private Exchange Notes, as the case may be, cease to be
outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of the Company or
Capital II, including, but not limited to, the Exchange Registration Statement,
which covers any of the Registrable Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the
<PAGE> 7
-4-
SEC providing for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not affiliates of
an issuer of such securities being free of the registration and prospectus
delivery requirements of the Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration
under the Securities Act in which securities of the Company are sold to an
underwriter(s) for reoffering to the public.
<PAGE> 8
-5-
2. Exchange Offer
(a) Each of the Issuers jointly and severally agrees to use its
reasonable best efforts to file with the SEC as soon as practicable after the
Closing, but in no event later than the Filing Date, documents pertaining to an
offer to exchange (the "Exchange Offer") any and all of the Registrable Notes
for a like aggregate principal amount of debt securities of the Issuers which
are identical in all material respects to the Notes (the "Exchange Notes") (and
which are entitled to the benefits of the Indenture or a trust indenture which
is substantially identical to the Indenture (other than such changes to the
Indenture or any such identical trust indenture as are necessary to comply with
any requirements of the SEC to effect or maintain the qualification thereof
under the TIA) and which, in either case, has been qualified under the TIA),
except that the Exchange Notes shall have been registered pursuant to an
effective registration statement under the Securities Act and will not contain
terms with respect to transfer restrictions. The Exchange Offer will be
registered under the Securities Act on the appropriate form (the "Exchange
Registration Statement"), and the Exchange Offer will comply with all
applicable tender offer rules and regulations under the Exchange Act. Each of
the Issuers jointly and severally agrees to use its reasonable best efforts to
(x) cause the Exchange Registration Statement to become effective under the
Securities Act on or before the Effectiveness Date; (y) keep the Exchange Offer
open for at least 30 days (or longer if required by applicable law) after the
date that notice of the Exchange Offer is mailed to Holders; and (z) consummate
the Exchange Offer with respect to all Notes validly tendered on or prior to
the 60th day following the date the Exchange Registration Statement is declared
effective (in any event on or prior to the Consummation Date) (or, in the event
of any extension of the Exchange Offer required by applicable law, the earliest
day following any such extension). Each Holder who participates in the
Exchange Offer will be required to represent that any Exchange Notes received
by it will be acquired in the ordinary course of its business, that at the time
of the consummation of the Exchange Offer such Holder will have no arrangement
or understanding with any Person to participate in the distribution of the
Exchange Notes in violation of the provisions of the Securities Act, that such
Holder is not an affiliate of either of the Issuers within the meaning of Rule
405 promulgated under the Securities Act or if it is such an affiliate, that it
will comply with the registration and prospectus delivery requirements of the
Securities Act, to the extent applicable, and that is not acting on behalf of
any Person who could not truthfully make the foregoing representations. Upon
consummation of the Exchange Offer in accordance with this Section 2, the
provisions of this Agreement shall continue to apply, mutatis mutandis, solely
with respect to Registrable Notes
<PAGE> 9
-6-
that are Private Exchange Notes and Exchange Notes held by Participating
Broker-Dealers, and the Issuers shall have no further obligation to register
Registrable Notes (other than Private Exchange Notes and Exchange Notes held by
Participating Broker-Dealers) pursuant to Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act)
of Exchange Notes received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the staff of the SEC or such positions or policies, in
the reasonable judgment of the Initial Purchasers, represent the prevailing
views of the staff of the SEC. Such "Plan of Distribution" section shall also
allow the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Notes.
Each of the Issuers shall use its reasonable best efforts to keep the
Exchange Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such Persons must comply with such
requirements in order to resell the Exchange Notes, provided that such period
shall not exceed 180 days (or such longer period if extended pursuant to the
last paragraph of Section 5) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them and having, or which are reasonably
likely to be determined to have, the status as an unsold allotment in the
initial distribution, the Issuers upon the request of such Initial Purchasers
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchasers, in exchange (the "Private
Exchange") for the Notes held by such Initial Purchasers, a like principal
amount of debt securities of the Issuers that are identical in all material
respects to the Exchange Notes (the "Private Exchange Notes") (and which are
issued pursuant to the same indenture as the Exchange Notes) except for the
placement of a restrictive legend on the Private Exchange Notes. If possible,
the Private Exchange Notes shall bear the same CUSIP number as the Exchange
Notes. Interest on the Exchange Notes and Private
<PAGE> 10
-7-
Exchange Notes will accrue from the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or, if no
interest has been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Issuers shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York; and
(iii) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York City time, on the last business day on
which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuers shall:
(i) accept for exchange all Notes tendered and not validly withdrawn
pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver to the Trustee for cancellation all Notes so accepted
for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount to the Notes of such Holder so accepted for
exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture substantially identical to the
Indenture, which in either event will provide that (1) the Exchange Notes
will not be subject to the transfer restrictions set forth in the Indenture
and (2) the Private Exchange Notes will be subject to the transfer
restrictions set forth in the Indenture. The Indenture or such indenture
shall provide that the Exchange Notes, the Private Exchange Notes and the
Notes will have the right to vote and give consents together on all matters
presented to such holders for votes or consents as one class and that
neither the Exchange Notes, the Private Exchange Notes nor the Notes will
have the right to vote or consent as a separate class on any matter.
<PAGE> 11
-8-
(c) If (1) prior to the consummation of the Exchange Offer, the
Issuers or Holders of at least a majority in aggregate principal amount of the
Registrable Notes reasonably determine in good faith that (i) the Exchange Notes
would not, upon receipt, be freely transferable by such Holders which are not
affiliates (within the meaning of the Securities Act) of the Issuers without
restriction under the Securities Act and without restrictions under applicable
state securities laws, (ii) the interests of the Holders under this Agreement
would be adversely affected by the consummation of the Exchange Offer or (iii)
after conferring with counsel, the SEC is unlikely to permit the commencement of
the Exchange Offer prior to the Effectiveness Date, (2) subsequent to the
consummation of the Private Exchange, any holder of the Private Exchange Notes
so requests or (3) the Exchange Offer is commenced and not consummated prior to
the Consummation Date, then the Issuers shall promptly deliver to the Holders
and the Trustee written notice thereof (the "Shelf Notice") and shall file an
Initial Shelf Registration pursuant to Section 3. The parties hereto agree that
following the delivery of a Shelf Notice to the Holders of Registrable Notes (in
the circumstances contemplated by clauses (1) and (3) of the preceding
sentence), the Issuers shall not have any further obligation to conduct the
Exchange Offer or the Private Exchange under this Section 2.
3. Shelf Registration
If a Shelf Notice is required to be delivered as contemplated by
Section 2(c), then:
(a) Initial Shelf Registration. The Issuers shall prepare and file
with the SEC a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the then existing Registrable Notes
(the "Initial Shelf Registration"). If the Issuers shall have not yet filed an
Exchange Registration Statement, each of the Issuers shall use its reasonable
best efforts to file with the SEC the Initial Shelf Registration on or prior to
the Filing Date. In any other instance, each of the Issuers shall use its
reasonable best efforts to file with the SEC the Initial Shelf Registration as
promptly as practicable but, in any event, within 45 days following delivery of
the Shelf Notice. The Initial Shelf Registration shall be on Form S-1 or
another appropriate form permitting registration of such Registrable Notes for
resale by such Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Issuers shall not
permit any securities other than the Registrable Notes to be included in the
Initial Shelf Registration or any Subsequent Shelf Registration. Each of the
Issuers shall use its reasonable best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act, if an Exchange
Registration Statement has not yet been
<PAGE> 12
-9-
declared effective, on or prior to the Effectiveness Date, or, in any other
instance, as soon as practicable after the filing thereof and in no event
later than 60 days after filing of the Initial Shelf Registration, and to keep
the Initial Shelf Registration continuously effective under the Securities Act
until the date which is 24 months from the date on which such Initial Shelf
Registration is declared effective (subject to extension pursuant to the last
paragraph of Section 5 hereof), or such shorter period ending when (i) all
Registrable Notes covered by the Initial Shelf Registration have been sold in
the manner set forth and as contemplated in the Initial Shelf Registration or
(ii) a Subsequent Shelf Registration covering all of the Registrable Notes has
been declared effective under the Securities Act (the "Effectiveness Period").
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time prior to the termination of the Effectiveness Period, each of
the Issuers shall use its reasonable best efforts to promptly restore the
effectiveness thereof, and in any event shall, within 45 days of such cessation
of effectiveness, amend the Shelf Registration in a manner reasonably expected
to restore the effectiveness thereof, or file an additional "shelf" Registration
Statement pursuant to Rule 415 covering all of the then existing Registrable
Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration
is filed, each of the Issuers shall use its reasonable best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as practicable
after such filing and to keep such Registration Statement continuously effective
for a period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registration was previously continuously effective. As used
herein the term "Shelf Registration" means the Initial Shelf Registration and
any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration or if required by the Securities Act. The Issuers shall
promptly supplement and amend the Shelf Registration if any such supplement or
amendment is requested by the Holders of a majority in aggregate principal
amount of the Registrable Notes covered by such Registration Statement or by any
underwriter(s) of such Registrable Notes.
4. Additional Interest
(a) The Issuers and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the
<PAGE> 13
-10-
Company and Capital II fail to fulfill their obligations under Section 2 or
Section 3 hereof and that it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, the Company and Capital II agree to
pay additional interest on the Notes ("Additional Interest") under the
circumstances and to the extent set forth below:
(i) if neither the Exchange Registration Statement nor the Initial
Shelf Registration has been filed on or prior to the Filing Date;
(ii) if neither the Exchange Registration Statement nor the Initial
Shelf Registration has been declared effective on or prior to the
Effectiveness Date;
(iii) if an Initial Shelf Registration required by Section 2(c)(2) has
not been filed on or prior to the date 45 days after delivery of the Shelf
Notice;
(iv) if an Initial Shelf Registration required by Section 2(c)(2) has
not been declared effective on or prior to the date 105 days after the
delivery of the Shelf Notice; and/or
(v) if (A) the Company and Capital II have not exchanged the
Exchange Notes for all Notes validly tendered in accordance with the terms
of the Exchange Offer on or prior to the Consummation Date or (B) the
Exchange Registration Statement ceases to be effective at any time prior to
the time that the Exchange Offer is consummated as to all Notes validly
tendered or (C) if applicable, the Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
prior to the termination of the Effectiveness Period.
(each such event referred to in clauses (i) through (v) above is a "Registration
Default"). The sole remedy available to Holders of the Notes for a Registration
Default will be the accrual of Additional Interest as follows: the per annum
interest rate on the Notes will increase by .50% during the first 90-day period
following the occurrence of a Registration Default and until it is waived or
cured; and the per annum interest rate will increase by an additional .25% for
each subsequent 90-day period during which the Registration Default remains
uncured, up to a maximum additional interest rate of 2.0% per annum, provided,
however, that only Holders of Private Exchange Notes shall be entitled to
receive Additional Interest as a result of a Registration Default pursuant to
clause (iii) or (iv), provided, further, that (1) upon the filing of the
Exchange Registration Statement or the Initial Shelf Registration (in the case
of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or a Shelf
<PAGE> 14
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Registration (in the case of (ii) above), (3) upon the filing of the Shelf
Registration (in the case of (iii) above), (4) upon the effectiveness of the
Shelf Registration (in the case of (iv) above), or (5) upon the exchange of
Exchange Notes for all Notes tendered or the effectiveness of a Shelf
Registration (in the case of (v)(A) above), or upon the subsequent
effectiveness of the Exchange Registration Statement which had ceased to remain
effective or the effectiveness of a Shelf Registration (in the case of (v)(B)
above), or upon the subsequent effectiveness of the Shelf Registration which
had ceased to remain effective (in the case of (v)(C) above), Additional
Interest on the Notes as a result of such clause (i), (ii), (iii), (iv) or (v)
(or the relevant subclause thereof), as the case may be, shall cease to accrue
and the interest rate on the Notes will revert to the interest rate originally
borne by the Notes.
(b) The Issuers shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii), (a)(iii), (a)(iv) or (a)(v)
of this Section 4 will be payable in cash semi-annually on each November 15 and
May 15 (to the Holders of record on the and immediately preceding such dates),
commencing with the first such date occurring after any such Additional Interest
commences to accrue and until such Registration Default is cured, by depositing
with the Trustee, in trust for the benefit of such Holders, immediately
available funds in sums sufficient to pay such Additional Interest. The amount
of Additional Interest will be determined by multiplying the applicable
Additional Interest rate by the principal amount of the Registrable Notes,
multiplied by a fraction, the numerator of which is the number of days such
Additional Interest rate was applicable during such period (determined on the
basis of a 360-day year comprised of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed), and the denominator of which
is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant
to Section 2 or 3 hereof, the Issuers shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Issuers
shall:
(a) Prepare and file with the SEC, as provided herein, a Registration
Statement or Registration Statements as prescribed by Section 2 or 3, and
use their respective reasonable best efforts to cause each such
Registration Statement to become effective and remain effective as
<PAGE> 15
-12-
provided herein, provided that, if (1) such filing is pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the
Issuers shall, upon written request, furnish to and afford the Holders of
the Registrable Notes covered by such Registration Statement and each such
Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriter(s), if any, a reasonable opportunity to review copies
of all such documents (including copies of any documents to be incorporated
by reference therein and all exhibits thereto) proposed to be filed (to the
extent practicable, at least 5 business days prior to such filing). The
Issuers shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must be
afforded an opportunity to review prior to the filing of such document, if
the Holders of a majority in aggregate principal amount of the Registrable
Notes covered by such Registration Statement, or such Participating
Broker-Dealer, as the case may be, their counsel, or the managing
underwriter(s), if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement,
as the case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented
by any prospectus supplement required by applicable law, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions
then in force) under the Securities Act; and comply with the provisions of
the Securities Act and the Exchange Act applicable to them with respect to
the disposition of all securities covered by such Registration Statement as
so amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Issuers shall be deemed
not to have used their reasonable best efforts to keep a Registration
Statement effective during the Applicable Period if either of them
voluntarily takes any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking
to sell Exchange Notes not being able to sell such Registrable Notes or
such Exchange Notes during that period unless such action is required by
applicable law or unless the Issuers comply
<PAGE> 16
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with this Agreement, including without limitation, the provisions of
clauses 5(c)(v) and (vi) below.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, notify the selling Holders of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, their counsel
and the managing underwriter(s), if any, promptly (but in any event within
two business days), and confirm such notice in writing, (i) when a
Prospectus or any prospectus supplement or post-effective amendment
thereto has been filed, and, with respect to a Registration Statement or
any post-effective amendment thereto, when the same has become effective
under the Securities Act (including in such notice a written statement
that any Holder may, upon request, obtain, without charge, one conformed
copy of such Registration Statement or post-effective amendment thereto
including financial statements and schedules, documents incorporated or
deemed to be incorporated by reference and exhibits), (ii) of the issuance
by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of
any preliminary Prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a Prospectus is required by the
Securities Act to be delivered in connection with sales of the Registrable
Notes or resales of Exchange Notes by Participating Broker-Dealers the
representations and warranties of the Issuers contained in any agreement
(including any underwriting agreement) contemplated by Section 5(n) below
cease to be true and correct, (iv) of the receipt by either of the Issuers
of any notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of
any event or any information becoming known that makes any statement made
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in, or
amendments or supplements to, such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of
<PAGE> 17
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the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (vi) of
either Issuer's reasonable determination that a post-effective amendment
to a Registration Statement would be necessary or appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, use their reasonable best efforts to prevent the
issuance of any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of a Prospectus
or suspending the qualification (or exemption from qualification) of any
of the Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any
such order is issued, to use their reasonable best efforts to obtain the
withdrawal of any such order as promptly as practicable.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter(s), if any, or the Holders of a
majority in aggregate principal amount of the Registrable Notes being sold
in connection with an underwritten offering, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information as the
managing underwriter(s), if any, or such Holders reasonably request to be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after
the Company has received notification of the matters to be incorporated in
such Prospectus supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes
who so requests and to each such Participating Broker-Dealer who so
requests and to counsel and the managing underwriter(s), if any, without
charge, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if
<PAGE> 18
-15-
requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable
Notes, or each such Participating Broker-Dealer, as the case may be, their
counsel, and the managing underwriter or underwriters, if any, without
charge, as many copies of the Prospectus or Prospectuses (including each
form of preliminary Prospectus) and each amendment or supplement thereto
and any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the last paragraph of this Section 5,
each of the Issuers hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case
may be, and the managing underwriter or underwriters or agents, if any,
and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers
of the Exchange Notes pursuant to, such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, to use their reasonable best efforts to register or
qualify, and to cooperate with the selling Holders of Registrable Notes or
each such Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters, if any, and their respective counsel in
connection with the registration or qualification of (or exemption from
such registration or qualification), such Registrable Notes for offer and
sale under the securities or Blue Sky laws of such jurisdictions within
the United States as any selling Holder, Participating Broker-Dealer, or
the managing underwriter or underwriters, if any, reasonably request in
writing, provided that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Issuers agree to cause their counsel to perform
Blue Sky investigations and file registrations and qualifications required
to be filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts or things reasonably
<PAGE> 19
-16-
necessary or advisable to enable the disposition in such jurisdictions
of the Exchange Notes held by Participating Broker-Dealers or the
Registrable Notes covered by the applicable Registration Statement;
provided that neither of the Issuers shall be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C)
subject itself to taxation in any such jurisdiction where it is not
otherwise so subject.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Registrable Notes and the managing underwriter
or underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names
as the managing underwriter or underwriters, if any, or Holders may
reasonably request.
(j) Use their reasonable best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the managing underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Notes, except as may be required solely as a consequence of the nature of
such selling Holder's business, in which case each of the Issuers will
cooperate in all reasonable respects with the filing of such Registration
Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi), as promptly as reasonably practicable
prepare and (subject to Section 5(a)) file with the SEC, at the joint and
several expense of each of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Notes being sold
thereunder or to the purchasers of the
<PAGE> 20
-17-
Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(l) Use their reasonable best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case may
be, to be rated with the appropriate rating agencies, if so requested by
the Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement or the Exchange Notes, as the
case may be, or the managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes or Exchange Notes, as the case may
be, in a form eligible for deposit with The Depository Trust Company and
(ii) provide a CUSIP number for the Registrable Notes or Exchange Notes,
as the case may be.
(n) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement
upon such reasonable terms and conditions as are customary in underwritten
offerings of debt securities similar to the Notes and take all such other
actions as are reasonably requested by the managing underwriter(s), if
any, in order to expedite or facilitate the registration or the
disposition of such Registrable Notes, and in such connection, (i) make
such reasonable representations and warranties to the managing underwriter
or underwriters on behalf of any underwriters, with respect to the
business of the Company and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters
in underwritten offerings of debt securities similar to the Notes, and
confirm the same if and when requested; (ii) obtain opinions of counsel to
the Issuers and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
managing underwriter or underwriters covering the matters customarily
covered in opinions received in underwritten offerings of debt securities
similar to the Notes and such other customary matters as may be reasonably
requested by the managing underwriter(s); (iii) obtain "cold comfort"
letters and updates thereof in form and substance reasonably satisfactory
to the managing underwriter or underwriters from the
<PAGE> 21
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independent certified public accountants of the Issuers (and, if
necessary, any other independent certified public accountants of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to the managing underwriter or underwriters on
behalf of any underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings of debt securities similar to
the Notes and such other matters as may be reasonably requested by the
managing underwriter or underwriters; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Registrable Notes
covered by such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at each closing under
such underwriting agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder
of such Registrable Notes being sold, or each such Participating
Broker-Dealer, as the case may be, the managing underwriter or
underwriters participating in any such disposition of Registrable Notes,
if any, and any attorney, accountant or other agent retained by any such
selling Holder or each such Participating Broker-Dealer, as the case may
be (collectively, the "Inspectors"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Company (collectively,
the "Records") as shall be reasonably necessary to enable them to exercise
any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Company to supply all information in each
case reasonably requested by any such Inspector in connection with such
Registration Statement. Records which the Company determines, in good
faith, to be confidential and any Records which they notify the Inspectors
are confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or
<PAGE> 22
-19-
other order from a court of competent jurisdiction or (iii) the
information in such Records has been made generally available to the
public. Each selling Holder of such Registrable Notes and each such
Participating Broker-Dealer or underwriter will be required to agree that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Issuers or for any purpose other
than in connection with such Registration Statement unless and until such
is made generally available to the public. Each selling Holder of such
Registrable Notes and each such Participating Broker-Dealer will be
required to further agree that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give prompt
notice to the Company and allow the Company to undertake appropriate
action to prevent disclosure of the Records deemed confidential at their
expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange
Registration Statement or the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the trustee
under any such indenture and the Holders of the Registrable Notes, to
effect such changes to such indenture as may be required for such
indenture to be so qualified in accordance with the terms of the TIA; and
execute, and use their respective reasonable best efforts to cause such
trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the
SEC to enable such indenture to be so qualified in a timely manner.
(q) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated
under the Securities Act) no later than 90 days after the end of any
12-month period (i) commencing at the end of any fiscal quarter in which
Registrable Notes are sold to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to underwriters in such
an offering, commencing on the first day of the first fiscal quarter of
the Company after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
<PAGE> 23
-20-
(r) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Issuers, in a form reasonable and
customary for underwritten offerings of debt securities similar to the
Notes, addressed to the Trustee for the benefit of all Holders of
Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, and which includes an opinion that (i) each
of the Issuers has duly authorized, executed and delivered the Exchange
Notes and Private Exchange Notes and the related indenture and (ii) each
of the Exchange Notes or the Private Exchange Notes, as the case may be,
and related indenture constitute a legal, valid and binding obligation of
each of the Issuers, enforceable against each of the Issuers in accordance
with its respective terms (with reasonable and customary exceptions and
qualifications).
(s) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Issuers (or to
such other Person as directed by the Issuers) in exchange for the Exchange
Notes or the Private Exchange Notes, as the case may be, the Issuers shall
mark, or cause to be marked, on such Registrable Notes that such
Registrable Notes are being canceled in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be; and, in no event shall
such Registrable Notes be marked as paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and the managing underwriter(s), if any,
participating in the disposition of such Registrable Notes and their
respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(u) Use their respective reasonable best efforts to take all other
reasonable steps necessary to effect the registration of the Registrable
Notes covered by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, as the
Issuers may, from time to time, reasonably request. The Issuers may exclude
from such registration the Registrable Notes of any seller or Participating
Broker-Dealer who fails to furnish such information within a reasonable time
after receiving such request. Each seller as to which any Shelf Registration is
being
<PAGE> 24
-21-
effected agrees to furnish promptly to the Issuers all information
required to be disclosed in order to make the information previously furnished
to the Issuers by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi) hereof, such Holder will
forthwith discontinue disposition of such Registrable Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such Holder
or Participating Broker-Dealer, as the case may be, until such Holder's or
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k), or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements
thereto. In the event the Company shall give any such notice, each of the
Effectiveness Period and the Applicable Period shall be extended by the number
of days during such periods from and including the date of the giving of such
notice to and including the date when each seller of Registrable Notes covered
by such Registration Statement or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) or
(y) the Advice.
6. Registration Expenses
(a) All reasonable fees and expenses incident to the performance of
or compliance with this Agreement by the Issuers shall be borne by the Issuers,
jointly and severally, whether or not the Exchange Offer or a Shelf
Registration is filed or becomes effective, including, without limitation, (i)
all registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions in the United States (x) where the Holders of Registrable Notes
are located, in the case of the Exchange Notes, or (y) as provided in Section
5(h), in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable
<PAGE> 25
-22-
Notes or Exchange Notes in a form eligible for deposit with The Depository
Trust Company and of printing Prospectuses if the printing of Prospectuses is
reasonably requested by the managing underwriter or underwriters, if any, or,
in respect of Registrable Notes or Exchange Notes to be sold by any
Participating Broker-Dealer during the Applicable Period, if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes included in any Registration Statement or of such Exchange
Notes, as the case may be), (iii) messenger, telephone and delivery expenses,
(iv) reasonable fees and disbursements of counsel for the Issuers and
reasonable fees and disbursements of special counsel for the sellers of
Registrable Notes (subject to the provisions of Section 6(b)), (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(n)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) rating agency fees, (vii) Securities Act liability insurance, if the
Issuers desire such insurance, (viii) fees and expenses of the Trustee, (ix)
fees and expenses of all other Persons retained by the Issuers, (x) internal
expenses of the Issuers (including, without limitation, all salaries and
expenses of officers and employees of the Issuers performing legal or
accounting duties), (xi) the expense of any annual audit, (xii) the fees and
expenses incurred in connection with any listing of the securities to be
registered on any securities exchange and (xiii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement. In the event of an
underwritten offering of Registrable Notes the Company shall not be responsible
for any "roadshow" expenses in connection therewith.
(b) In connection with any Shelf Registration hereunder, the Issuers,
jointly and severally, shall reimburse the Holders of the Registrable Notes
being registered in such registration for the reasonable fees and disbursements
of not more than one counsel (in addition to appropriate local counsel) chosen
by the Holders of a majority in aggregate principal amount of the Registrable
Notes to be included in such Registration Statement and other reasonable
out-of-pocket expenses of the Holders of Registrable Notes incurred in
connection with the registration of the Registrable Notes.
(c) Notwithstanding any of the foregoing, the Issuers shall not have
any obligation to pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Notes.
<PAGE> 26
-23-
7. Indemnification
(a) Each of the Issuers, jointly and severally, agrees to indemnify
and hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the officers
and directors of each such Person, and each Person, if any, who controls any
such Person within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant"), from and against any and
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other expenses actually incurred in connection with
any suit, action or proceeding or any claim asserted) caused by, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary Prospectus, or caused by, arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except insofar
as such losses, claims, damages or liabilities are caused by any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to any Participant furnished to
the Company in writing by such Participant expressly for use therein; provided
that the foregoing indemnity with respect to any preliminary Prospectus shall
not inure to the benefit of any Participant (or to the benefit of an officer or
director of such Participant or any Person controlling such Participant) from
whom the Person asserting any such losses, claims, damages or liabilities
purchased Registrable Notes or Exchange Notes if such untrue statement or
omission or alleged untrue statement or omission made in such preliminary
Prospectus is eliminated or remedied in the related Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) and a copy of the related Prospectus (as so amended or supplemented)
shall have been furnished to such Participant at or prior to the sale of such
Registrable Notes or Exchange Notes, as the case may be, to such Person.
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Issuers, their respective directors
and officers and each Person who controls either of the Issuers within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from the Issuers to each
Participant, but only with reference to information relating to such
Participant furnished to the Issuers in writing by such Participant expressly
for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any
<PAGE> 27
-24-
preliminary Prospectus. The liability of any Participant under this
paragraph (b) shall in no event exceed the proceeds received by such
Participant from sales of Registrable Notes or Exchange Notes giving rise to
such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either
paragraph (a) or (b) of this Section 7, such Person (the "Indemnified Person")
shall promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain one counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses incurred by such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person has failed to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and such Indemnified Person shall have been
advised by counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to any such
Indemnifying Person. It is understood that the Indemnifying Person shall not,
in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate law firm (in addition to any local counsel) for all Indemnified
Persons, and that all such reasonable fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for the Participants and such
control Persons of Participants shall be designated in writing by Participants
who sold a majority in interest of Registrable Notes and Exchange Notes sold by
all such Participants and any such separate firm for the Issuers, their
directors, their officers and such control Persons of the Issuers shall be
designated in writing by the Issuers. The Indemnifying
Person shall not be liable for any settlement of any proceeding effected
without its prior written consent, but if settled with such consent or if there
is a final judgment for the plaintiff for which the Indemnified Person is
entitled to indemnification pursuant to this Agreement, the Indemnifying Person
agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested
an
<PAGE> 28
-25-
Indemnifying Person to reimburse the Indemnified Person for reasonable fees
and expenses incurred by counsel as contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 60 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not
have reimbursed the Indemnified Person in accordance with such request prior to
the date of such settlement; provided, however, that the Indemnifying Person
shall not be liable for any settlement effected without its consent pursuant to
this sentence if the Indemnifying Party is contesting, in good faith, the
request for reimbursement. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is a party
and indemnity has been sought hereunder by such Indemnified Person, unless such
settlement includes an unconditional release (or any other release reasonably
acceptable to the Indemnified Person) of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraphs (a) and (b) of this
Section 7 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein (other than as a result of
the proviso set forth in Section 7(a)), then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder,
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Issuers on the one hand and
the Participants on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of the Issuers on
the one hand and the Participants on the other shall be determined by reference
to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Issuers or by the
Participants and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of
<PAGE> 29
-26-
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall a Participant be required to contribute any amount in excess of the
amount by which proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes exceeds the amount of any damages that such Participant
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Each of the Issuers covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if at any
time the Company is not required to file such reports, it will, upon the
request of any Holder of Registrable Notes, make publicly available other
information of a like nature so long as necessary to permit sales pursuant to
Rule 144 or Rule 144A. Each of the Issuers further covenants that so long as
any Registrable Notes remain outstanding to make available to any Holder of
Registrable Notes in connection with any sale thereof, the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to (a) such Rule 144A, or (b) any similar rule or
regulation hereafter adopted by the SEC.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banking firm or firms
that will underwrite the offering and the manager or managers that will manage
the offering will be selected by the Holders of a majority in aggregate
principal amount of such Registrable Notes included in such offering and shall
be reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
offering hereunder unless such Holder (a) agrees to
<PAGE> 30
-27-
sell such Holder's Registrable Notes on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by either Issuer of any of
its obligations under this Agreement, other than the occurrence of an event
which requires payment of Additional Interest, each Holder of Registrable
Notes, in addition to being entitled to exercise all rights provided herein, in
the Indenture or, in the case of the Initial Purchasers, in the Purchase
Agreement or granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Each of the Issuers,
jointly and severally, agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees, jointly and severally,
that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.
(b) Enforcement. The Trustee shall be authorized to enforce the
provisions of this Agreement for the ratable benefit of the Holders.
(c) No Inconsistent Agreements. Neither of the Issuers has entered,
as of the date hereof, and the Issuers shall not enter, after the date of this
Agreement, into any agreement with respect to any of their securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in
this Agreement or otherwise conflicts with the provisions hereof. Neither of
the Issuers has entered or will enter into any agreement with respect to any of
its securities which will grant to any Person piggy-back rights with respect to
a Registration Statement required to be filed under this Agreement.
(d) Adjustments Affecting Registrable Notes. Neither of the Issuers
shall, directly or indirectly, take any action with respect to the Registrable
Notes as a class that would adversely affect the ability of the Holders of
Registrable Notes to include such Registrable Notes in a registration
undertaken pursuant to this Agreement.
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the
<PAGE> 31
-28-
Issuers have obtained the written consent of Holders of at least a
majority of the then outstanding aggregate principal amount of Registrable
Notes. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Notes whose securities are being sold pursuant
to a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders of Registrable Notes
may be given by Holders of at least a majority in aggregate principal amount of
the Registrable Notes being sold by such Holders pursuant to such Registration
Statement, provided that the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(f) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day courier or telecopier:
(f) if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address given by the Trustee to the
Issuers; and
(i) if to the Issuers, to TransWestern Publishing Company, LLC and
TWP Capital Corp. II, 8344 Clairemont Mesa Boulevard, San Diego, CA 92111,
Attention: Chief Financial Officer and with a copy to Kirkland & Ellis,
200 East Randolph Drive, Chicago, IL 60601, Attention: William Kirsch,
Esq.
All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) five business
days after being deposited in the mail, postage prepaid, if mailed; (iii) one
business day after being timely delivered to a next-day courier; and (iv) when
receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Registrable Notes; provided that, with respect to the
indemnity and contribution agreements in Section 7, each Holder of Registrable
Notes subsequent to the Initial Purchasers shall be
<PAGE> 32
-29-
bound by the terms thereof if such Holder elects to include Registrable Notes
in a Shelf Registration; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder
unless and except to the extent such successor or assign holds Registrable
Notes.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final expression
of their agreement, and is intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(m) Joint and Several Obligations. Unless otherwise stated herein,
each of the obligations of the Issuers under this Agreement shall be joint and
several obligations of each of them.
(n) Notes Held by the Issuers or Their Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes
is required hereunder, Registrable Notes held by the Issuers or their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted
<PAGE> 33
-30-
in determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE> 34
-31-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TRANSWESTERN PUBLISHING COMPANY, LLC
By: /s/ Joan Fiorito
-----------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
TWP CAPITAL CORP. II
By: /s/ Joan Fiorito
-----------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
The foregoing Agreement is hereby TRANSWESTERN HOLDINGS, L.P.
confirmed and accepted as of the
date first above written. By: TRANSWESTERN
COMMUNICATIONS
COMPANY, INC., its
general partner
CIBC OPPENHEIMER
By: /s/ Walter McLallen By: /s/ Joan Fiorito
------------------------ -----------------------------------
Name: Walter McLallen Name: Joan Fiorito
Title: Managing Director Title: Vice President and
Chief Financial Officer
FIRST UNION CAPITAL MARKETS CORP.
By: /s/ Eric Lloyd TRANSWESTERN COMMUNICATIONS
------------------------------ COMPANY, INC.
Name: Eric Lloyd
Title: Director
By: /s/ Joan Fiorito
-----------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT made as of October 1, 1997, between TransWestern Publishing
Company, L.P., a Delaware limited partnership (the "Partnership"), TransWestern
Communications Company, Inc., general partner of the Partnership ("TCC"), and
Laurence H. Bloch ("Executive").
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Partnership shall employ Executive, and
Executive accepts employment with the Partnership, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in paragraph 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the
Chairman of the Board of Directors of TCC (the "Board") and Chairman of the
Partnership and shall have the normal duties, responsibilities and authority of
the Chairman of the Board, subject to the ultimate authority of the Board.
(b) Executive shall report to the Board and shall devote his
reasonable efforts to the business and affairs of the Partnership and its
Subsidiaries, it being understood that Executive may engage in other activities
and businesses and may invest in and be an officer and/or director of unrelated
business entities, subject only to his obligations pursuant to this paragraph
and paragraph 7 below. Executive shall perform his duties and responsibilities
to the best of his abilities in a diligent, trustworthy, businesslike and
efficient manner.
(c) For purposes of this Agreement, "Subsidiary" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Partnership,
directly or through one of more Subsidiaries.
3. Compensation.
(a) Base Salary. As compensation for Executive's services during
Executive's employment hereunder, the Partnership will pay Executive, so long
as Executive's employment hereunder continues, annual base salary of $222,167
through April 30, 1998 and, effective May 1, 1998, and on each anniversary
thereafter such base salary will be increased by a percentage which corresponds
with the increase in the Consumer Price Index for such year as determined by
the Board. The amount of such salary as adjusted in any year is referred to
herein as the "Base Salary."
<PAGE> 2
The Base Salary will be payable in installments at such regular intervals as
the Partnership at the time is using for the payment of salaries.
(b) Bonus. Each year Executive will be entitled to an annual bonus
of up to 100% of the Base Salary based on achievement of Target EBITDA (as
defined in Section 4(c) below) or such lesser EBITDA Target as approved by the
Board, in a manner consistent with past practice. As used herein, EBITDA
means, for any period, the net income of the Partnership for any such period
plus the amount deducted (or in the case of extraordinary gains, minus any
amount added) in the computation thereof for (i) all federal, state and local
income taxes, (ii) interest expense, (iii) any extraordinary gains or losses,
(iv) depreciation and (v) amortization of goodwill and other intangibles
determined in accordance with generally accepted accounting principles
consistently applied. For purposes of this Agreement, EBITDA will be
determined, after deduction of any bonus payments paid or payable with respect
to such period, from the audited financial statements of the Partnership and
the components of EBITDA contained in the financial statements will be
conclusive and binding upon the parties.
(c) Insurance and Fringe Benefits. During the Employment Period,
Executive shall be entitled to receive insurance benefits and fringe benefits
that are substantially similar to those provided to Executive by the
Partnership as of the date hereof, including participation in the Partnership's
long-term disability program, and shall be entitled to participate in all of
the Partnership's employee benefit programs for which senior executive
employees of the Partnership are generally eligible. In addition, during the
Employment Period, the Partnership shall continue to provide Executive with a
life insurance policy in the face amount of $2,000,000 on terms and conditions
(including price) similar to those in effect with respect to the policy as in
effect as of the date hereof and a car allowance not to exceed $600 per month.
(d) Equity Participation Plan. Executive will have an opportunity
to purchase equity of the Partnership on the date hereof, subject to a vesting
period as provided in the Executive's Executive Agreement.
4. Term.
(a) Unless renewed by the mutual agreement of the Partnership and
Executive, the Employment Period shall end on the fifth anniversary of the date
of this Agreement; provided that (i) the Employment Period shall terminate
prior to such date upon Executive's resignation, death or permanent disability
or incapacity (as determined by the Board in its good faith judgment) and (ii)
the Employment Period may be terminated by the Partnership at any time prior to
such date for Cause (as defined below) or without Cause.
(b) If immediately after the fifth anniversary of the date of this
Agreement Executive ceases to be employed by the Partnership due to (i) the
Partnership's failure to renew Executive's employment without Cause or (ii)
Executive's refusal to renew his employment with Good Reason, Executive shall
be entitled to receive his Base Salary (as in effect on such fifth anniversary)
payable on the Company's regular payroll dates for a period of one year after
such termination, so long as Executive has not breached the provisions of
paragraphs 5, 6 and 7 hereof.
-2-
<PAGE> 3
(c) If the Employment Period is terminated by the Partnership without
Cause or by Executive with Good Reason or due to Executive's death or permanent
disability or incapacity prior to the fifth anniversary of the date of this
Agreement, Executive or his estate, as the case may be, shall be entitled to
receive his Base Salary (as in effect on the date of such termination) payable
on the Partnership's regular payroll dates for a period of one year after such
termination, so long as Executive has not breached the provisions of paragraphs
5, 6 and 7 hereof. For purposes of this Agreement, "Good Reason" shall mean
(i) a reduction in Executive's Base Salary by more than 20% of the Base Salary,
(ii) any reduction in Executive's Base Salary (in effect immediately prior to
such reduction) if in the fiscal year prior to such reduction the EBITDA for
such prior fiscal year was equal to or greater than 80% of the Target EBITDA
for such prior year, (iii) any wilful action by the Partnership that is
intentionally inconsistent with the terms of this Agreement or Executive's
Executive Agreement, dated as of the date hereof, between Executive and the
Partnership or (iv) any material reduction by General Partner or the
Partnership in the powers, duties or responsibilities of which Executive was
entitled to exercise as of the date of this Agreement (except such reduction
which is the result of Executive's termination for Cause). The "Target EBITDA"
as of the end of each fiscal year shall be the amount set forth opposite such
year end below:
<TABLE>
<S> <C>
Fiscal Year End Target EBITDA
--------------- -------------
1998 $31.0 million
1999 35.5 million
2000 42.0 million
2001 50.1 million
2002 59.3 million
</TABLE>
; it being understood that the foregoing calculation of the Target EBITDA
assumes that the Partnership's fiscal year ends on April. In the event that
the Partnership's fiscal year is changed, the foregoing calculation of Target
EBITDA may be adjusted by the Board to reflect the impact of such change.
(d) If the Employment Period is terminated for any other reason,
including voluntary resignation or termination by the Partnership for Cause,
Executive shall only be entitled to receive his Base Salary through the date of
termination.
(e) All of Executive's rights to fringe benefits will continue for a
period of one year after termination, provided such termination is without
Cause by the Partnership or with Good Reason by Executive. Bonuses hereunder
(if any) accruing after the termination of the Employment Period shall cease
upon such termination.
(f) For purposes of this Agreement, "Cause" shall mean (i) the
commission of a felony or a crime involving moral turpitude or the commission
of any other act involving dishonesty, disloyalty or fraud with respect to the
Partnership or any of its Subsidiaries, (ii) conduct tending to bring the
Partnership or any of its Subsidiaries into substantial public disgrace or
disrepute, (iii) substantial and repeated failure to perform duties as
reasonably directed by the Board,
-3-
<PAGE> 4
(iv) gross negligence or willful misconduct with respect to the Partnership or
any of its Subsidiaries or (v) any other material breach of this Agreement
which is not cured within 15 days after written notice thereof to Executive.
5. Confidential Information. The Executive acknowledges that the
information, observations and data obtained by him while employed by the
Partnership concerning the business or affairs of the Partnership or any
Subsidiary ("Confidential Information") are the property of the Partnership or
such Subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions to act or
required by law to be disclosed. Executive shall deliver to the Partnership at
the termination of the Employment Period, or at any other time the Partnership
may request, all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating to the
Confidential Information, Work Product (as defined in Section 6 hereof) or the
business of the Partnership or any Subsidiary which he may then possess or have
under his control.
6. Inventions and Patents. Executive agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relate to the
Partnership's or any of its Subsidiaries' actual or anticipated business,
research and development or existing or future products or services and which
are conceived, developed or made by Executive while employed by the Partnership
or any Subsidiary ("Work Product") belong to the Partnership or such
Subsidiary. Executive will promptly disclose such Work Product to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
7. Non-Compete, Non-Solicitation.
(a) Executive acknowledges that in the course of his employment with
the Partnership he will become familiar with the Partnership's trade secrets
and with other confidential information concerning the Partnership and its
predecessors and that his services have been and will be of special, unique and
extraordinary value to the Partnership. Therefore, Executive agrees that,
during the Employment Period and (i) for three years thereafter in the case of
a termination of Executive's employment by the Partnership with Cause or by
Executive without Good Reason and (ii) for two years thereafter in all other
cases (the "Noncompete Period"), he shall not directly or indirectly own,
manage, control, participate in, consult with, render services for, or in any
manner engage in any yellow page directory publishing business or any business
competing for the same customers as the businesses of the Partnership or its
Subsidiaries as such businesses exist or are in process on the date of the
termination of Executive's employment within any geographical area in which the
Partnership or its Subsidiaries engage or plan to engage in such businesses.
Nothing herein shall prohibit Executive from (i) being a passive owner of not
more than 5% of the outstanding stock of any class of any corporation, so long
as Executive has no active participation in the business of such corporation,
(ii) becoming employed by a competitor; provided that
-4-
<PAGE> 5
Executive is not directly or indirectly responsible for, or does not have
control over, the business of such competitor which directly competes with any
of the businesses of the Partnership or (iii) becoming an officer or director
of any entity (other than a competitor) not affiliated with the Partnership.
(b) During the Employment Period and for three years thereafter,
Executive shall not directly or indirectly through another entity (i) induce
or attempt to induce any employee of the Partnership or any Subsidiary to leave
the employ of the Partnership or such Subsidiary, or in any way interfere with
the relationship between the Partnership or any Subsidiary and any employee
thereof, (ii) hire any person who was an employee of the Partnership or any
Subsidiary at any time during the Employment Period, or (iii) induce or attempt
to induce any customer, supplier, licensee or other business relation of the
Partnership or any Subsidiary to cease doing business with the Partnership or
such Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Partnership or any
Subsidiary.
(c) If, at the time of enforcement of this paragraph 7, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law.
(d) In the event of the breach or a threatened breach by Executive
of any of the provisions of this paragraph 7, the Partnership, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security).
8. Executive Representations. Executive hereby represents and
warrants to the Partnership that (i) the execution, delivery and performance
of this Agreement by Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which Executive is a party or by which he is bound, (ii)
Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other person or entity and
(iii) upon the execution and delivery of this Agreement by the Partnership,
this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms.
9. Survival. Paragraphs 5, 6 and 7 shall survive and continue in
full force in accordance with their terms notwithstanding any termination of
the Employment Period.
10. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class
mail, return receipt requested, to the recipient at the address below
indicated:
-5-
<PAGE> 6
Notices to Executive:
Laurence H. Bloch
c/o TransWestern Publishing Company, L.P.
8344 Clairemont Mesa Blvd.
San Diego, CA 92111
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: John A. Weissenbach
Notices to the Partnership:
---------------------------
TransWestern Publishing Company, L.P.
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
Attention: Scott A. Schoen
C. Hunter Boll
with a copy to:
Latham & Watkins
701 B Street, Suite 2100
San Diego, CA 92101
Attention: Scott N. Wolfe, Esq.
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
11. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision, but this Agreement will be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
12. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements
-6-
<PAGE> 7
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way, including without limitation
the Employment Agreement dated May 13, 1993 between Executive and the
Partnership.
13. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
14. Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive, the Partnership
and their respective heirs, successors and assigns, except that Executive may
not assign his rights or delegate his obligations hereunder without the prior
written consent of the Partnership.
15. Choice of Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of California or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
California.
16. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Partnership and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
* * * * *
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
TRANSWESTERN PUBLISHING COMPANY, L.P.
By TransWestern Communications Company, Inc.
Its General Partner
By /s/ Ricardo Puente
-----------------------------------
Its Chief Executive Officer
/s/ Laurence H. Bloch
-----------------------------------
Laurence H. Bloch
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT made as of October 1, 1997, between TransWestern Publishing
Company, L.P., a Delaware limited partnership (the "Partnership"), TransWestern
Communications Company, Inc., general partner of the Partnership ("TCC"), and
Ricardo Puente ("Executive").
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Partnership shall employ Executive, and Executive
accepts employment with the Partnership, upon the terms and conditions set
forth in this Agreement for the period beginning on the date hereof and ending
as provided in paragraph 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the President
and Chief Executive Officer ("CEO") of the Partnership and of TCC and shall
have the normal duties, responsibilities and authority of the President and
CEO, subject to the ultimate authority of the Board of Directors of TCC (the
"Board").
(b) Executive shall report to the Board and shall devote his best efforts
and his full business time and attention (except for permitted vacation periods
and reasonable periods of illness or other incapacity) to the business and
affairs of the Partnership and its Subsidiaries. Executive shall perform his
duties and responsibilities to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement, "Subsidiary" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Partnership,
directly or through one or more Subsidiaries.
3. Compensation.
(a) Base Salary. As compensation for Executive's services during
Executive's employment hereunder, the Partnership will pay Executive, so long
as Executive's employment hereunder continues, annual base salary of $199,519
through April 30, 1998 and, effective May 1, 1998, a base salary of $235,000,
and on each anniversary thereafter such base salary will be increased by a
percentage which corresponds with the increase in the Consumer Price Index for
such year as determined by the Board. The amount of such salary as adjusted in
any year is referred to
<PAGE> 2
herein as the "Base Salary." The Base Salary will be payable in installments
at such regular intervals as the Partnership at the time is using for the
payment of salaries.
(b) Bonus. Each year Executive will be entitled to receive a bonus of up
to 100% of the Base Salary based on achievement of the applicable Target EBITDA
(as defined in Section 4(c) below) or such lesser EBITDA Target as approved by
the Board, in a manner consistent with past practice. As used herein, EBITDA
means, for any period, the net income of the Partnership for any such period
plus the amount deducted (or in the case of extraordinary gains, minus any
amount added) in the computation thereof for (i) all federal, state and local
income taxes, (ii) interest expense, (iii) any extraordinary gains or losses,
(iv) depreciation and (v) amortization of goodwill and other intangibles
determined in accordance with generally accepted accounting principles
consistently applied. For purposes of this Agreement, EBITDA will be
determined, after deducting annual bonuses paid or payable with respect to such
periods, from the audited financial statements of the Partnership and the
components of EBITDA contained in the financial statements will be conclusive
and binding upon the parties.
(c) Insurance and Fringe Benefits. During the Employment Period,
Executive shall be entitled to receive insurance benefits and fringe benefits
that are substantially similar to those provided to Executive by the
Partnership as of the date hereof, including participation in the Partnership's
long-term disability program, and shall be entitled to participate in all of
the Partnership's employee benefit programs for which senior executive
employees of the Partnership are generally eligible. In addition, during the
Employment Period, the Partnership shall continue to provide Executive with a
life insurance policy in the face amount of $2,000,000 on terms and conditions
(including price) similar to those in effect with respect to the policy as in
effect as of the date hereof and a car allowance not to exceed $1,200.
(d) Equity Participation Plan. Executive will have the opportunity to
purchase equity of the Partnership on the date hereof, subject to a vesting
period as provided in the Executive's Executive Agreement.
4. Term.
(a) Unless renewed by the mutual agreement of the Partnership and
Executive, the Employment Period shall end on the fifth anniversary of the date
of this Agreement; provided that (i) the Employment Period shall terminate
prior to such date upon Executive's resignation, death or permanent disability
or incapacity (as determined by the Board in its good faith judgment) and (ii)
the Employment Period may be terminated by the Partnership at any time prior to
such date for Cause (as defined below) or without Cause.
(b) If immediately after the fifth anniversary of the date of this
Agreement Executive ceases to be employed by the Partnership due to (i) the
Partnership's failure to renew Executive's employment without Cause or (ii)
Executive's refusal to renew his employment with Good Reason, Executive shall
be entitled to receive his Base Salary (as in effect on such fifth anniversary)
payable on the Company's regular payroll dates for a period of one year after
such termination, so long as Executive has not breached the provisions of
paragraphs 5, 6 and 7 hereof.
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<PAGE> 3
(c) If the Employment Period is terminated by the Partnership without
Cause or by Executive with Good Reason or due to Executive's death or permanent
disability or incapacity prior to the fifth anniversary of the date of this
Agreement, Executive or his estate, as the case may be, shall be entitled to
receive his Base Salary (as in effect on the date of such termination) payable
on the Partnership's regular payroll dates for a period of one year after such
termination, so long as Executive has not breached the provisions of paragraphs
5, 6 and 7 hereof. For purposes of this Agreement, "Good Reason" shall mean
(i) a reduction in Executive's Base Salary by more than 20% of the Base Salary,
(ii) any reduction in Executive's Base Salary (in effect immediately prior to
such reduction) if in the fiscal year prior to such reduction the EBITDA for
such prior fiscal year was equal to or greater than 80% of the Target EBITDA
for such prior year, (iii) any wilful action by the Partnership that is
intentionally inconsistent with the terms of this Agreement or Executive's
Executive Agreement, dated as of the date hereof, between Executive and the
Partnership or (iv) any material reduction by the General Partner or the
Partnership in the powers, duties or responsibilities of which Executive was
entitled to exercise as of the date of this Agreement (except for such
reduction which is the result of Executive's termination for Cause). The
"Target EBITDA" as of the end of each fiscal year shall be the amount set forth
opposite such year end below:
<TABLE>
<S> <C>
Fiscal Year End Target EBITDA
--------------- -------------
1998 $31.0 million
1999 35.5 million
2000 42.0 million
2001 50.1 million
2002 59.3 million
</TABLE>
it being understood that the foregoing calculation of the Target EBITDA
assumes that the Partnership's fiscal year ends on April 30. In the event that
the Partnership's fiscal year is changed, the foregoing calculation of the
Target EBITDA may be adjusted by the Board to reflect the impact of such
change.
(d) If the Employment Period is terminated for any other reason, including
voluntary resignation or termination by the Partnership for Cause, Executive
shall only be entitled to receive his Base Salary through the date of
termination.
(e) All of Executive's rights to fringe benefits will continue for a
period of one year after termination, provided such termination is without
Cause by the Partnership or with Good Reason by Executive. Bonuses hereunder
(if any) accruing after the termination of the Employment Period shall cease
upon such termination.
(f) For purposes of this Agreement, "Cause" shall mean (i) the commission
of a felony or a crime involving moral turpitude or the commission of any other
act involving dishonesty, disloyalty or fraud with respect to the Partnership
or any of its Subsidiaries, (ii) conduct tending to bring the Partnership or
any of its Subsidiaries into substantial public disgrace or disrepute, (iii)
substantial and repeated failure to perform duties as reasonably directed by
the Board,
-3-
<PAGE> 4
(iv) gross negligence or willful misconduct with respect to the Partnership or
any of its Subsidiaries or (v) any other material breach of this Agreement
which is not cured within 15 days after written notice thereof to Executive.
5. Confidential Information. The Executive acknowledges that the
information, observations and data obtained by him while employed by the
Partnership concerning the business or affairs of the Partnership or any
Subsidiary ("Confidential Information") are the property of the Partnership or
such Subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions to act or
required by law to be disclosed. Executive shall deliver to the Partnership at
the termination of the Employment Period, or at any other time the Partnership
may request, all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating to the
Confidential Information, Work Product (as defined in Section 6 hereof) or the
business of the Partnership or any Subsidiary which he may then possess or have
under his control.
6. Inventions and Patents. Executive agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relate to the
Partnership's or any of its Subsidiaries' actual or anticipated business,
research and development or existing or future products or services and which
are conceived, developed or made by Executive while employed by the Partnership
or any Subsidiary ("Work Product") belong to the Partnership or such
Subsidiary. Executive will promptly disclose such Work Product to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
7. Non-Compete, Non-Solicitation.
(a) Executive acknowledges that in the course of his employment with the
Partnership he will become familiar with the Partnership's trade secrets and
with other confidential information concerning the Partnership and its
predecessors and that his services have been and will be of special, unique and
extraordinary value to the Partnership. Therefore, Executive agrees that,
during the Employment Period and (i) for three years thereafter in the case of
a termination of Executive's employment by the Partnership with Cause or by
Executive without Good Reason and (ii) for two years thereafter in all other
cases (the "Noncompete Period"), he shall not directly or indirectly own,
manage, control, participate in, consult with, render services for, or in any
manner engage in any yellow page directory publishing business or any business
competing for the same customers as the businesses of the Partnership or its
Subsidiaries as such businesses exist or are in process on the date of the
termination of Executive's employment within any geographical area in which the
Partnership or its Subsidiaries engage or plan to engage in such businesses.
Nothing herein shall prohibit Executive from (i) being a passive owner of not
more than 5% of the outstanding stock of any class of any corporation, so long
as Executive has no active participation in the business of such corporation or
(ii) becoming employed by a competitor; provided that
-4-
<PAGE> 5
Executive is not directly or indirectly responsible for, or does not have
control over, the business of such competitor which directly competes with any
of the businesses of the Partnership.
(b) During the Employment Period and for three years thereafter, Executive
shall not directly or indirectly through another entity (i) induce or attempt
to induce any employee of the Partnership or any Subsidiary to leave the employ
of the Partnership or such Subsidiary, or in any way interfere with the
relationship between the Partnership or any Subsidiary and any employee
thereof, (ii) hire any person who was an employee of the Partnership or any
Subsidiary at any time during the Employment Period, or (iii) induce or attempt
to induce any customer, supplier, licensee or other business relation of the
Partnership or any Subsidiary to cease doing business with the Partnership or
such Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Partnership or any
Subsidiary.
(c) If, at the time of enforcement of this paragraph 7, a court shall hold
that the duration, scope or area restrictions stated herein are unreasonable
under circumstances then existing, the parties agree that the maximum duration,
scope or area reasonable under such circumstances shall be substituted for the
stated duration, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum period, scope and area
permitted by law.
(d) In the event of the breach or a threatened breach by Executive of any
of the provisions of this paragraph 7, the Partnership, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security).
8. Executive Representations. Executive hereby represents and warrants to
the Partnership that (i) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Partnership, this Agreement
shall be the valid and binding obligation of Executive, enforceable in
accordance with its terms.
9. Survival. Paragraphs 5, 6 and 7 shall survive and continue in full
force in accordance with their terms notwithstanding any termination of the
Employment Period.
10. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class
mail, return receipt requested, to the recipient at the address below
indicated:
-5-
<PAGE> 6
Notices to Executive:
---------------------
Ricardo Puente
2901 South Bayshore Drive, Apt. 10D
Coconut Grove, Florida 33133
with a copy to:
Ricardo Puente
c/o TransWestern Publishing Company, L.P.
8344 Clairemont Mesa Boulevard
San Diego, California 92111
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: John A. Weissenbach
Notices to the Partnership:
---------------------------
TransWestern Publishing Company, L.P.
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
Attention: Scott A. Schoen
C. Hunter Boll
with a copy to:
Latham & Watkins
701 B Street, Suite 2100
San Diego, CA 92101
Attention: Scott N. Wolfe, Esq.
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
11. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other
-6-
<PAGE> 7
provision, but this Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
12. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way, including without limitation the Employment Agreement, dated as of
May 13, 1993, between Executive and the Partnership.
13. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
14. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Partnership and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Partnership.
15. Choice of Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of California or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of California.
16. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Partnership and Executive,
and no course of conduct or failure or delay in enforcing the provisions of
this Agreement shall affect the validity, binding effect or enforceability of
this Agreement.
* * * * *
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
TRANSWESTERN PUBLISHING COMPANY, L.P.
By TransWestern Communications Company, Inc.
Its General Partner
By /s/ Laurence H. Bloch
------------------------------------------
Its Vice President
/s/ Ricardo Puente
---------------------------------------------
Ricardo Puente
<PAGE> 1
EXHIBIT 10.3
================================================================================
ASSUMPTION AGREEMENT AND
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
TRANSWESTERN PUBLISHING COMPANY LLC
AND
TWP CAPITAL CORP. II,
AS BORROWERS
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
CANADIAN IMPERIAL BANK OF COMMERCE,
AS ADMINISTRATIVE AGENT
AND
FIRST UNION NATIONAL BANK,
AS DOCUMENTATION AGENT
DATED AS OF NOVEMBER 6, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINITIONS......................................................................2
1.1 Defined Terms................................................................2
1.2 Other Definitional Provisions...............................................20
SECTION 2. ASSUMPTION OF THE LOANS.........................................................21
2.1 Assumption by the Borrowers of the Existing Borrowers' Obligations..........21
2.2 Release of the Existing Borrowers...........................................21
SECTION 3. AMOUNT AND TERMS OF COMMITMENTS.................................................22
3.1 Revolving Credit Commitments................................................22
3.2 Procedure for Revolving Credit Borrowing....................................23
3.3 Fees........................................................................23
3.4 Termination or Reduction of Revolving Credit Commitments....................23
3.5 Term Loans..................................................................24
3.6 Closing Date Term Loan Borrowings...........................................24
3.7 Repayment of Loans; Evidence of Debt........................................25
3.8 Optional Prepayments; Mandatory Prepayments and Revolving Credit
Commitment Reductions......................................................26
3.9 Conversion and Continuation Options.........................................28
3.10 Minimum Amounts and Maximum Number of Tranches..............................28
3.11 Interest Rates and Payment Dates............................................28
3.12 Computation of Interest and Fees............................................29
3.13 Inability to Determine Interest Rate........................................29
3.14 Pro Rata Treatment and Payments.............................................30
3.15 Illegality..................................................................31
3.16 Requirements of Law.........................................................31
3.17 Taxes.......................................................................32
3.18 Indemnity...................................................................34
3.19 Change of Lending Office; Mandatory Assignment..............................34
SECTION 4. REPRESENTATIONS AND WARRANTIES..................................................35
4.1 Financial Condition.........................................................35
4.2 No Change...................................................................36
4.3 Existence; Compliance with Law..............................................37
4.4 Power; Authorization; Enforceable Obligations...............................37
4.5 No Legal Bar................................................................37
4.6 No Material Litigation......................................................38
4.7 No Default..................................................................38
4.8 Ownership of Property; Liens................................................38
4.9 Intellectual Property.......................................................38
4.10 No Burdensome Restrictions..................................................38
4.11 Taxes.......................................................................38
4.12 Federal Regulations.........................................................39
</TABLE>
ii
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
4.13 ERISA.......................................................................39
4.14 Investment Company Act; Other Regulations...................................39
4.15 Purpose of Loans............................................................39
4.16 Environmental Matters.......................................................40
4.17 Solvency....................................................................40
4.18 Accuracy of Information.....................................................41
4.19 Employee Matters, etc.......................................................41
4.20 Security Documents..........................................................41
4.21 Ownership...................................................................41
SECTION 5. CONDITIONS PRECEDENT............................................................42
5.1 Conditions to Effectiveness.................................................42
5.2 Conditions to Each Loan.....................................................43
SECTION 6. AFFIRMATIVE COVENANTS...........................................................44
6.1 Financial Statements........................................................44
6.2 Certificates; Other Information.............................................45
6.3 Conduct of Business and Maintenance of Existence............................46
6.4 Maintenance of Property; Insurance..........................................46
6.5 Inspection of Property; Books and Records; Discussions......................46
6.6 Notices.....................................................................47
6.7 Environmental Laws..........................................................48
6.8 Additional Collateral; Subsidiaries.........................................48
6.9 Interest Rate Protection....................................................49
SECTION 7. NEGATIVE COVENANTS..............................................................49
7.1 Financial Condition Covenants...............................................49
7.2 Limitation on Indebtedness..................................................51
7.3 Limitation on Liens.........................................................52
7.4 Limitation on Guarantee Obligations.........................................53
7.5 Limitation on Fundamental Changes...........................................53
7.6 Limitation on Sale of Assets................................................53
7.7 Limitation on Leases........................................................54
7.8 Limitation on Distributions.................................................54
7.9 Limitation on Capital Expenditures..........................................56
7.10 Limitation on Investments, Loans and Advances...............................56
7.11 Limitation on Transactions with Affiliates..................................58
7.12 Limitation on Sales and Leasebacks..........................................59
7.13 Limitation on Changes in Fiscal Year........................................59
7.14 Limitation on Negative Pledge Clauses.......................................59
7.15 Limitation on Lines of Business.............................................59
7.16 Limitation on Designated Senior Debt........................................59
7.17 Limitation on Activities of Holdings........................................59
7.18 Limitation on Optional Payments and Modifications of Subordinated
Debt......................................................................59
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 8. EVENTS OF DEFAULT...............................................................60
SECTION 9. THE AGENTS......................................................................63
9.1 Appointment.................................................................63
9.2 Delegation of Duties........................................................63
9.3 Exculpatory Provisions......................................................63
9.4 Reliance by Agents..........................................................64
9.5 Notice of Default...........................................................64
9.6 Non-Reliance on Agents and Other Lenders....................................64
9.7 Indemnification.............................................................65
9.8 Agents in Their Individual Capacity.........................................65
9.9 Successor Administrative Agent..............................................65
9.10 Releases of Collateral......................................................66
SECTION 10. MISCELLANEOUS..................................................................66
10.1 Amendments and Waivers......................................................66
10.2 Notices.....................................................................67
10.3 No Waiver; Cumulative Remedies..............................................67
10.4 Survival of Representations and Warranties..................................67
10.5 Payment of Expenses and Taxes...............................................68
10.6 Successors and Assigns; Participations and Assignments......................68
10.7 Adjustments; Set-off........................................................71
10.8 Counterparts................................................................71
10.9 Severability................................................................71
10.10 Integration.................................................................71
10.11 GOVERNING LAW...............................................................71
10.12 Submission To Jurisdiction; Waivers.........................................72
10.13 Acknowledgements............................................................72
10.14 Partner Liability...........................................................73
10.15 Confidentiality.............................................................73
10.16 WAIVERS OF JURY TRIAL.......................................................73
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 1.1 Commitments and Addresses
Schedule 1.2 Executive Agreement Signatories
Schedule 3.7 Amortization
Schedule 4.2 Material Adverse Effect
Schedule 4.3 Disclosure Schedule
Schedule 4.21 Ownership
Schedule 7.2 Existing Indebtedness
Schedule 7.3 Existing Liens
Schedule 7.4 Existing Guarantee Obligations
EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Term Note
Exhibit C Form of Borrowers Security Agreement
Exhibit D Form of Holdings Pledge Agreement
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Borrowing Certificate
Exhibit G Form of Opinion of Counsel to Borrowers (Kirkland & Ellis)
Exhibit H Form of Conversion/Continuation
</TABLE>
iv
<PAGE> 6
ASSUMPTION AGREEMENT AND AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of November 6, 1997, among TransWestern Publishing Company LLC, a
Delaware limited liability company (the "Company"), TWP Capital Corp. II, a
Delaware corporation and a wholly owned Subsidiary of the Company ("TWP Capital
II"; the Company and TWP Capital II, collectively, the "Borrowers"), the several
banks and other financial institutions from time to time parties to this
Agreement (the "Lenders"), Canadian Imperial Bank of Commerce, New York Agency,
as administrative agent for the Lenders hereunder (in such capacity, the
"Administrative Agent") and First Union National Bank, a national banking
association, as documentation agent for the Lenders hereunder (in such capacity,
the "Documentation Agent" and, together with the Administrative Agent, the
"Agents").
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, dated as of October 1,
1997 (the "Existing Credit Agreement"), among TransWestern Publishing Company,
L.P., a Delaware limited partnership (the "Predecessor Company"), TWP Capital
Corp., a Delaware corporation and wholly owned Subsidiary of the Predecessor
Company (the "Predecessor Subsidiary"; together with the Predecessor Company,
the "Existing Borrowers"), the several banks and other financial institutions
parties thereto, CIBC, as administrative agent thereunder, and First Union, as
documentation agent thereunder, such lenders have agreed to make, and have made,
certain loans and other extensions of credit to the Existing Borrowers;
WHEREAS, the Existing Borrowers intend to enter into a series of
transactions which will result in (i) the transfer of all of the assets and
liabilities of the Predecessor Company to the Company, including the transfer of
all obligations under the Existing Credit Agreement, (ii) the renaming of the
Predecessor Company from TransWestern Publishing Company, L.P to TransWestern
Holdings L.P. ("Holdings"), (iii) the issuance of approximately $33,000,000 of
senior discount notes by Holdings, the proceeds of which will be used to
repurchase or redeem approximately $33,000,000 of preferred partnership units of
the Predecessor Company and (iv) the assumption by the Borrowers of all
obligations of the Existing Borrowers under the Existing Credit Agreement
(collectively, the "Contemplated Transactions"); and
WHEREAS, the Borrowers have requested that the Lenders and the
Agents enter into this Assumption Agreement and Amended and Restated Credit
Agreement to amend certain provisions of the Existing Credit Agreement and for
the purposes, among others, of (i) transferring the obligations of the Existing
Borrowers under the Existing Credit Agreement to the Borrowers and (ii)
permitting the Contemplated Transactions, and the Lenders and the Agents have
agreed to do so.
NOW THEREFORE, the parties hereto hereby agree that, effective on
the Closing Date, the Borrowers shall assume, on a joint and several basis, all
obligations of the
<PAGE> 7
2
Existing Borrowers under the Existing Credit Agreement, and the Existing Credit
Agreement shall be superseded, amended and restated to read in its entirety as
follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:
"ABR": at any time, a rate per annum equal to the higher of (a)
the Prime Rate and (b) the Federal Funds Rate as quoted by the
Administrative Agent plus 1/2 of 1%. Each change in the ABR shall take
effect simultaneously with the corresponding change or changes in the
Prime Rate or the Federal Funds Rate.
"ABR Loans": Loans the rate of interest applicable to which is
based upon the ABR.
"Acquisition Debt": Indebtedness of the Company (other than
Loans) issued as part of the consideration for a Permitted Acquisition,
provided that (a) such Indebtedness is unsecured, (b) either (i) all the
terms and conditions of such Indebtedness are satisfactory in form and
substance to the Required Lenders, as evidenced by their prior written
approval thereof, or (ii) the Revolving Credit Commitments are,
contemporaneously with the issuance of such Indebtedness, permanently
reduced in accordance with subsection 3.4(a) by an amount equal to the
principal amount thereof, and (c) after giving effect to the issuance
thereof, no Default or Event of Default shall have occurred and be
continuing.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether by contract or
otherwise.
"Agents": as defined in the preamble hereto.
"Agreement": this Assumption Agreement and Amended and Restated
Credit Agreement, as amended, supplemented or otherwise modified from
time to time.
"Applicable Margin": for each Revolving Credit Loan and Term
Loan, the rate per annum set forth in the table below opposite the Total
Leverage Ratio then in effect; such Applicable Margin shall be in effect
for the period beginning the second Business Day following the date on
which the Pricing Certificate provided pursuant to subsection 6.2(b) is
delivered to the Lenders and ending on the first Business Day
<PAGE> 8
3
following the date on which the Pricing Certificate provided pursuant to
subsection 6.2(b) is delivered to the Lenders and ending on the first
Business Day following the date on which the next such Pricing
Certificate is delivered to the Lenders; provided, that, if for any
reason the Pricing Certificate required by subsection 6.2(b) is not
delivered in accordance with such subsection to the Lenders, the Total
Leverage Ratio shall, for purposes of determining the Applicable Margin,
be deemed to be greater than or equal to 6.25 to 1.00 for each day
during the period from and including the day such Pricing Certificate
was required to be delivered pursuant to subsection 6.2(b) to the day
such Pricing Certificate is so delivered; and provided, further, that
for the period from and including the Closing Date to the first Business
Day following the date on which the Borrowers shall deliver the first
Pricing Certificate pursuant to subsection 6.2(b), the Total Leverage
Ratio shall, for purposes of determining Applicable Margin, be deemed to
be greater than or equal to 6.25 to 1.00.
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE
MARGIN FOR MARGIN FOR
TOTAL LEVERAGE RATIO ABR LOANS LIBOR LOANS
<S> <C> <C>
Revolving Credit Loans
Greater than or equal to 6.25 to 1.00 1.500% 2.500%
Less than 6.25 to 1.00 and greater 1.375% 2.375%
than or equal to 6.00 to 1.00
Less than 6.00 to 1.00 and greater 1.125% 2.125%
than or equal to 5.50 to 1.00
Less than 5.50 to 1.00 and greater 0.875% 1.875%
than or equal to 5.00 to 1.00
Less than 5.00 to 1.00 and greater 0.625% 1.625%
than or equal to 4.50 to 1.00
Less than 4.50 to 1.00 0.375% 1.375%
Term Loans
Greater than or equal to 6.25 to 1.00 1.750% 2.750%
Less than 6.25 to 1.00 and greater 1.625% 2.625%
than or equal to 6.00 to 1.00
Less than 6.00 to 1.00 and greater 1.375% 2.375%
than or equal to 5.50 to 1.00
Less than 5.50 to 1.00 and greater 1.125% 2.125%
than or equal to 5.00 to 1.00
</TABLE>
<PAGE> 9
4
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE
MARGIN FOR MARGIN FOR
TOTAL LEVERAGE RATIO ABR LOANS LIBOR LOANS
<S> <C> <C>
Less than 5.00 to 1.00 0.875% 1.875%
</TABLE>
"Asset Sale": any sale or other disposition (including any
Permitted Disposition) or series of related sales or other dispositions
by either Borrower or any Subsidiary of any asset or assets of such
Borrower or Subsidiary (including any sale and leaseback of assets) and
any issuance by any Subsidiary of any shares of Capital Stock of such
Subsidiary to any Person other than the Company or any wholly owned
Subsidiary; provided, that any sale of assets expressly permitted by
subsections 7.6(a) through (d) shall not constitute an "Asset Sale"
hereunder.
"Assignee": as defined in subsection 10.6(c).
"Available Commitment": as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's
Revolving Credit Commitment over (b) the aggregate principal amount of
all Revolving Credit Loans outstanding to such Lender.
"Board of Directors": (i) in the case of a Person that is a
limited partnership, the board of directors of its corporate general
partner or any committee authorized to act therefor (or, if the general
partner is itself a limited partnership, the board of directors of such
general partner's corporate general partner or any committee authorized
to act therefor), (ii) in the case of a Person that is a corporation,
the board of directors of such Person or any committee authorized to act
therefor and (iii) in the case of any other Person, the board of
directors, management committee or similar governing body or any
authorized committee thereof responsible for the management of the
business and affairs of such Person.
"Borrowers Security Agreement": the Assumed Amended and Restated
Borrowers Security Agreement to be executed and delivered by the Company
and TWP Capital II, substantially in the form of Exhibit C, as the same
may be amended, supplemented or otherwise modified from time to time.
"Borrowers": as defined in the preamble hereto.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 3.2 or 3.6 as a date on which the Company
requests the Lenders to make Loans hereunder.
"Bridge Period": that time period from the Closing Date until
the receipt by the Lenders of audited consolidated financial statements
of the Borrowers and their
<PAGE> 10
5
Subsidiaries for the fiscal year ending April 30, 1998 and the related
compliance certificate delivered pursuant to subsection 6.2(a) and (b).
"Bridge Securities Purchase Agreement": the Bridge Securities
Purchase Agreement, dated as of October 1, 1997, among the Predecessor
Company, the Predecessor Subsidiary, CIBC Wood Gundy Securities Corp.,
First Union Corporation and the other signatories thereto.
"Business": as defined in subsection 3.16.
"Business Day": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City, New York or London, England
are authorized or required by law to close.
"Capital Expenditures": of any Person for any period the amount,
without duplication, of expenditures (including by way of the
acquisition of securities of a Person or otherwise), determined in
accordance with GAAP, for such period in respect of the purchase or
other acquisition of fixed or capital assets (excluding (i) any such
asset acquired in connection with normal replacement and maintenance
programs properly charged to current operations, (ii) expenditures made
with the proceeds of insurance and awards of condemnation and (iii)
assets acquired as part of a Permitted Acquisition).
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
other than a corporation (including general and limited partnership
interests in a partnership) and any and all warrants or options to
purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of six months
or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b)
certificates of deposit, time deposits, overnight bank deposits, bankers
acceptances and repurchase agreements of any commercial bank which has
combined capital and surplus in excess of $200,000,000 having maturities
of six months or less from the date of acquisition, (c) commercial paper
of an issuer rated at least A-1 by Standard & Poor's Corporation or P-1
by Moody's Investors Service, Inc., or carrying an equivalent rating by
a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments having maturities of
six months or less from the date of acquisition and (d) shares of money
market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (c) of this
definition.
"Cash Interest Coverage Ratio": EBITDA for any period of four
consecutive fiscal quarters divided by Cash Interest Expense for such
period.
<PAGE> 11
6
"Cash Interest Expense": for any period, Interest Expense for
such period, excluding (a) interest paid in kind or by accretion or
addition to principal, (b) amortization of commissions, discounts, fees,
costs and other charges paid in connection with the incurrence of
Indebtedness and (c) other interest costs not paid in cash.
"CIBC": Canadian Imperial Bank of Commerce, New York Agency.
"Closing Date": the date on which the conditions precedent set
forth in subsection 5.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral": all assets of the Loan Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes
the Company and which is treated as a single employer under Section 414
of the Code.
"Company": as defined in the preamble hereto.
"Consolidated Net Income": of any Person for any period,
consolidated net income of such Person for such period determined in
accordance with GAAP.
"Contemplated Transactions": as defined in the recitals hereto.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Conversion Securities": Promissory notes issued by the
Predecessor Company and the Predecessor Subsidiary pursuant to Section
3.6 of the Bridge Securities Purchase Agreement in an aggregate
principal amount not to exceed $100,000,000 or any related Refinancing
Indebtedness.
"Current Assets": at a particular date, with respect to any
Person, all amounts (other than cash and Cash Equivalents and assets
which would not otherwise be included in "total current assets" in
accordance with GAAP but for the fact that such assets are being held
for sale) which would, in conformity with GAAP, be set forth opposite
the caption "total current assets" (or any like caption) on a balance
sheet of such Person at such date.
<PAGE> 12
7
"Current Liabilities": at a particular date, with respect to any
Person, all amounts which would, in conformity with GAAP, be set forth
opposite the caption "total current liabilities" (or any like caption)
on a balance sheet of such Person at such date (other than current
maturities of long term debt).
"Day 45": the day that is 45 days after the Closing Date.
"Default": any of the events specified in Section 7, whether or
not any requirement set forth therein for the giving of notice, the
lapse of time, or both, has been satisfied.
"Disclosure Schedule": Schedule 4.3 hereto.
"Documentation Agent": as defined in the preamble hereto.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"EBITDA": of any Person for any period, Consolidated Net Income
of such Person for such period plus, without duplication and to the
extent reflected as a charge in the statement of such Consolidated Net
Income, the sum of (a) provision for income tax expense (including,
without limitation, any income taxes that would be payable if the
Company were to become a taxable entity for purposes of Federal, state
or local income taxes), (b) Interest Expense, (c) depreciation and
amortization expense, (d) any extraordinary, non-recurring or unusual
losses or expenses (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income, losses
on the sales of assets outside of the ordinary course of business and
transaction expenses incurred in connection with the Recapitalization)
and (e) distributions to the Equity Compensation Trust and any payments
made by the Equity Compensation Trust minus, without duplication and to
the extent reflected as income in the statement of such Consolidated Net
Income, any extraordinary, non-recurring or unusual gains (including,
whether or not otherwise includable as a separate item in the statement
of such Consolidated Net Income, gains on the sales of assets outside of
the ordinary course of business); provided that (i) in computing EBITDA
for any period any Permitted Acquisition or Permitted Disposition
occurring during such period shall be deemed to have been completed on
the first day of such period and (ii) EBITDA may be adjusted for
projected cost savings and other pro forma adjustments relating to any
Permitted Acquisition if such savings or adjustments would be permitted
under applicable Securities and Exchange Commission (or any successor or
analogous Governmental Authority) regulations or are approved in writing
by the Required Lenders.
"Employment Agreements": collectively, the Employment Agreements
entered into by the Predecessor Company with Mr. Laurence H. Bloch and
Mr. Ricardo Puente, as assigned to the Company on November 6, 1997.
<PAGE> 13
8
"Environmental Laws": any and all foreign, Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other
Requirements of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning protection of
human health or the environment, as now or may at any time hereafter be
in effect.
"Equity Compensation Trust": the trust established for the
benefit of certain members of management and certain full time employees
of the Predecessor Company pursuant to the terms of the Equity
Compensation Trust Agreement, dated as of November 4, 1993, as amended,
between TransWestern Publishing Company, L.P. and the Trustees named
therein, or any trust established for such purposes on substantially
identical terms for such members of management and full time employees
of the Company a copy of which shall be delivered to each Agent.
"Equity Consideration": any consideration given by the Company in
connection with a Permitted Acquisition or proposed Permitted
Acquisition consisting of equity interests issued by the Company or the
Predecessor Company or cash proceeds from the sale of equity interests
in the Company.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default": any of the events specified in Section 7,
provided that any requirement set forth therein for the giving of
notice, the lapse of time, or both, has been satisfied.
"Excess Cash Flow": for any period of the Company, the excess of
(a) the sum, without duplication, of (i) EBITDA of the Company for such
period, (ii) the amount of returned surplus assets of any pension plan
received by the Company during such period to the extent not included in
Net Income to determine EBITDA for such period or any prior period
commencing on or subsequent to the Closing Date, (iii) decreases in
Working Capital of the Company and its Subsidiaries for such period and
(iv) extraordinary, non-recurring or unusual cash gains during such
period included in Consolidated Net Income of the Company for such
period, over (b) the sum, without duplication, of (i) the aggregate
amount of cash Capital Expenditures permitted pursuant to subsection 7.9
and made by the Company and its Subsidiaries during such period, (ii)
the aggregate amount of payments of principal in respect of any
Indebtedness of the Company or any of its Subsidiaries not prohibited
hereunder during such period, including, but not limited to, prepayments
made pursuant to subsection 3.8(a) (other than prepayments of Loans made
pursuant to subsections 3.8(b), (c), (d), (e) and prepayments of
Revolving Credit Loans to the extent not accompanied by reductions of
the Revolving Credit Commitments), (iii) increases in Working Capital of
the Company for such period, (iv) Interest Expense of the Company and
its Subsidiaries for such period, (v) taxes paid in cash by the Company
<PAGE> 14
9
or any of its Subsidiaries in such period, (vi) cash distributions made
in such period by the Company for payment of taxes to the extent
permitted under subsection 7.8(a), (vii) any cash payments, made by the
Company in accordance with subsection 7.8(d) during such period for the
purchase of shares of its Capital Stock from departing officers and
employees and on account of Subordinated Management Notes, (viii) any
cash payments made by the Company or any of its Subsidiaries for
acquisitions made during such period pursuant to subsection 7.10(e) and
(ix) Management Fees paid during such period; notwithstanding the
parenthetical phrase included in clause (b)(ii) above, the amount
described in such clause (b)(ii) shall include the amount of any
mandatory prepayment of the Loans to the extent that clause (a) of this
definition includes a corresponding amount directly attributable to the
event giving rise to such mandatory prepayment (such as, for example,
the portion of the Net Cash Proceeds from an Asset Sale applied as a
mandatory prepayment of the Loans representing the ordinary gain
realized in such Asset Sale).
"Executive Agreements": collectively, (a) the Executive
Agreements entered into by the Predecessor Company with Mr. Laurence H.
Bloch and Mr. Ricardo Puente on October 1, 1997, and (b) the Executive
Agreements entered into by the Predecessor Company with those officers
and employees of the Company listed on Schedule 1.2 hereto and any other
officers and employees of the Company who shall enter into an Executive
Agreement with the Company subsequent to the Closing Date, all such
agreements referred to in this clause (b) in substantially the form of
Exhibit K-2 to the Purchase Agreement and, in the case of all such
Agreements entered into prior to November 6, 1997, as assigned to the
Company on November 6, 1997.
"Existing Borrowers Security Agreement": the Borrowers Security
Agreement (as defined in the Existing Credit Agreement).
"Existing Credit Agreement": as defined in the recitals hereto.
"Facilities Termination Date": October 1, 2004.
"Federal Funds Rate": for any day, a rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published at 11:00 a.m. (New York City time) for such day
(or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
<PAGE> 15
10
"First Union": First Union National Bank, a national banking
association.
"Fixed Charge Ratio": EBITDA for any period of four consecutive
fiscal quarters divided by Fixed Charges for the Company for such
period.
"Fixed Charges": for the Company for any period the sum of (a)
Total Debt Service for such period, (b) distributions for the payment of
taxes made by the Company during such period pursuant to subsection
7.8(a), (c) the aggregate amount of Capital Expenditures permitted
pursuant to subsection 7.9 and made by the Company and its Subsidiaries
during such period and (d) cash dividend payments made by the Company
pursuant to subsection 7.8(g) during such period, in each case
determined on a consolidated basis in accordance with GAAP.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"General Partner": TransWestern Communications Company, Inc., a
Delaware corporation and the general partner of Holdings.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of
the guaranteeing person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount
of any Guarantee Obligation of any guaranteeing person shall be deemed
to be the lower of (a) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such
guaranteeing person
<PAGE> 16
11
may be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Company in good faith.
"High-Yield Debt": as defined in subsection 7.2(b).
"Holdings Pledge Agreement": the Holdings Pledge Agreement to be
executed and delivered by Holdings in favor of the Administrative Agent,
substantially in the form of Exhibit D, as the same may be amended,
supplemented or otherwise modified from time to time.
"Indebtedness": of any Person at any date, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services (other than (i) current trade liabilities incurred
in the ordinary course of business and payable in accordance with
customary practices, (ii) any "earn-out" or similar obligations payable
to the sellers in connection with any Permitted Acquisition based upon a
percentage of the earnings or the cash flow of the business acquired and
(iii) obligations of the Company or any of its Subsidiaries in respect
of advance payments or deposits by its customers for goods or services
to be sold by the Company or such Subsidiary), (b) any other
indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person
under Financing Leases, (d) all obligations, contingent or otherwise, of
such Person in respect of acceptances, letters of credit and similar
facilities issued or created for the account of such Person, (e) all
liabilities secured by any Lien on any property owned by such Person
where such Person has not assumed or otherwise become liable for the
payment thereof and (f) for the purposes of subsection 7.2 and Section
7(e) only, all obligations, contingent or otherwise, of such Person in
respect of Interest Rate Agreements.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245
of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Expense": of any Person for any period the amount of
interest expense (including that attributable to Financing Leases)
payable with respect to all outstanding Indebtedness of such Person,
including, without limitation or duplication, all commissions, discounts
and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and all net amounts payable by such Person
under Interest Rate Agreements, determined in accordance with GAAP.
<PAGE> 17
12
"Interest Payment Date": (a) as to any ABR Loan, the first day of
each January, April, July and October, (b) as to any LIBOR Loan having
an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any LIBOR Loan having an Interest Period
longer than three months, each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period and the
last day of such Interest Period.
"Interest Period": with respect to any LIBOR Loan:
(i) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
LIBOR Loan and ending one, two, three or six months thereafter,
as selected by the Borrowers in their notice of borrowing or
notice of conversion, as the case may be, given with respect
thereto; and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
LIBOR Loan and ending one, two, three or six months thereafter,
as selected by the Borrowers by irrevocable notice to the
Administrative Agent by 11:00 a.m. New York City time not less
than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a LIBOR Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business
Day;
(2) any Interest Period that would otherwise extend beyond
the Revolving Credit Termination Date or beyond the date final
payment is due on the Term Loans shall end on the Revolving
Credit Termination Date or such date of final payment, as the
case may be;
(3) any Interest Period pertaining to a LIBOR Loan that
begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month; and
(4) the Borrowers shall select Interest Periods so as not
to require a payment or prepayment of any LIBOR Loan during an
Interest Period for such Loan.
<PAGE> 18
13
"Interest Rate Agreement": with respect to any Person, any
interest rate swap agreement, interest rate future, interest rate
option, interest rate cap or collar or other interest rate hedge
arrangement, to or under which such Person is a party or a beneficiary.
"Lease Expense": for any Person for any period, the aggregate
amount of fixed and contingent rentals payable by such Person,
determined on a consolidated basis in accordance with GAAP, for such
period with respect to operating leases of real and personal property.
"Lenders": as defined in the preamble hereto.
"LIBOR": the rate of interest determined on the basis of the rate
for deposits in Dollars for a period equal to the applicable Interest
Period commencing on the first day of such Interest Period appearing on
Telerate Page 3750 as of 11:00 a.m. (London time) two (2) Business Days
prior to the first day of the applicable Interest Period. If, for any
reason, such rate is not available, then "LIBOR" shall be determined by
the Administrative Agent to be the arithmetic average (rounded upward,
if necessary, to the nearest one-sixteenth of one percent (1/16%)) of
the rate per annum at which deposits in Dollars would be offered by
first class banks in the London interbank market to the Administrative
Agent at approximately 11:00 a.m. (London time) two (2) Business Days
prior to the first day of the applicable Interest Period for a period
equal to such Interest Period and in an amount substantially equal to
the amount of the applicable Loan.
"LIBOR Rate": for any Interest Period, LIBOR for such Interest
Period.
"LIBOR Loans": Loans bearing interest at a rate determined with
reference to the LIBOR Rate.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, any Notes, the Security
Documents and any document delivered in connection herewith by any new
Subsidiary of the Company pursuant to subsection 6.8.
<PAGE> 19
14
"Loan Parties": the Company, TWP Capital II and any new
Subsidiary of the Company that delivers any documents in connection
herewith pursuant to subsection 6.8.
"Management Fees": as defined in subsection 7.11.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, condition (financial or otherwise) or results of
operations of the Borrowers and their Subsidiaries, taken as a whole or
(b) the validity or enforceability of this or any of the other Loan
Documents or the rights or remedies of the Agents or the Lenders
hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or wastes, defined or
regulated as such in or under any Environmental Law, including, without
limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale, the
cash proceeds (including any payments received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise) of such Asset Sale
net of all reasonable attorneys' fees, accountants' fees, investment
banking fees, brokerage commissions, survey costs, title insurance
premiums, required debt payments (other than pursuant hereto), amounts
required to be paid to any Person (other than the Company) owning a
beneficial interest in the assets subject to such Asset Sale, reasonable
amounts to be provided by the Company as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and
retained by the Company (provided, that, if any amount of such reserve
shall be released or reversed, the amount of such release or reversal
shall be "Net Cash Proceeds"), and other customary fees and expenses in
connection therewith and net of taxes (including income taxes of
partners) paid or payable as a result thereof and net of purchase price
adjustments which are in amounts ascertainable on the date of such Asset
Sale and which are reasonably expected to be payable in connection
therewith within 6 months of such date and (b) in connection with any
issuance of any equity or debt securities or instruments or the
incurrence of loans, the cash proceeds (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or
otherwise) received from such issuance, net of all reasonable investment
banking fees, legal fees, accountants fees, underwriting discounts and
commissions and other customary fees and expenses in connection
therewith, provided that notwithstanding the foregoing, no fees
described in clauses (a) or (b) above shall be deducted in determining
such Net Cash Proceeds to the extent such fees are payable to an
Affiliate of the Company.
<PAGE> 20
15
"Non-Excluded Taxes": as defined in subsection 3.17.
"Notes": the collective reference to the Revolving Credit Notes
and the Term Notes.
"Original Closing Date": the "Closing Date", as defined in the
Existing Credit Agreement.
"Participant": as defined in subsection 10.6(b).
"Partnership Agreement": the Third Amended and Restated
Agreement of Limited Partnership of Holdings, dated as of October 1,
1997, as amended, modified or supplemented in accordance with the terms
thereof.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Percentage": as to any Lender at any time the percentage which
the sum, without duplication, of such Lender's Revolving Credit
Commitment and the aggregate principal amount of such Lender's Term
Loans then outstanding then constitutes of the sum, without duplication,
of the aggregate Revolving Credit Commitments then in effect and Term
Loans then outstanding (or, at any time after the Revolving Credit
Commitments shall have expired or terminated, the percentage which the
aggregate principal amount of such Lender's Loans then outstanding
constitutes of the aggregate principal amount of the Loans then
outstanding).
"Permitted Acquisition": as defined in subsection 7.10(e).
"Permitted Disposition": as defined in subsection 7.6(e).
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pricing Certificate": as defined in subsection 6.2(b).
"Prime Rate": at any time, the rate of interest per annum
publicly announced from time to time by CIBC as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs. The parties
hereto acknowledge that the rate announced publicly by CIBC as
<PAGE> 21
16
its Prime Rate is an index or base rate and shall not necessarily be its
lowest rate charged to its customers or other banks.
"Properties": as defined in subsection 3.16.
"Purchase Agreement": the Securities Purchase and Redemption
Agreement, dated as of August 27, 1997 and amended as of October 1,
1997, among TWP, the Predecessor Company, the General Partner, and
certain limited partners of the Company and certain stockholders of the
General Partner, and as assigned as of October 1, 1997 by TWP to Thomas
H. Lee Equity Fund III and certain of its Affiliates.
"Recapitalization": the recapitalization of the Predecessor
Company pursuant to the Purchase Agreement and, specifically, the
transactions contemplated by subsections 1, 2, 3 and 4 thereof.
"Refinancing Indebtedness": Indebtedness that refunds, refinances
or extends the High-Yield Debt or the Conversion Securities, but only to
the extent that (i) the Refinancing Indebtedness is subordinated to the
obligations of the Borrowers hereunder to at least the same extent as
the Conversion Securities or High-Yield Debt being refunded, refinanced
or extended, (ii) the Refinancing Indebtedness is scheduled to mature
either (a) no earlier than the Conversion Securities or High-Yield Debt
being refunded, refinanced or extended, or (b) after the Facilities
Termination Date, (iii) the portion, if any, of the Refinancing
Indebtedness that is scheduled to mature on or prior to the Facilities
Termination Date has a weighted average life to maturity at the time
such Refinancing Indebtedness is incurred that is equal to or greater
than the weighted average life to maturity of the portion of Conversion
Securities or High- Yield Debt being refunded, refinanced or extended
that is scheduled to mature on or prior to the Facilities Termination
Date, (iv) such Refinancing Indebtedness is in an aggregate principal
amount that is equal to or less than the sum of (a) the aggregate
principal amount then outstanding under the Conversion Securities or
High-Yield Debt being refunded, refinanced or extended, (b) the amount
of accrued and unpaid interest, if any, and premiums owed, if any, not
in excess of preexisting prepayment provisions on such Conversion
Securities or High-Yield Debt being refunded, refinanced or extended and
(c) the amount of customary fees, expenses and costs related to the
incurrence of such Refinancing Indebtedness, and (v) such Refinancing
Indebtedness is incurred by the Borrowers.
"Register": as defined in subsection 10.6(d).
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
<PAGE> 22
17
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20
of PBGC Reg. Section 2615.
"Required Lenders": at any time, Lenders the Percentages of
which aggregate more than 50%; provided that notwithstanding the
foregoing, Required Lenders shall at all times be at least two Lenders.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
"Reserve Percentage": the maximum daily arithmetic reserve
requirement imposed by the Board of Governors of the Federal Reserve
System (or any successor) under Regulation D on Eurocurrency Liabilities
(as defined in Regulation D) for the applicable Interest Period as of
the first day of such Interest Period, but subject to any changes in
such reserve requirement becoming effective during the Interest Period.
For purposes of calculating the Reserve Percentage, the reserve
requirement shall be as set forth in Regulation D without benefit of
credit for prorations, exemptions or offsets under Regulation D, and
further without regard to whether or not any Lender elects to actually
fund any Loan or portion thereof with Eurocurrency Liabilities.
"Responsible Officer": each of the chief executive officer and
the president of the Company and, with respect to financial matters, the
chief financial officer of the Company and with respect to financial
matters relating to the Predecessor Company, the chief financial officer
of the Predecessor Company.
"Revolving Credit Commitment": as to any Lender, the obligation
of such Lender to make Revolving Credit Loans to the Borrowers hereunder
in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender's name on Schedule 1.1
under the heading "Revolving Credit Commitment" or, in the case of any
Lender that is an Assignee, the amount of the assigning Lender's
Revolving Credit Commitment assigned to such Assignee pursuant to
subsection 10.6 (in each case as such amount may be changed from time to
time (including, without limitation, as a result of assignment by one
Lender to another) in accordance with the provisions of this Agreement).
"Revolving Credit Commitment Percentage": as to any Lender at
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the aggregate Revolving Credit Commitments then in
effect (or, at any time after the Revolving Credit Commitments shall
have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Credit Loans then
<PAGE> 23
18
outstanding constitutes of the aggregate principal amount of the Loans
then outstanding).
"Revolving Credit Commitment Period": the period from and
including the Closing Date to, but not including the Revolving Credit
Termination Date, or such earlier date on which the Revolving Credit
Commitments shall terminate as provided herein.
"Revolving Credit Loans": as defined in subsection 3.1.
"Revolving Credit Note": as defined in subsection 3.7(e).
"Revolving Credit Termination Date": October 1, 2003.
"Security Documents": the collective reference to the Borrowers
Security Agreement, the Holdings Pledge Agreement and all other security
documents hereafter delivered to the Administrative Agent granting a
Lien on any asset or assets of any Person to secure the obligations and
liabilities of the Borrowers hereunder and under any of the other Loan
Documents or to secure any guarantee of any such obligations and
liabilities in the case of each such other security document, as the
same may be amended, supplemented or otherwise modified according to the
terms thereof.
"Senior Debt": All Indebtedness of the Company and its
Subsidiaries other than Subordinated Debt.
"Senior Discount Notes": the senior discount notes issued by
Holdings on the date hereof for aggregate gross proceeds of
approximately $32,500,000 on the terms and conditions set forth in the
Offering Memorandum with respect thereto dated the date hereof.
"Senior Leverage Ratio": at any date, all then outstanding Senior
Debt divided by EBITDA for the then most recently ended period of four
consecutive fiscal quarters for which financial statements shall have
been delivered to the Lenders.
"Senior Subordinated Increasing Rate Notes": as defined in
subsection 5.1(l).
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": with respect to any Person on a particular date, the
condition that on such date, (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including,
without limitation, probable liability in respect of contingent
liabilities, of such Person, (b) the present fair salable value, on a
going concern basis, of the assets of such Person is not less than the
amount that will be
<PAGE> 24
19
required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay as such debts and liabilities mature, and
(d) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person's
property would constitute an unreasonably small amount of capital.
"Subordinated Debt": the Senior Subordinated Increasing Rate
Notes, the Conversion Securities, the High-Yield Debt (including, with
respect to the Conversion Securities and the High-Yield Debt, any
related Refinancing Indebtedness), the Subordinated Management Notes and
any other Indebtedness of the Borrowers which by its terms is expressly
subordinated to the Senior Debt pursuant to subordination provisions
approved in writing by the Required Lenders and all other terms and
conditions of which shall have been approved in writing by the Required
Lenders.
"Subordinated Management Notes": promissory notes of the Company
or the Predecessor Company (which will be assumed by the Company on the
Closing Date) issued to Mr. Laurence H. Bloch, Mr. Ricardo Puente and
those officers and employees of the Company listed on Schedule 1.2
hereto and any other officers and employees of the Company who shall
enter into an Executive Agreement with the Company subsequent to the
Original Closing Date in accordance with the provisions of Sections 3
and 4 of the Executive Agreement to which such person is a party (as
such Executive Agreements are in effect on the Original Closing Date),
provided that all the terms and conditions of such notes that are not
specified in such Section, including, without limitation, those relating
to subordination, shall be in form and substance satisfactory to the
Required Lenders, as evidenced by their prior written approval thereof,
it being understood that such notes will not be satisfactory to the
Required Lenders unless they include provisions prohibiting payments to
be made thereunder (a) during the Bridge Period and (b) if, after giving
effect to such payment, the Total Leverage Ratio would be equal to or
greater than 5.5 to 1.0 or any Event of Default under Sections 7(a),
(c), (f) and (h) shall have occurred and be continuing and provided,
further, that payments pursuant to the Subordinated Management Notes may
only be made in accordance with subsection 7.8.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise expressly stated, all references to the term
Subsidiary shall be deemed to be to a Subsidiary of the Company.
"Term Loan": as defined in subsection 3.5.
<PAGE> 25
20
"Term Note": as defined in subsection 3.7(e).
"Total Amount Expended": when used with respect to any Permitted
Acquisition or proposed Permitted Acquisition, the total amount expended
or, as the case may be, proposed to be expended by the Company as the
purchase consideration for such Permitted Acquisition, whether in cash,
by issuance of Acquisition Debt, by assumption of debt or otherwise, but
shall exclude (i) any Equity Consideration and (ii) any "earn-out" or
similar obligations payable to the sellers based upon a percentage of
the earnings or cash flow of the business acquired.
"Total Debt Service": for any Person for any period, the sum of
(a) regularly scheduled mandatory principal payments on Indebtedness
(other than the Revolving Credit Loans) for such period, (b) required
scheduled reductions of the Revolving Credit Commitments during such
period in accordance with subsection 3.4(c) and (c) Cash Interest
Expense for such period.
"Total Indebtedness": of any Person, as of the date of
determination, all Indebtedness of such Person which, in accordance with
GAAP, would be included as indebtedness on a consolidated balance sheet
of such Person at such date.
"Total Leverage Ratio": at any date, all then outstanding Total
Indebtedness divided by EBITDA for the then most recently ended period
of four consecutive fiscal quarters for which financial statements shall
have been delivered to the Lenders.
"Tranche": the collective reference to LIBOR Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day); Tranches may be identified
as "LIBOR Tranches".
"Transferee": as defined in subsection 10.6(f).
"TWP": TWP Recapitalization Corp.
"TWP Capital II": as defined in the preamble hereto.
"Type": as to any Loan, its nature as an ABR Loan or a LIBOR
Loan.
"Working Capital": the excess of Current Assets over Current
Liabilities.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrowers and their
<PAGE> 26
21
Subsidiaries not defined in subsection 1.1 and accounting terms partly defined
in subsection 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP, provided, however, that if there shall occur any
change after the date hereof in GAAP and such change affects the method of
calculating any component used in determining compliance with the financial
covenants set forth in subsection 7.1, GAAP as in effect on the date hereof
shall be applied in computing such components and determining such compliance,
and the Company shall deliver a certificate showing in reasonable detail a
reconciliation in respect of such adjustments concurrently with the delivery of
relevant financial statements hereunder.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified. The words include, includes and including shall be deemed
to be followed by the phrase "without limitation".
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. ASSUMPTION OF THE LOANS
2.1 ASSUMPTION BY THE BORROWERS OF THE EXISTING BORROWERS'
OBLIGATIONS. To induce the Agents and the Lenders to consent to the Contemplated
Transactions, including, without limitation, the transfer of all of the
Predecessor Company's assets to the Company, the Borrowers hereby expressly
agree that, effective on the Closing Date, the Borrowers will assume and be
obligated to pay and perform all the obligations and liabilities of the Existing
Borrowers to the Agents and the Lenders under the Existing Credit Agreement and
any other agreement executed in connection with the Existing Credit Agreement,
and the parties hereto agree that effective on the Closing Date, the Existing
Credit Agreement shall be superseded, amended and restated to read in its
entirety as set forth in this Agreement.
2.2 RELEASE OF THE EXISTING BORROWERS. In consideration of the
assumption by the Borrowers provided for in subsection 2.1 hereof and subject to
the fulfillment of the conditions set forth in subsection 5.1, (i) the Existing
Borrowers shall on the Closing Date be fully released from all their respective
obligations and liabilities under the Existing Credit Agreement, the Existing
Borrowers Security Agreement and any other Loan Documents, as such term is
defined in the Existing Credit Agreement (together with the Existing Borrowers
Security Agreement, the "Existing Loan Documents"), (ii) all Liens created by
the Existing Loan Documents on assets of the Existing Borrowers that are not
transferred to the Company on the Closing Date shall be released as of the
Closing Date, and all assets transferred by the Predecessor Company to the
Company shall be transferred subject to the Lien created by the Existing Loan
Documents, but the Existing Borrowers shall be released from all obligations and
liabilities with respect to such Liens on such transferred
<PAGE> 27
22
assets (which assets shall thereafter be subject to Liens pursuant to the
Borrowers Security Agreement) and (iii) the Lenders hereby consent to the
Contemplated Transactions. However, notwithstanding the foregoing, if any assets
of the Predecessor Company are not transferred to the Company on or prior to Day
45 and such failure to transfer shall result in any of the representations and
warranties set forth in Section 4 being untrue in any material respect on the
date that is 46 days after the Closing Date, then on such 46th day the releases
provided for in the preceding sentence shall be automatically revoked and the
obligations, liabilities and Liens of the Existing Borrowers under the Existing
Credit Agreement and the Existing Loan Documents shall be automatically
reinstated (provided that the reinstated amount of such obligations and
liabilities, the recourse with respect to such obligations and liabilities, and
such Liens shall be limited to the assets not so transferred to the Company and
only for so long as the failure to effect such transfer shall cause any of such
representations and warranties to continue to be untrue). The Lenders will on
the Closing Date deliver to the Company, marked cancelled, all promissory notes
delivered to them pursuant to the Existing Credit Agreement (it being understood
that such delivery shall not reflect a satisfaction of the indebtedness
evidenced thereby but shall reflect the full release of the Existing Borrowers
from all of their respective obligations and liabilities under the Existing
Credit Agreement and the assumption by the Borrowers of all such obligations and
liabilities as provided in subsection 2.1, the Lenders being entitled to receive
new promissory notes evidencing such indebtedness pursuant to subsection
3.7(e)). The Administrative Agent will, on the day which is 46 days following
the Closing Date (so long as the release of the Existing Borrowers shall not
have been revoked in accordance with the above provisions of this paragraph),
execute and deliver to the Predecessor Company all such UCC-3 forms and other
instruments necessary to reflect the release provided for in this paragraph as
shall be reasonably requested by the Predecessor Company and submitted to the
Administrative Agent on or prior to such 46th day. The Borrowers understand and
agree that the release of the Existing Borrowers from their obligations and
liabilities under the Existing Borrowers Security Agreement is not intended to
release any assets of the Predecessor Company that are transferred to the
Company from the Lien originally created by the Existing Borrowers Security
Agreement and that such Lien shall continue against the Borrowers (but not the
Existing Borrowers) on such transferred assets and be governed by the provisions
of the Borrowers Security Agreement.
SECTION 3. AMOUNT AND TERMS OF COMMITMENTS
3.1 REVOLVING CREDIT COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
("Revolving Credit Loans") to the Borrowers from time to time during the
Revolving Credit Commitment Period in an aggregate principal amount at any one
time outstanding not to exceed the amount of such Lender's Revolving Credit
Commitment. During the Revolving Credit Commitment Period the Borrowers may use
the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit
Loans in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof;
<PAGE> 28
23
(b) The Revolving Credit Loans may from time to time be (i) LIBOR
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrowers and notified to the Administrative Agent in accordance with
subsections 3.2 and 3.9, provided that no Revolving Credit Loan shall be made as
a LIBOR Loan after the day that is one month prior to the Revolving Credit
Termination Date.
3.2 PROCEDURE FOR REVOLVING CREDIT BORROWING. The Borrowers may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrowers shall give
the Administrative Agent irrevocable written notice (which notice must be
received by the Administrative Agent prior to 12:00 Noon, New York City time,
(a) three Business Days prior to the requested Borrowing Date, if all or any
part of the requested Revolving Credit Loans are to be initially LIBOR Loans or
(b) one Business Day prior to the requested Borrowing Date, otherwise),
specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of LIBOR Loans, ABR Loans or a combination
thereof and (iv) if the borrowing is to be entirely or partly of LIBOR Loans,
the respective amounts of each such Type of Loan and the respective lengths of
the initial Interest Periods therefor. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to $1,000,000 or a whole multiple of
$100,000 in excess thereof. Upon receipt of any such notice from the Borrowers,
the Administrative Agent shall promptly notify each Lender thereof. Upon receipt
of such notice from the Administrative Agent, each Lender will make the amount
of its pro rata share of each borrowing available to the Administrative Agent
for the account of the Borrowers at the office of the Administrative Agent
specified in subsection 10.2 prior to 11:00 a.m., New York City time, on the
Borrowing Date requested by the Borrowers in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the
Borrowers by the Administrative Agent crediting the account of the Company on
the books of such office with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
3.3 FEES. The Borrowers jointly and severally agree to pay to the
Administrative Agent for the account of each Lender a commitment fee for the
period from and including the first day of the Revolving Credit Commitment
Period to the Revolving Credit Termination Date, computed at the rate of 1/2 of
1% per annum on the average daily amount of the Available Commitment of such
Lender during the period for which payment is made, payable quarterly in arrears
on the first day of each January, April, July and October and on the Revolving
Credit Termination Date or such earlier date as the Revolving Credit Commitments
shall terminate as provided herein, commencing on the first of such dates to
occur after the Original Closing Date.
3.4 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. (a)
The Borrowers shall have the right, upon not less than three Business Days'
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the amount of the Revolving Credit
Commitments. Any such reduction shall be in
<PAGE> 29
24
an amount equal to $5,000,000 or a whole multiple of $100,000 in excess thereof
and shall reduce permanently the Revolving Credit Commitments then in effect.
(b) The Revolving Credit Commitments shall automatically be
permanently be reduced as set forth in the following paragraph (c) and as set
forth in subsection 3.8.
(c) The Revolving Credit Commitments shall automatically be
permanently reduced according to the following schedule, commencing on January
1, 2000, by the amount set forth below opposite each such date:
<TABLE>
<S> <C>
January 1, 2000 $1,500,000
April 1, 2000 $1,500,000
July 1, 2000 $1,500,000
October 1, 2000 $1,500,000
January 1, 2001 $1,500,000
April 1, 2001 $1,500,000
July 1, 2001 $1,500,000
October 1, 2001 $1,500,000
January 1, 2002 $1,500,000
April 1, 2002 $1,500,000
July 1, 2002 $1,500,000
October 1, 2002 $1,500,000
January 1, 2003 $5,500,000
April 1, 2003 $5,500,000
July 1, 2003 $5,500,000
October 1, 2003 $5,500,000
</TABLE>
Each such reduction shall be accompanied by prepayment of the Revolving Credit
Loans (together with fees and interest accrued thereon to the date of such
prepayment and any additional amounts owing under subsection 3.18) to the
extent, if any, that the Revolving Credit Loans then outstanding exceed the
amount of the Revolving Credit Commitments as so reduced.
3.5 TERM LOANS. Subject to the terms and conditions hereof, each
Lender severally agrees to continue a term loan (each a "Term Loan",
collectively, the "Term Loans") to the Borrowers on the Original Closing Date in
an amount equal to the amount set forth opposite such Lender's name on Schedule
1.1 under the heading "Term Loan". The Term Loans may from time to time be (i)
LIBOR Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrowers and notified to the Administrative Agent in accordance with
subsections 3.6 and 3.9.
3.6 CLOSING DATE TERM LOAN BORROWINGS. [intentionally omitted]
<PAGE> 30
25
3.7 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrowers
jointly and severally hereby unconditionally promise to pay to the
Administrative Agent for the account of each Lender (i) the then unpaid
principal amount of each Revolving Credit Loan of such Lender on the Revolving
Credit Termination Date (or such earlier date on which the Revolving Credit
Loans become due and payable pursuant to Section 7), and (ii) the principal
amount of the Term Loan of such Lender, in quarterly installments on the dates
set forth on Schedule 3.7, in the aggregate principal amounts for all Lenders
set forth on said Schedule opposite the date of such installment (or the then
unpaid principal amount of such Term Loan, on the date that the Term Loans
become due and payable pursuant to Section 7 or otherwise). The Borrowers
jointly and severally hereby further agree to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the Original
Closing Date until payment in full thereof at the rates per annum, and on the
dates, set forth in subsection 3.11.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrowers to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant
to subsection 10.6(d), and a subaccount therein for each Lender, in which shall
be recorded (i) the amount of each Revolving Credit Loan and Term Loan made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrowers to each Lender hereunder and (iii) both the amount of
any sum received by the Administrative Agent hereunder from the Borrowers and
each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 3.7(b) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the joint
and several obligation of the Borrowers to repay (with applicable interest) the
Loans made to such Borrower by such Lender in accordance with the terms of this
Agreement.
(e) The Borrowers agree that, upon the request to the
Administrative Agent by any Lender, the Borrowers will execute and deliver to
such Lender (i) a promissory note of the Borrowers evidencing the Revolving
Credit Loans of such Lender, substantially in the form of Exhibit A with
appropriate insertions as to date and principal amount (a "Revolving Credit
Note"), and/or (ii) a promissory note of the Borrowers evidencing the Term Loan
of such Lender, substantially in the form of Exhibit B with appropriate
insertions as to date and principal amount (a "Term Note").
<PAGE> 31
26
3.8 OPTIONAL PREPAYMENTS; MANDATORY PREPAYMENTS AND REVOLVING
CREDIT COMMITMENT REDUCTIONS. (a) The Borrowers may on the last day of any
Interest Period with respect thereto (or on any other day if the prepayment
referred to herein is accompanied by all amounts payable by the Borrowers
pursuant to subsection 3.18), in the case of LIBOR Loans, or at any time and
from time to time, in the case of ABR Loans, prepay the Loans, in whole or in
part, without premium or penalty, upon one Business Days' written notice in the
case of ABR Loans and three Business Days' written notice in the case of LIBOR
Loans to the Administrative Agent, specifying the date and amount of prepayment
and whether the prepayment is of LIBOR Loans, ABR Loans or a combination
thereof, and, if of a combination thereof, the amount allocable to each and
specifying whether the prepayment is of Term Loans, Revolving Credit Loans or a
combination thereof and, if a combination thereof, the amount allocable to each.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with any
amounts payable pursuant to subsection 3.18. Partial optional prepayments of the
Term Loans pursuant to this subsection 3.8(a) shall be applied ratably to the
remaining installments of principal thereof. Amounts prepaid on account of the
Term Loans may not be reborrowed. Partial prepayments shall be in an aggregate
principal amount of $50,000 or a whole multiple thereof.
(b) If, subsequent to the Closing Date, either Borrower or any
Subsidiary shall receive Net Cash Proceeds from any Asset Sale and shall not
have applied all or a portion of such Net Cash Proceeds to the purchase or
acquisition of other assets within 180 days after such Asset Sale, an amount
equal to such unapplied Net Cash Proceeds shall, on the 180th day following the
receipt of such Net Cash Proceeds, be applied toward the prepayment of the Loans
and reduction of the Revolving Credit Commitments as set forth in subsection
3.8(f), provided that no prepayment or Revolving Credit Commitment reduction
shall be required pursuant to this paragraph unless the aggregate amount of all
Net Cash Proceeds from Asset Sales exceeds an amount equal to (i) $1,000,000 in
any fiscal year or (ii) $5,000,000 subsequent to the Original Closing Date (and
such prepayments shall be required only to the extent of such excess).
(c) If the Company's Total Leverage Ratio determined as of the
last day of any fiscal year, commencing with the fiscal year beginning May 1,
1998 and ending December 31, 1998, equals or exceeds 5.00 to 1.0, the Borrowers
shall, within 120 days from the end of such fiscal year, prepay the Loans and
reduce the Revolving Credit Commitments as set forth in subsection 3.8(f) in an
amount equal to 50% of Excess Cash Flow for such fiscal year.
(d) If, subsequent to the Original Closing Date, either Borrower
or any Subsidiary shall receive insurance proceeds (or proceeds from a
condemnation award) in excess of amounts used to restore or replace any affected
properties or equipment within 180 days from the date of the related loss or
condemnation, it shall promptly apply an amount equal to such excess to prepay
the Loans and reduce the Revolving Credit Commitments as set forth in subsection
3.8(f).
<PAGE> 32
27
(e) If the Company's Total Leverage Ratio determined as of the
date of any issuance of any equity securities of the Company or of any
incurrence of Indebtedness by the Company or any of its Subsidiaries (in each
case after giving effect to such issuance or incurrence and the application of
the proceeds thereof) equals or exceeds 5.00 to 1.0, the Borrowers shall prepay
the Loans and reduce the Revolving Credit Commitments as set forth in subsection
3.8(f) by an amount equal to (x) 100% of the Net Cash Proceeds of such equity
issuance (other than Equity Consideration used to make or finance Permitted
Acquisitions as permitted by subsection 7.10(e) and equity issuances used to
finance the repurchase of partnership interests or other equity participation
rights of departing officers or employees of the Company as permitted by
subsection 7.8(c)) and (y) to the extent that the aggregate Net Cash Proceeds of
all incurrences of Indebtedness by the Company (including the High-Yield Debt)
and its Subsidiaries permitted by this Agreement subsequent to the Original
Closing Date exceeds $100,000,000, 100% of such excess; provided, however, that
(i) if the Company's Total Leverage Ratio determined as described above is less
than 5.00 to 1.0, a mandatory prepayment of the Loans and reduction of the
Revolving Credit Commitments shall be required in accordance with this paragraph
in connection with any issuance of equity by the Company except that the
percentage referred to in clause (x) shall be reduced from 100% to 50% and (ii)
notwithstanding anything to the contrary herein, in any case described in clause
(y) where the Indebtedness incurred consists solely of High-Yield Debt or
Conversion Securities, (A) the Net Cash Proceeds thereof shall be applied to
repay any and all then outstanding Conversion Securities or Senior Subordinated
Increasing Rate Notes and (B) any surplus of such Net Cash Proceeds remaining
shall be applied solely to prepay any then outstanding Revolving Credit Loans
(and shall not be applied to prepay any Term Loans and shall not reduce the
Revolving Credit Commitments).
(f) All mandatory prepayments pursuant to subsections 3.8(b), (c)
and (d) and, except as provided in clause (ii) of the proviso thereto,
subsection 3.8(e) shall be applied first, to the permanent repayment of the Term
Loans and second, to the permanent reduction of the Revolving Credit Commitments
and, to the extent required by subsection 3.8(g), to the prepayment of Revolving
Credit Loans, in each case together with interest accrued to the date of such
prepayment and any amounts payable under subsection 3.18. Mandatory prepayments
of the Term Loans shall be applied (i) to each remaining installment of the Term
Loans in the inverse order of the maturity of such installments, in the case of
prepayments pursuant to subsections 3.8(c) and (e), and (ii) ratably to the
remaining installments of the Term Loans, in the case of prepayments pursuant to
subsections 3.8(b) and (d). Mandatory prepayments of the Term Loans may not be
reborrowed. All mandatory permanent reductions of the Revolving Credit
Commitments shall be applied to reduce the Revolving Credit Commitments in
inverse order of the Revolving Credit Commitment reductions provided for in
subsection 3.4(c) until reduced to zero.
(g) If at any time the aggregate principal amount of the
Revolving Credit Loans exceeds the aggregate Revolving Credit Commitments, the
Borrowers shall prepay the Revolving Credit Loans in an amount equal to such
excess together with interest accrued to the date of such prepayment and any
amounts payable under subsection 3.18.
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3.9 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrowers may
elect from time to time to convert LIBOR Loans to ABR Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election substantially in the form of Exhibit H, provided that any such
conversion of LIBOR Loans may only be made on the last day of an Interest Period
with respect thereto. The Borrowers may elect from time to time to convert ABR
Loans to LIBOR Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable written notice of such election substantially in the
form of Exhibit H. Any such notice of conversion to LIBOR Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof. All or any part of outstanding LIBOR Loans and ABR Loans may be
converted as provided herein, provided that (i) no Loan may be converted into a
LIBOR Loan when any Default or Event of Default has occurred and is continuing
and the Administrative Agent has or the Required Lenders have determined that
such a conversion is not appropriate and (ii) no Loan may be converted into a
LIBOR Loan after the date that is one month prior to the Revolving Credit
Termination Date (in the case of conversions of Revolving Credit Loans) or the
date of the final installment of principal of the Term Loans.
(b) Any LIBOR Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrowers giving
written notice to the Administrative Agent substantially in the form of Exhibit
H, in accordance with the applicable provisions of the term "Interest Period"
set forth in subsection 1.1, of the length of the next Interest Period to be
applicable to such Loans, provided that no LIBOR Loan may be continued as such
(i) when any Default or Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined that such a
continuation is not appropriate or (ii) after the date that is one month prior
to the Revolving Credit Termination Date (in the case of continuations of
Revolving Credit Loans) or the date of the final installment of principal of the
Term Loans and provided, further, that if the Borrowers shall fail to give such
written notice or if such continuation is not permitted such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period.
3.10 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. All
borrowings, conversions and continuations of Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of the Loans comprising each LIBOR Tranche shall be equal to $1,000,000
or a whole multiple of $100,000 in excess thereof. In no event shall there be
more than seven LIBOR Tranches outstanding at any time.
3.11 INTEREST RATES AND PAYMENT DATES. (a) Each LIBOR Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the LIBOR Rate determined for such day plus the
Applicable Margin.
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(b) Each ABR Loan shall bear interest at a rate per annum equal
to the ABR plus the Applicable Margin.
(c) Upon the occurrence and during the continuance of any Event
of Default under Section 7(a) (i) all outstanding LIBOR Loans will bear interest
at a rate per annum 2.00% in excess of the rate per annum otherwise applicable
thereto until the end of the Interest Period then in effect with respect thereto
and thereafter at a rate per annum 2.00% in excess of the ABR from time to time
in effect plus the Applicable Margin and (ii) all outstanding ABR Loans will
bear interest at a rate per annum 2.00% in excess of the ABR from time to time
in effect plus the Applicable Margin. Any interest, fees or other amounts (other
than principal) payable hereunder that are not paid when due shall bear interest
until paid in full at a rate per annum equal to the ABR from time to time in
effect plus the Applicable Margin.
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
3.12 COMPUTATION OF INTEREST AND FEES. (a) Revolving Credit
Commitment fees and, whenever it is calculated on the basis of the ABR, interest
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed; otherwise, interest shall be calculated on the
basis of a 360-day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Company and the Lenders of each
determination of a LIBOR Rate. Any change in the interest rate on a Loan
resulting from a change in the ABR shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Company and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrowers and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrowers, deliver to the
Company a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to subsection 3.11(a) or (c).
3.13 INABILITY TO DETERMINE INTEREST RATE. If prior to the first
day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the LIBOR Rate for such
Interest Period, or
<PAGE> 35
30
(b) the Administrative Agent shall have received notice from the
Required Lenders that the LIBOR Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected LIBOR Loans during such Interest Period and
the Borrowers shall not have entered into a written agreement providing
to the affected Lenders compensation satisfactory to such Lenders for
such inadequately and unfairly reflected cost.
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Company and the Lenders as soon as practicable thereafter. If such notice is
given (x) any LIBOR Loans requested to be made on the first day of such Interest
Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to LIBOR Loans shall be
converted to or continued as ABR Loans and (z) any outstanding LIBOR Loans shall
be converted, on the first day of such Interest Period, to ABR Loans. Until such
notice has been withdrawn by the Administrative Agent, no further LIBOR Loans
shall be made or continued as such, nor shall the Borrowers have the right to
convert Loans to LIBOR Loans.
3.14 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by the
Borrowers of Revolving Credit Loans from the Lenders hereunder, each payment by
the Borrowers on account of any commitment fee hereunder and any reduction of
the Revolving Credit Commitments of the Lenders shall be made pro rata according
to the respective Revolving Credit Commitment Percentages of the Lenders. Each
payment (including each prepayment) by the Borrowers on account of principal of
and interest on the Term Loans shall be made pro rata according to the
respective outstanding principal amounts of the Term Loans then held by the
Lenders. Each payment (including each prepayment) by the Borrowers on account of
principal of and interest on the Revolving Credit Loans shall be made pro rata
according to the respective outstanding principal amounts of the Revolving
Credit Loans then held by the Lenders. All payments (including prepayments) to
be made by the Borrowers hereunder, whether on account of principal, interest,
fees or otherwise, shall be made without set off or counterclaim and shall be
made prior to 1:00 P.M., New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Administrative
Agent's office specified in subsection 10.2, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its Revolving Credit Commitment Percentage of such
borrowing available to the Administrative Agent, the Administrative Agent may
assume that such Lender is making such amount available to the Administrative
Agent, and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. If such
<PAGE> 36
31
amount is not made available to the Administrative Agent by the required time on
the Borrowing Date therefor, such Lender shall pay to the Administrative Agent,
on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this subsection shall be conclusive in the absence of manifest error. If
such Lender's Revolving Credit Commitment Percentage of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans hereunder, on demand, from the Borrowers.
3.15 ILLEGALITY. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
LIBOR Loans as contemplated by this Agreement, (a) the commitment of such Lender
hereunder to make LIBOR Loans, continue LIBOR Loans as such and convert ABR
Loans to LIBOR Loans shall forthwith be cancelled and (b) such Lender's Loans
then outstanding as LIBOR Loans, if any, shall be converted automatically to ABR
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a LIBOR Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrowers shall pay to
such Lender such amounts, if any, as may be required pursuant to subsection
3.18.
3.16 REQUIREMENTS OF LAW. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note or any LIBOR Loan
made by it, or change the basis of taxation of payments to such Lender
in respect thereof (except for Non- Excluded Taxes covered by subsection
3.17 and changes in the rate of tax on the overall net income of such
Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the LIBOR Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or
<PAGE> 37
32
maintaining LIBOR Loans or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrowers shall be jointly and severally
obligated to promptly pay such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, the Borrowers shall be jointly and
severally obligated to promptly pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) In the event that after the date hereof a Lender is required
to maintain reserves of the type contemplated by the definition of "Reserve
Percentage", such Lender may require the Borrowers, jointly and severally, to
pay, promptly after receiving notice of the amount due, additional interest on
the related LIBOR Loan of such Lender at a rate per annum determined by such
Lender up to but not exceeding the excess of (i) (A) the applicable LIBOR Rate
divided by (B) one minus the Reserve Percentage over (ii) the applicable LIBOR
Rate.
(d) If any Lender becomes entitled to claim any additional
amounts or additional interest pursuant to this subsection, it shall promptly
notify the Company (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled; provided that the Borrowers shall not
be required to compensate a Lender pursuant to this subsection for any
additional amounts or additional interest incurred more than three months prior
to the date on which such Lender notifies the Company of such event giving rise
to such additional amounts or additional interest and of such Lender's intention
to make claim therefor under this subscription; and provided, further, that, if
any adoption or change of any Requirement in Law or other event giving rise to
such claim for additional amounts is retroactive, then the three-month period
referred to above shall be extended to include the period of retroactive effect
thereof. A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Lender to the Company (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
3.17 TAXES. (a) All payments made by the Borrowers under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies,
<PAGE> 38
33
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise or similar taxes (imposed in lieu of
net income taxes) imposed on any Agent or Lender as a result of a present or
former connection between such Agent or Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
such Agent or Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any Note). If any such
non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to any Agent or Lender hereunder or under any Note, the amounts so
payable to any Agent or Lender shall be increased to the extent necessary to
yield to any Agent or Lender (after payment of all Non-Excluded Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, provided, however, that the Borrowers shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of paragraph (b) of this
subsection. Whenever any Non-Excluded Taxes are payable by the Borrowers, as
promptly as possible thereafter the Borrowers shall send to the Administrative
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by the Borrowers
showing payment thereof. If the Borrowers fail to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrowers shall be jointly and severally obligated to indemnify
the Agents and the Lenders for any incremental taxes, interest or penalties that
may become payable by either Agent or any Lender as a result of any such
failure. The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) deliver to the Company and the Administrative Agent (A)
two duly completed copies of United States Internal Revenue Service Form
1001 or 4224, or successor applicable form, as the case may be, and (B)
an Internal Revenue Service Form W-8 or W-9, or successor applicable
form, as the case may be;
(ii) deliver to the Company and the Administrative Agent two
further copies of any such form or certification on or before the date
that any such form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change in the most recent
form previously delivered by it to the Company; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrowers or the Administrative Agent;
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unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Company and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender or a
Participant pursuant to subsection 10.6 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms and statements
required pursuant to this subsection, provided that in the case of a Participant
such Participant shall furnish all such required forms and statements to the
Lender from which the related participation shall have been purchased.
3.18 INDEMNITY. The Borrowers jointly and severally agree to
indemnify each Lender and to hold each Lender harmless from any loss or expense
which such Lender may sustain or incur as a consequence of (a) default by the
Borrowers in making a borrowing of, conversion into or continuation of LIBOR
Loans after the Borrowers have given a notice requesting the same in accordance
with the provisions of this Agreement, (b) default by the Borrowers in making
any prepayment after the Borrowers have given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a prepayment of LIBOR
Loans on a day which is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Bank on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank eurodollar market.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
3.19 CHANGE OF LENDING OFFICE; MANDATORY ASSIGNMENT. (a) Each
Lender agrees that if it makes any demand for payment under subsection 3.16 or
3.17(a), or if any adoption or change of the type described in subsection 3.15
shall occur with respect to it, it will use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions and so long as such
efforts would not be disadvantageous to it, as determined in its sole
discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Borrowers to make payments
under subsection 3.16 or 3.17(a), or would eliminate or reduce the effect of any
adoption or change described in subsection 3.15.
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(b) If the Borrowers shall be required to pay any additional
amounts or other payments to any Lender in accordance with subsection 3.16 or
3.17(a) or if any Lender shall, in accordance with subsection 3.15, no longer be
obligated to make or maintain Eurodollar Loans hereunder, the Borrowers may, at
their own expense and in their sole discretion, unless such Lender has
theretofore removed or cured the conditions which result in the obligation to
pay such additional amounts or other payments or which result in such
illegality, as the case may be, after reasonable notice to the Administrative
Agent and such Lender, require such Lender to transfer or assign, in whole or in
part, without recourse (in accordance with subsection 10.6), all or part of its
interests, rights and obligations under this Agreement to another bank or
financial institution reasonably acceptable to the Administrative Agent
(provided that the Borrowers, with the full cooperation of such Lender, can
identify a bank or financial institution reasonably acceptable to the
Administrative Agent which is ready, willing and able to be an Assignee with
respect thereto) which shall assume such assigned obligations (which Assignee
may be another Lender, if such Assignee Lender accepts such assignment);
provided that (A) the Assignee or the Borrowers, as the case may be, shall have
paid to such Lender in immediately available funds the principal of and interest
accrued to the date of such payment on the Loans made by it hereunder and all
other amounts owed to it hereunder, including, without limitation, any amounts
owing pursuant to subsection 3.18 and any amounts that would be owing under said
subsection if such Loans were prepaid on the date of such assignment, and (B)
such assignment does not conflict with any law, rule or regulation or order of
any Governmental Authority.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement
and to make the Loans, the Borrowers hereby represent and warrant to the Agents
and each Lender that:
4.1 FINANCIAL CONDITION. (a) The balance sheet of the Predecessor
Company as at April 30, of each of 1995, 1996 and 1997 and the related
statements of income and of cash flows for the fiscal year ended on such date,
reported on by Ernst & Young, copies of which have heretofore been furnished to
each Lender, are complete and correct in all material respects and present
fairly in all material respects the financial condition of the Predecessor
Company as at such date, and the results of its operations and its cash flows
for the fiscal year then ended.
(b) The unaudited balance sheet of the Predecessor Company as at
July 31, 1997 and the related unaudited statements of income and of cash flows
for the three-month period ended on such date (such statements include the
deferred revenue report dated September 20, 1997), certified by a Responsible
Officer, copies of which have heretofore been furnished to each Lender, are, in
management's reasonable judgment, complete and correct in all material respects
and present fairly in all material respects the financial condition of the
Predecessor Company as at such date, and the results of its operations and
<PAGE> 41
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its cash flows for the three-month period then ended (subject to normal year-end
audit adjustments and the absence of footnote disclosure).
(c) All such financial statements referred to in subsection
3.1(a) and (b), including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein and except that the unaudited financial
statements referred to in subsection 3.1(b) may not be accompanied by notes
thereto). The Predecessor Company did not have, at the date of the most recent
balance sheet referred to above, any material Guarantee Obligation, contingent
liability or liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto. During the period from April 30,
1997 to and including the date hereof there has been no sale, transfer or other
disposition by Holdings (with the exception of the Contemplated Transactions) or
the Company of any material part of its business or property and no purchase or
other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the financial condition of Holdings or
the Company, as the case may be, at April 30, 1997.
(d) The unaudited pro forma balance sheet of the Predecessor
Company as at July 31, 1997, and the related unaudited pro forma statements of
income and of cash flows for the three months ended on such date, certified by a
Responsible Officer, copies of which have heretofore been furnished to each
Lender, have been prepared in good faith based on reasonable assumptions for the
purposes of fairly presenting the pro forma financial condition of the
Predecessor Company as at such date after giving effect to (i) the
Recapitalization, (ii) the payment of estimated fees and expenses, financing
costs and distributions related to the transactions contemplated hereby and
thereby and (iii) the making of the Loans on the Original Closing Date in
accordance with this Agreement, as if all such transactions described in clauses
(i) through (iii) had occurred on such date.
(e) Immediately prior to the transfer of the Predecessor
Company's assets to the Company and the completion of the other Contemplated
Transactions, the Company shall have no material assets or liabilities.
4.2 NO CHANGE. (a) Since April 30, 1997, there has been no
development or event which has had or would reasonably be expected to have a
Material Adverse Effect, and (b) except (i) as permitted pursuant to subsection
7.8, (ii) as set forth on Schedule 4.2 hereto and (iii) as made on the Original
Closing Date in connection with the Recapitalization in accordance with the
terms hereof, during the period from such date to and including the date hereof
no dividends or other distributions have been declared, paid or made upon the
Capital Stock of the Predecessor Company or the Company nor has any of the
Capital Stock of the Predecessor Company or the Company been redeemed, retired,
purchased or otherwise acquired for value by the Predecessor Company or the
Company, as the case may be, other
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than the redemption of preferred partnership interests in the Predecessor
Company with the proceeds of the Senior Discount Notes.
4.3 EXISTENCE; COMPLIANCE WITH LAW. Except, until Day 45, as set
forth on the Disclosure Schedule, each Loan Party (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, (c) is duly qualified and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except to the extent that failure to be so qualified or in good standing would
not reasonably be expected to have a Material Adverse Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith would not, in the aggregate, be reasonably expected to have a
Material Adverse Effect.
4.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each Loan
Party has the power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and, in the case of the
Borrowers, to borrow hereunder and has taken all necessary corporate or
partnership action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrowers, to
authorize the borrowings on the terms and conditions of this Agreement and any
Notes. Except, until Day 45, as set forth on the Disclosure Schedule, no consent
or authorization of, filing with, notice to or other act by or in respect of,
any Governmental Authority or any other Person is required in connection with
the borrowings hereunder or with the execution, delivery, performance, validity
or enforceability of the Loan Documents, except as may be required to perfect
the Liens created thereby. This Agreement has been, and each other Loan Document
to which it is a party will be, duly executed and delivered on behalf of each
Loan Party thereto. This Agreement constitutes, and each other Loan Document to
which it is a party when executed and delivered will constitute, a legal, valid
and binding obligation of each Loan Party thereto, enforceable against such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
4.5 NO LEGAL BAR. Except, until Day 45, as set forth on the
Disclosure Schedule, the execution, delivery and performance of the Loan
Documents by each Loan Party thereto, the borrowings hereunder and the use of
the proceeds thereof will not violate any Requirement of Law or Contractual
Obligation (other than Contractual Obligations the failure of the Company to
have good title to which would not result in the representation set forth in
subsection 4.8 being untrue) of any Loan Party and will not result in, or
require, the creation or imposition of any Lien (other than imposed by any
Security Document) on or their respective properties or revenues pursuant to any
such Requirement of Law or Contractual Obligation or on any of the limited or
general partnership interests in the Company.
<PAGE> 43
38
4.6 NO MATERIAL LITIGATION. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrowers, threatened by or against any Loan Party or
against any of its properties or revenues (a) with respect to any of the Loan
Documents or any of the transactions contemplated hereby or thereby, or (b)
which would reasonably be expected to have a Material Adverse Effect.
4.7 NO DEFAULT. No Loan Party is in default under or with respect
to any of its Contractual Obligations in any respect which would reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. On the Closing Date there will
be transferred by the Predecessor Company to the Company all of the following
assets owned by the Predecessor Company on the Closing Date: receivables,
customer lists and inventory located at property owned or leased by the
Predecessor Company; after giving effect to such transfer the Company will have
good title to such assets, and none of such assets will be subject to any Lien
except as permitted by subsection 7.3. Except, until Day 45, as set forth on the
Disclosure Schedule, the Borrowers have good record and marketable title in fee
simple to, or a valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, all its other material property
(other than real property and assets described in the preceding sentence), and
none of such property described in this sentence is subject to any Lien (except
as permitted by subsection 7.3), except insofar as the failure to have such
title or leasehold interest or the presence of any non-permitted Lien would not
reasonably be expected to have a Material Adverse Effect.
4.9 INTELLECTUAL PROPERTY. Except, until Day 45, as set forth in
the Disclosure Schedule, each Borrower owns, or is licensed to use, all
trademarks, tradenames, copyrights, technology, know-how, data bases, listing
information and processes necessary for the conduct of its business as currently
conducted except for those the failure to own or license which would not
reasonably be expected to have a Material Adverse Effect (the "Intellectual
Property"). No claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor do the Borrowers know of
any valid basis for any such claim. The use of such Intellectual Property by
each Borrower does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
4.10 NO BURDENSOME RESTRICTIONS. No Requirement of Law or
Contractual Obligation of any Loan Party has had or would reasonably be expected
to have a Material Adverse Effect.
4.11 TAXES. Each Loan Party has filed or caused to be filed all
tax returns which, to the knowledge of the Borrowers, are required to be filed
and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by
<PAGE> 44
39
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrowers or such Loan Party, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrowers, no claim is being asserted,
with respect to any such tax, fee or other charge except for such claims and tax
liens that, in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
4.12 FEDERAL REGULATIONS. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation G or Regulation
U of the Board of Governors of the Federal Reserve System, in violation of such
regulations as now and from time to time hereafter in effect. If requested by
any Lender or the Administrative Agent, the Borrowers will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-1 or FR Form U-1 referred to in
said Regulation G or Regulation U, as the case may be.
4.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Neither the Company nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither the Company nor any Commonly Controlled Entity would become subject to
any liability under ERISA if the Company or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. Neither Borrower
is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
Neither Borrower is subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
4.15 PURPOSE OF LOANS. The proceeds of the Loans shall be used by
the Borrowers (a) for working capital purposes, capital expenditures and general
corporate purposes in the ordinary course of business and (b) for Permitted
Acquisitions.
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40
4.16 ENVIRONMENTAL MATTERS. Except as would not reasonably be
expected to have a Material Adverse Effect, to the best knowledge of the
Borrowers:
(a) The facilities and properties owned, leased or operated by
the Borrowers (the "Properties") do not contain any Materials of Environmental
Concern in amounts or concentrations which (i) constitute a violation of, or
(ii) could reasonably be expected to give rise to liability under, any
Environmental Law;
(b) The Properties and all operations at the Properties are in
compliance with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Borrowers (the
"Business") which could interfere with the continued operation of the Properties
or impair the fair saleable value thereof;
(c) The Borrowers have not received any written notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor do the Borrowers have
knowledge or reason to believe that any such notice will be received or is being
threatened;
(d) Materials of Environmental Concern have not been transported
or disposed of from the Properties in violation of, or in a manner or to a
location which could reasonably be expected to give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could reasonably be expected to give rise
to liability under, any applicable Environmental Law;
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrowers, threatened, under any
Environmental Law to which the Borrowers are or will be named as a party with
respect to the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders outstanding
under any Environmental Law with respect to the Properties or the Business; and
(f) There has been no release or threat of release of Materials
of Environmental Concern at or from the Properties, or arising from or related
to the operations of the Borrowers in connection with the Properties or
otherwise in connection with the Business, in violation of or in amounts or in a
manner that could reasonably be expected to give rise to liability under
Environmental Laws.
4.17 SOLVENCY. Each Borrower is, and after giving effect to the
consummation of the Recapitalization and to the incurrence of all Indebtedness
and obligations being incurred in connection herewith and therewith will be and
will continue to be, Solvent.
<PAGE> 46
41
4.18 ACCURACY OF INFORMATION. No statement or information
contained in this Agreement, any other Loan Document or any other document,
certificate or statement furnished in writing to the Agents or the Lenders or
any of them, by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished any untrue statement of any fact material to the interests of
the Agents or any Lender, or omitted to state a fact necessary in order to make
the statements contained herein or therein not misleading in any respect
material to the interests of the Agents or any Lender.
4.19 EMPLOYEE MATTERS, ETC. (a) None of the employees of the
Borrowers are subject to any collective bargaining agreement, (b) except as
expressly disclosed to the Lenders prior to the making of the representation and
warranty contained herein, no petition for certification or union election is
pending with respect to the employees of any Borrower and no union or collective
bargaining unit has sought such certification or recognition with respect to the
employees of the Borrowers, and (c) there are no strikes, slowdowns, work
stoppages, unfair labor practice complaints, grievances, arbitration proceedings
or controversies pending or, to the best knowledge of the Borrowers, threatened
against either Borrower by any of its employees, other than employee grievances
or controversies arising in the ordinary course of business that would not in
the aggregate be reasonably expected to have a Material Adverse Effect and (d)
each Borrower, and to the Borrower's best knowledge, no partner or employee of
the Borrowers are subject to any employment agreement or non-competition
agreement with any former employer or any other Person which agreement would
reasonably be expected to have a Material Adverse Effect.
4.20 SECURITY DOCUMENTS. The Borrowers Security Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof, and, after financing statements in
appropriate form are filed in the offices specified on Schedule 4 to the
Borrowers Security Agreement, the Borrowers Security Agreement shall at all
times constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Borrowers Security
Agreement), in each case prior and superior in right to any other Person, other
than with respect to Liens expressly permitted by Section 7.3.
4.21 OWNERSHIP. Schedule 4.21 is a complete and correct list of,
as of the Closing Date, (a) the owners of the LLC interests of the Company and
(b) the owners of Holdings and each owner's respective ownership percentage. As
of the Closing Date and thereafter, all the issued and outstanding Capital Stock
of the Company will be owned by Holdings.
<PAGE> 47
42
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Agreement, and the agreement of each Lender to make any extension of credit
hereunder on the Closing Date, shall be subject to the satisfaction of the
following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received
(i) this Agreement, executed and delivered by a duly authorized officer
of each Borrower, with a counterpart for each Lender, (ii) the Borrowers
Security Agreement, executed and delivered by a duly authorized officer
of the party thereto, with a counterpart or a conformed copy for each
Lender and (iii) the Holdings Pledge Agreement, executed and delivered
by a duly authorized officer of Holdings, with a counterpart or a
conformed copy for each Lender.
(b) Related Agreements. The Administrative Agent shall have
received, with a copy for each Lender, true and correct copies,
certified as to authenticity by the Borrower, such other documents or
instruments as may be in existence and reasonably requested by the
Agents, including, without limitation, a copy of the Employment
Agreements, the Executive Agreements, the Equity Compensation Trust
Agreement and a copy of any debt instrument, security agreement or other
material contract to which the Company, Holdings or TWP Capital II may
be a party and requested by the Agents.
(c) Borrowing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of the
Borrowers, dated the Closing Date, substantially in the form of Exhibit
F, with appropriate insertions and attachments, satisfactory in form and
substance to the Agents, executed by the respective President or any
Vice President and the Secretary or any Assistant Secretary of each
Borrower.
(d) Proceedings of the Borrowers. The Administrative Agent shall
have received, with a counterpart for each Lender, a copy of the
resolutions and other proceedings, in form and substance satisfactory to
the Agents authorizing (i) the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party, (ii)
the borrowings contemplated hereunder and (iii) the granting by it of
the Liens created pursuant to the Borrowers Security Agreement,
certified by the respective Secretary or an Assistant Secretary of each
Borrower as of the Closing Date, which certificate shall be in form and
substance reasonably satisfactory to the Agents and shall state that the
resolutions and other actions thereby certified have not been amended,
modified, revoked or rescinded.
(e) Borrowers and Holdings Incumbency Certificates. The
Administrative Agent shall have received, with a counterpart for each
Lender, a certificate of Holdings, the Company and TWP Capital II, dated
the Closing Date, as to the incumbency and signature of the officers of
Holdings, the Company and TWP Capital
<PAGE> 48
43
II executing any Loan Document reasonably satisfactory in form and
substance to the Agents, executed by the respective President or any
Vice President and the Secretary or any Assistant Secretary of Holdings,
the Company or TWP Capital II, as the case may be.
(f) Corporate and LLC Documents. The Administrative Agent shall
have received, with a counterpart for each Lender, true and complete
copies of (i) the Certificate of Formation of Limited Liability Company,
the Limited Liability Company Agreement and any other organizational
documents of Company and (ii) the certificate of incorporation and
by-laws of TWP Capital II, in each case certified as of the Closing Date
as complete and correct copies thereof by the respective Secretary or an
Assistant Secretary of the Company or TWP Capital II, as the case may
be.
(g) Legal Opinions. The Administrative Agent shall have received,
with a counterpart for each Lender the executed legal opinion of
Kirkland & Ellis, counsel to the Company and TWP Capital II,
substantially in the form of Exhibit G.
(h) Actions to Perfect Liens. The Administrative Agent shall have
received (i) evidence in form and substance reasonably satisfactory to
the Administrative Agent that all filings, recordings, registrations and
other actions, including, without limitation, the filing of duly
executed financing statements on form UCC-1, necessary or, in the
opinion of the Administrative Agent, desirable to perfect the Liens
created by the Security Documents shall have been completed or that all
documents necessary to complete the foregoing shall have been executed
and delivered to the Administrative Agent.
(i) Insurance. The Agents shall have received evidence in form
and substance satisfactory to them that all of the requirements of
subsection 7.4 shall have been satisfied.
5.2 CONDITIONS TO EACH LOAN. The agreement of each Lender to make
any extension of credit requested to be made by it on any date (including,
without limitation, its initial extension of credit) is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations
and warranties made by the Loan Parties in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as
of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans requested to be made on such date.
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44
Each borrowing by the Borrowers hereunder shall constitute a representation and
warranty by the Borrowers as of the date thereof that the conditions contained
in this subsection have been satisfied or waived in accordance with subsection
10.1.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrowers hereby agree that, so long as the Revolving Credit
Commitments remain in effect or any Loan is outstanding, the Borrowers shall
and, where applicable, shall cause each Subsidiary to:
6.1 FINANCIAL STATEMENTS. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Company, a copy of the balance sheet
of the Company and its consolidated subsidiaries as at the end of such
year and the related statements of income and retained earnings and of
cash flows for such year, setting forth in each case in comparative form
the figures for the previous year, reported on without a "going concern"
or like qualification or exception, or qualification arising out of the
scope of the audit, by Ernst & Young or other independent certified
public accountants of nationally recognized standing accompanied by a
comparison to the budget delivered pursuant to subsection 6.2(c) for
such year;
(b) as soon as available, but in any event not later than 45 days
after the end of (i) each of the first three quarterly periods of each
fiscal year of each of the Company and its consolidated Subsidiaries,
the unaudited balance sheet of each of the Company and its consolidated
Subsidiaries as at the end of such period and the related unaudited
statements of income and retained earnings and of cash flows of each of
the Company and its consolidated Subsidiaries for such period and the
portion of the fiscal year through the end of such period, setting forth
in each case in comparative forms the figures for the previous year and
for the budget delivered pursuant to subsection 6.2(c) for such year,
certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments and the
absence of footnote disclosure); and
(c) as soon as available, but in any event not later than 30 days
after the end of each calendar month, the unaudited interim balance
sheet of the Company and its consolidated Subsidiaries as at the end of
such month and the related unaudited interim statements of income and
retained earnings and of cash flows of the Company and its consolidated
Subsidiaries for such one-month period and the portion of the fiscal
year through the end of such month, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments and the absence of
footnote disclosure);
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45
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and, except for the
financial statements referred to in paragraph (c) above, in accordance with GAAP
(provided that, with respect to the financial statements referred to in
paragraphs (b) above, such statements shall be prepared in accordance with GAAP
in the judgment of senior management of the Company) applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and disclosed
therein and except that the unaudited financial statements referred to in
subsection 6.1(b) and (c) may not be accompanied by notes thereto) and shall be
accompanied by a management discussion and analysis in respect of the fiscal
periods reported on therein.
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements in
such form (if any) as may be consistent with the then general practice
of such accountants stating that in making the examination necessary
therefor no knowledge was obtained of any Default or Event of Default,
except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a certificate of a
Responsible Officer (a "Pricing Certificate") (i) stating that, to the
best of such Responsible Officer's knowledge except as specified in such
certificate, each of the Company, its Subsidiaries and TWP Capital II
during such period have observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default, (ii) including
calculations and information demonstrating in reasonable detail whether
or not the Borrowers have complied with the requirements of subsections
7.1, 7.2(e). 7.3(h), 7.6(b) and (e), 7.7, 7.8, 7.9 and 7.10(d) and (e)
and (iii) describing in reasonable detail any material Guarantee
Obligation, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment, in each case
which are not reflected in such financial statements;
(c) not later than thirty days prior to the end of each fiscal
year of the Company, a copy of the projections by the Company of the
operating budget and cash flow budget of the Company and its
consolidated Subsidiaries for the succeeding fiscal year, such
projections to be accompanied by a certificate of a Responsible Officer
to the effect that such projections have been prepared on the basis of
reasonable assumptions and that such Responsible Officer has no reason
to believe they are incorrect or misleading in any material respect and
by a written management discussion, in reasonable detail, of such
assumptions;
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46
(d) promptly upon receipt thereof, copies of all final reports
submitted to the Company by independent certified public accountants in
connection with each annual, interim or special financial audit of the
books of the Company and its consolidated Subsidiaries made by such
accountants, including, without limitation, any final comment letter
submitted by such accountants to management in connection with their
annual audit;
(e) within five days after the same are sent, copies of all
financial statements and reports which the Company sends to its
partners, and within five days after the same are filed, copies of all
financial statements and reports which the Company may make to, or file
with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority; and
(f) promptly, such additional financial and other information as
any Lender may from time to time reasonably request.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in business of the same general type as now conducted by it (or as
otherwise allowed by subsection 7.15) and preserve, renew and keep in full force
and effect its existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable, in the Company's opinion, in
the normal conduct of its business except as otherwise permitted pursuant to
subsection 7.5; comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; and
continue in effect in all material respects its practices in respect of advance
payments as in effect on the Original Closing Date.
6.4 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property useful
and necessary, in the Company's opinion, in its business in good working order
and condition (subject to normal wear and tear in the ordinary course of
business); maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks (but including in any event public liability, product liability and
business interruption) as are usually insured against in the same general area
by companies engaged in the same or a similar business; and furnish to each
Lender, upon written request, full information as to the insurance carried.
6.5 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and account in which complete, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of any Lender, upon giving prior notice to the Company, to visit
and inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of the Company, its consolidated Subsidiaries and TWP
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47
Capital II with officers and employees of such parties and with its independent
certified public accountants.
6.6 NOTICES. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default as soon as
possible and no later than five Business Days after a Responsible
Officer of the Company knows or has reason to know thereof;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or (ii) litigation, investigation or
proceeding which may exist at any time between the Company and any
Governmental Authority, which is more likely than not to be determined
adversely to the Company and, if so determined, would be reasonably
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Company in which
the amount involved is $1,000,000 or more and not covered by insurance
or in which injunctive or similar relief is sought;
(d) (i) any release or discharge by the Company of any Material
of Environmental Concern required to be reported under Environmental
Laws to any Governmental Authority; (ii) any condition, circumstance,
occurrence or event that could result in a liability under Environmental
Laws where such liability would reasonably be expected to have a
Material Adverse Effect or would reasonably be expected to result in the
imposition of any Lien or other material restriction on the title,
ownership or transferability of any material Property; and (iii) any
proposed action to be taken by the Company that could subject the
Company to any material additional or different requirements or
liabilities under Environmental Law where such requirements or
liabilities would reasonably be expected to have a Material Adverse
Effect;
(e) the following events, as soon as possible and in any event
within 30 days after the Company knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a
Plan, the creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of,
any Multiemployer Plan or (ii) the institution of proceedings or the
taking of any other action by the PBGC or the Company or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of,
any Plan;
(f) any development or event which would reasonably be expected
to have a Material Adverse Effect as soon as possible and no later than
five Business Days after the Company knows or has reason to know
thereof; and
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48
(g) the termination, resignation or replacement of either of the
chairman or the president and chief executive officer of the Company,
and (together with copies thereof) the execution of any modification of
Employment Agreement, or any new employment agreement, with any such
officer.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto.
6.7 ENVIRONMENTAL LAWS. (a) Comply with, and ensure compliance by
all tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and ensure that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, except to the extent that failure to do so would not reasonably be
expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws, except, in each case,
to the extent that the failure to do so would not reasonably be expected to have
a Material Adverse Effect.
6.8 ADDITIONAL COLLATERAL; SUBSIDIARIES. (a) With respect to any
assets of the type covered by the Borrowers Security Agreement acquired after
the Closing Date, and, upon the occurrence and during the continuance of an
Event of Default and at the request of the Required Lenders, with respect to any
other assets or property of the Borrowers, as to which the Administrative Agent,
for the benefit of the Lenders, does not have a perfected Lien (i) execute and
deliver to the Administrative Agent such amendments to this Agreement or the
Borrowers Security Agreement or such other documents as the Administrative Agent
reasonably requests in order to grant to the Administrative Agent, for the
benefit of the Lenders, a security interest in such assets, (ii) take all
actions reasonably requested by the Administrative Agent to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in such assets, including without limitation, the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Borrowers Security Agreement or by law or as may be requested by
the Administrative Agent and (iii) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described in the preceding clauses (i) and (ii) to the extent such matters were
addressed in the legal opinion delivered pursuant to subsection 5.1(h), which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(b) With respect to any Subsidiary of the Company created or acquired
after the Closing Date by the Company, (i) execute and deliver, or cause to be
executed and delivered, to the Administrative Agent a pledge agreement, in form,
scope and substance satisfactory to the Administrative Agent, granting to the
Administrative Agent, for the benefit
<PAGE> 54
49
of the Lenders, a perfected first priority security interest in the Capital
Stock of such Subsidiary at any time held by the Company or a Subsidiary of the
Company, (ii) deliver to the Administrative Agent the certificates representing
such Capital Stock, if any, together with undated stock powers, executed in
blank, (iii) cause such Subsidiary to execute and deliver a guarantee (which
guarantee shall be senior to all other Indebtedness of such guarantor), in form
and substance satisfactory to the Administrative Agent, in respect to all
obligations of the Borrowers hereunder and under the Loan Documents, (iv) cause
such Subsidiary to execute and deliver a security agreement, in form and
substance satisfactory to the Administrative Agent, securing such Subsidiary's
obligations under such guarantee and covering the types of assets covered by the
Borrowers Security Agreement and (v) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described in the preceding clauses (i), (ii) and (iii), which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
6.9 INTEREST RATE PROTECTION. Within 120 days following the
Original Closing Date, enter into Interest Rate Agreements effectively fixing or
capping for a period of at least two years the rate of interest payable on at
least 50% of the Company's Total Indebtedness (provided that, for purposes of
this subsection, the rate of interest payable on the Senior Subordinated
Increasing Rate Notes and the High-Yield Debt shall be deemed to be effectively
fixed).
SECTION 7. NEGATIVE COVENANTS
The Borrowers hereby agree that, so long as the Revolving Credit
Commitments remain in effect or any Loan is outstanding, the Borrowers shall
not, nor shall they permit any Subsidiary to, directly or indirectly:
7.1 FINANCIAL CONDITION COVENANTS.
(a) Senior Leverage. Permit the Senior Leverage Ratio of the
Company at any time during any period specified below to be greater than
the Senior Leverage Ratio set forth opposite such period below:
<PAGE> 55
50
<TABLE>
<CAPTION>
Senior
Period Leverage Ratio
------ --------------
<S> <C>
End of Bridge Period to March 31, 1999 4.00:1.00
April 1, 1999 to December 31, 1999 3.50:1.00
January 1, 2000 to December 31, 2000 3.00:1.00
January 1, 2001 to December 31, 2001 2.50:1.00
January 1, 2002 to the Facilities Termination Date 2.00:1.00
</TABLE>
(b) Total Leverage. Permit the Total Leverage Ratio of the
Company at any time during any period specified below to be greater than
the Total Leverage Ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Total
Period Leverage Ratio
------ --------------
<S> <C>
End of Bridge Period to March 31, 1999 6.50:1.00
April 1, 1999 to December 31, 1999 6.00:1.00
January 1, 2000 to December 31, 2000 5.50:1.00
January 1, 2001 to December 31, 2001 5.00:1.00
January 1, 2002 to December 31, 2002 4.00:1.00
January 1, 2003 to the Facilities Termination Date 3.50:1.00
</TABLE>
(c) Maintenance of EBITDA. Permit EBITDA of the Company for the
twelve-month period of the Company ending on February 28, 1998 to be
less than $26,000,000.
(d) Cash Interest Coverage. Permit, for any period of four
consecutive fiscal quarters ending during any period specified below,
the Cash Interest Coverage Ratio to be less than the ratio set forth
opposite such period below:
<TABLE>
<CAPTION>
Cash Interest
Period Coverage Ratio
------ --------------
<S> <C>
Original Closing Date to December 31, 1998 1.40:1.00
January 1, 1999 to December 31, 1999 1.50:1.00
January 1, 2000 to December 31, 2000 1.75:1.00
January 1, 2001 to December 31, 2001 2.00:1.00
January 1, 2002 to the Facilities Termination Date 2.50:1.00
</TABLE>
(e) Fixed Charge Coverage. Permit for any period of twelve
consecutive months ended on a date for which the Company is required to
deliver to the Lenders financial statements pursuant to subsection
6.1(a) or (b) the Fixed Charge Ratio to be equal to or less than 1.05 to
1.0.
<PAGE> 56
51
7.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer
to exist any Indebtedness, except:
(a) Indebtedness of the Borrowers under this Agreement;
(b) the Senior Subordinated Increasing Rate Notes, the Conversion
Securities and subordinated unsecured high-yield Indebtedness of the
Borrowers (including any related Refinancing Indebtedness, the
"High-Yield Debt") the proceeds of which are at least sufficient, and
shall be used, to prepay the Senior Subordinated Increasing Rate Notes
or the Conversion Securities; provided that (i) the cash interest rate
payable on the High-Yield Debt shall not exceed 11.75% per annum and the
maximum interest rate payable thereon shall not exceed 15% per annum,
(ii) there shall be no scheduled payments of principal of the High-Yield
Debt prior to the date which is one year following the Facilities
Termination Date and (iii) all other terms and conditions of the
High-Yield Debt shall be substantially as set forth in the form of
indenture set forth as Exhibit G to the Bridge Securities Purchase
Agreement with any incomplete items included therein being completed in
a manner consistent with market terms for subordinated debt issued under
Rule 144A or in a public offering;
(c) Indebtedness outstanding on the Closing Date and listed on
Schedule 7.2(c);
(d) Indebtedness incurred not later than 180 days after the
acquisition of fixed or capital assets to finance the acquisition of
such fixed or capital assets (whether pursuant to a loan, a Financing
Lease or otherwise) permitted pursuant to subsection 7.9, in a principal
amount not to exceed 75% of the original purchase price of such property
at the time it was acquired, provided that the aggregate principal
amount of such Indebtedness incurred in any fiscal year of the Company
shall not exceed an amount equal to $1,000,000;
(e) Indebtedness under any Interest Rate Protection Agreement not
entered into for speculative purposes;
(f) Indebtedness of a Person which becomes a Subsidiary after the
date hereof, provided that (i) such Indebtedness existed at the time
such Person became a Subsidiary and was not created in anticipation of
the acquisition and (ii) immediately after giving effect to the
acquisition of such Person by the Company or any Subsidiary no Default
or Event of Default shall have occurred and be continuing;
(g) Acquisition Debt; and
(h) the Subordinated Management Notes.
<PAGE> 57
52
7.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves
with respect thereto are maintained on the books of the Company in
conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Company or such Subsidiary;
(f) Liens in existence on the Closing Date listed on Schedule
7.3, securing Indebtedness permitted by subsection 7.2(c), provided that
no such Lien is spread to cover any additional property after the
Closing Date and that the amount of Indebtedness secured thereby is not
increased;
(g) Liens securing Indebtedness permitted by subsection 7.2(d)
incurred to finance the acquisition of fixed or capital assets, provided
that (i) such Liens shall be created not later than 180 days after the
acquisition of such fixed or capital assets, (ii) such Liens do not at
any time encumber any property other than the property financed by such
Indebtedness, (iii) the principal amount of Indebtedness secured thereby
is not increased;
(h) additional Liens securing liabilities in an aggregate amount
not to exceed $100,000 at any time outstanding; and
(i) Liens created or modified pursuant to the Security Documents.
<PAGE> 58
53
7.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation except (a) Guarantee Obligations in
existence on the Closing Date and listed on Schedule 7.4, (b) Guarantee
Obligations of the Company in respect of liabilities of any Subsidiary entered
into in the ordinary course of business and not prohibited by this Agreement or
any other Loan Document and (c) Guarantee Obligations of Subsidiaries entered
into in accordance with subsection 6.8 (the "Senior Subsidiary Guarantees") and
subordinated Guarantee Obligations of such Subsidiaries that are entered into in
accordance with the Bridge Securities Purchase Agreement or any indenture
pursuant to which High-Yield Debt is issued provided that such subordinated
Guarantee Obligations are subordinated to the Senior Subsidiary Guarantees on
the terms and conditions set forth in the Bridge Securities Purchase Agreement
or, as the case may be, the indenture pursuant to which High-Yield Debt is
issued.
7.5 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting business
other than in connection with (a) the Recapitalization, (b) Permitted
Acquisitions and (c) any transaction in which TWP Capital II, the Company, the
General Partner and any holding company thereof (provided such holding company
has no liabilities) are merged, consolidated or otherwise combined.
7.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or permit any Subsidiary to issue any shares of
its Capital Stock to any Person other than the Company or a wholly owned
Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out
property in the ordinary course of business;
(b) the sale or other disposition of any property (other than
inventory) in the ordinary course of business at fair market value,
provided that the aggregate book value of all assets so sold or disposed
of by the Borrowers and their Subsidiaries in any period of twelve
consecutive months shall not exceed $100,000;
(c) the sale of inventory in the ordinary course of business;
(d) the sale or discount without recourse of accounts receivable,
such sale or discount arising in the ordinary course of business, at
fair market value in connection with the compromise or collection
thereof;
(e) the sale or other disposition of any property not covered by
paragraphs (a) through (d) above or the issuance by any Subsidiary of
shares of Capital Stock of such Subsidiary (any such non-excepted sale,
disposition or issuance described in this
<PAGE> 59
54
paragraph, a "Permitted Disposition"); provided that (i) the EBITDA
generated by or attributable to all such assets and Capital Stock sold
in any fiscal year does not exceed 10% of EBITDA for the prior fiscal
year, (ii) no Default or Event of Default exists immediately before or
after giving effect to such Permitted Disposition and (iii) any Net Cash
Proceeds not applied to purchase other assets within 180 days after the
Permitted Disposition are applied to permanently reduce the Term Loans
and the Revolving Credit Commitments in accordance with subsection 3.8;
and
(f) so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, the transfer of any assets
by the Company to TWP Capital II and the transfer of any assets by
either Borrower to any new Subsidiary created or acquired after the
Closing Date with respect to which the requirements of subsection 6.8(c)
shall have been fulfilled and which, immediately prior to such transfer,
shall have no material obligations or liabilities.
7.7 LIMITATION ON LEASES. Permit Lease Expense for any fiscal
year of the Company to exceed $3,000,000.
7.8 LIMITATION ON DISTRIBUTIONS. Declare or pay any dividend
(other than dividends payable solely in common stock or non-redeemable preferred
stock of the Borrowers) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of any class of
Capital Stock of either Borrower or any warrants or options to purchase any such
Stock, whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or property or
in obligations of either Borrower or any Subsidiary, except:
(a) the Company may make cash distributions to Holdings, the
proceeds of which are used by Holdings to make distributions to be used
for the payment by the holders of partnership interests Holdings of
income taxes attributable to the net income of the Company in accordance
with the terms of Section 5.1(b) of the Partnership Agreement as in
effect on the Original Closing Date, provided that (i) prior to the
making of such distribution, the Company shall have delivered to the
Administrative Agent a letter in form and substance satisfactory to the
Agents from independent public accountants detailing the highest
federal, state and local tax rates applicable to the partners of
Holdings (after giving effect to deductions for such state and local
taxes applicable thereto) and (ii) the maximum percentage permitted to
be so distributed as set forth in Section 5.1(b) of the Partnership
Agreement with respect to any fiscal year of Holdings shall not exceed
the percentage representing the maximum aggregate rate set forth in
clause (i) above for such fiscal year;
(b) (i) the transactions to be made in connection with the
Recapitalization and (ii) cash distributions made to Holdings from the
sale of High-Yield Debt, the proceeds of which are used to pay off
Indebtedness created under the Bridge Securities Purchase Agreement;
<PAGE> 60
55
(c) distributions to Holdings for the purpose of repurchases by
Holdings of shares of its Capital Stock from departing officers or
employees or payments on Subordinated Management Notes from the proceeds
of any substantially contemporaneous issuance of shares of its Capital
Stock;
(d) so long as (i) no Default or Event of Default under Section
7(a), (c), (f) or (h) shall have occurred and be continuing or would
result therefrom and (ii) the Total Leverage Ratio after giving effect
thereto and to the incurrence of any Indebtedness in connection
therewith would be less than 5.5 to 1.0, the Company may at any time
subsequent to the Bridge Period make cash distributions to Holdings for
the purchase of shares of Holdings' Capital Stock from departing
officers and employees (including, without limitation, in accordance
with the provisions of Section 4 of the respective Executive Agreements)
and/or make payments or prepayments under any Subordinated Management
Notes, provided that the aggregate amount of such purchases and payments
shall not exceed (x) $2,000,000 in any year or (y) $10,000,000
subsequent to the Original Closing Date;
(e) to the extent that the Company does not for any reason effect
by means of a cash payment to Holdings to repurchase shares of Holdings'
Capital Stock required pursuant to Sections 3 and 4 of the respective
Executive Agreements, the Company shall be permitted to effect such
purchase by the delivery of a Subordinated Management Note in an amount
required by such Sections;
(f) the Company may make cash distributions to the Equity
Compensation Trust (or to Holdings in respect of the Equity Compensation
Trust) an amount not to exceed $5,500,000 (50% of which amount shall be
paid in October 1997 with the remaining 50% of such amount to be paid in
October 1998);
(g) so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, the Company may, after the
fifth anniversary of the issuance of the Senior Discount Notes, pay cash
dividends to Holdings in amount sufficient to permit Holdings to make
scheduled interest payments (including payments, not to exceed $100,000
in the aggregate, to Holdings to make payments as liquidated damages to
the holders of the Senior Discount Notes under the registration rights
agreement relating to the Senior Discount Notes) on the Senior Discount
Notes (it being agreed that, for purposes of determining whether or not
a Default or Event of Default would result under subsection 7.1(e) as a
result of the payment of any cash dividend pursuant to this paragraph,
such determination will be made on a pro forma basis for the then most
recently ended period of twelve consecutive months for which the Company
shall have delivered to the Lenders financial statements pursuant to
subsection 6.1(a) or (b) assuming that such cash dividend was paid
during such period); and
(h) provided that the payment thereof would be treated as an
operating expense in the computation of Consolidated Net Income of the
Company, the
<PAGE> 61
56
Company may pay dividends to Holdings in amounts, when added to any
loans made for such purpose pursuant to subsection 7.10(h), that are
needed to pay the reasonable expenses (excluding the payment of interest
on indebtedness) incurred by Holdings, TWP Capital or the General
Partner in the ordinary course of its business.
7.9 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make
(by way of the acquisition of securities of a Person or otherwise) any Capital
Expenditure except for Capital Expenditures in the ordinary course of business
not exceeding, in the aggregate for the Company and its Subsidiaries during any
fiscal year of the Company, an amount equal to $2,000,000, it being understood
that (x) the Company and its Subsidiaries may carry over for one fiscal year the
amount of Capital Expenditures permitted to have been made, but not made, in the
immediately preceding fiscal year (it being agreed that, for purposes of this
clause (x), Capital Expenditures in any fiscal year of the Company shall be
deemed made first from the $2,000,000 permitted amount for such fiscal year and
then from any amount carried over into such fiscal year in accordance with this
clause (x)), and (y) repayments in any fiscal year of Indebtedness incurred
pursuant to subsection 7.2(d) shall not be included in determining the amount of
Capital Expenditures in such fiscal year for the purposes hereof to the extent
that such Indebtedness was included in determining the amount of Capital
Expenditures for the purpose hereof in the fiscal year in which such
Indebtedness was incurred.
7.10 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any other
Person, except:
(a) extensions of trade credit in the ordinary course of
business;
(b) acquisition of securities of a Person as a means of making
Capital Expenditures permitted pursuant to subsection 7.9, subject to
the limitations set forth therein;
(c) investments in Cash Equivalents;
(d) contributions to Holdings permitted under subsections 7.8 and
7.9;
(e) loans and advances to officers and employees in the ordinary
course of business provided that the aggregate principal amount thereof
outstanding at any time does not exceed $100,000;
(f) any acquisition by the Company or any of its Subsidiaries of
a business through the purchase or other acquisition of all or a portion
of the assets or Capital Stock of any Person provided that the business
or assets acquired fall within the restrictions of subsection 7.15 (a
"Permitted Acquisition"); provided that:
<PAGE> 62
57
(i) the Total Amount Expended in connection with all
Permitted Acquisitions shall not exceed (x) in the aggregate in
any fiscal year of the Company, $15,000,000 or (y) for any single
Permitted Acquisition or series of related Permitted Acquisitions
either (1) $7,5000,000, if the Total Leverage Ratio of the
Company calculated after giving effect to the proposed Permitted
Acquisition and the financing thereof is equal to or greater than
5.00 to 1.00, or (2) $10,000,000, if the Total Leverage Ratio of
the Company calculated after giving effect to the proposed
Permitted Acquisition and the financing thereof is less than 5.00
to 1.00;
(ii) no Default or Event of Default shall have
occurred and be continuing on the date thereof or after giving
effect to the proposed Permitted Acquisition, and at the request
of the Administrative Agent, the Administrative Agent shall have
received within five days prior to the consummation of such
Permitted Acquisition a certificate of a Responsible Officer of
the Company confirming such statement; and
(iii) the Lenders shall have received not later than
the date of completion of such Permitted Acquisition, (I)
available information regarding such Permitted Acquisition
(including historical and projected revenue and cash flow and
purchase price), (II) a pro forma consolidated balance sheet of
the Company and its consolidated Subsidiaries as at the end of
the most recent period for which financial statements shall have
been delivered to the Lenders pursuant to subsection 6.1(a) or
(b), adjusted to give effect to the consummation of such
Permitted Acquisition and all other Permitted Acquisitions
consummated prior to such date and any related financings and
other transactions contemplated thereby (the "Acquisition Pro
Forma Balance Sheet") which such Acquisition Pro Forma Balance
Sheet shall demonstrate compliance with the requirements of the
Loan Documents before and after giving effect to such Permitted
Acquisition through and including the Facilities Termination Date
and (III) a pro forma consolidated income statement of the
Company and its consolidated Subsidiaries for the twelve-month
period ended on the date of the Acquisition Pro Forma Balance
Sheet adjusted as set forth in clause (II) of this clause (iii);
provided, however, that notwithstanding anything to the contrary in this
subsection 7.10(e):
(I) regardless of the form of consideration or the source
of financing, the Total Amount Expended in connection with all
Permitted Acquisitions may not exceed $60,000,000 in the
aggregate during any period of four consecutive fiscal quarters
(provided that, as used in this clause (iv), "Total Amount
Expended" shall include any and all Equity Consideration used for
any Permitted Acquisition);
<PAGE> 63
58
(II) the Company may (subject to clauses (I) and (III) of
this proviso) make Permitted Acquisitions in any fiscal year
subject only to satisfaction of the requirements set forth in the
preceding clause (ii), so long as the Total Amount Expended in
connection with all Permitted Acquisitions during such year does
not exceed $1,000,000; and
(III) except for the currently contemplated acquisition by
the Company from NTD Publishing Inc. of directories servicing the
Seattle, Washington area, the Total Amount Expended in connection
with which does not exceed $4,500,000, neither the Company nor
any Subsidiary will be permitted to make any acquisition of
another business (whether through purchases of stock or assets or
otherwise), at any time during the Bridge Period unless the
consideration for such acquisition consists solely of Equity
Consideration;
(g) loans to officers and employees of the Company, the proceeds
of which are used to purchase Capital Stock of the Company (other than
any preferred stock or similar interest with a mandatory redemption
feature other than any such features provided for in an Executive
Agreement); and
(h) provided that the making thereof would be treated as an
operating expense in the computation of Consolidated Net Income of the
Company, the Company may make loans to Holdings in amounts, when added
to any dividends paid pursuant to subsection 7.8(h), that are needed to
pay the reasonable expenses (excluding the payment of interest on
indebtedness) incurred by Holdings, TWP Capital or the General Partner
in the ordinary course of its business.
7.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the business of the Borrowers and their Subsidiaries and (c)
upon fair and reasonable terms no less favorable to the applicable Borrower or
Subsidiary than it would obtain in a comparable arm's length transaction with a
Person which is not an Affiliate; provided that, notwithstanding anything in
this Agreement to the contrary, the Company may (i) unless a Default under
subsection 7(a) has occurred and is continuing or would result therefrom and the
Administrative Agent has or the Required Lenders have determined the payment of
management fees is not appropriate and have so notified the Company, pay
management fees in an aggregate amount not to exceed $500,000 in any fiscal year
of the Company pursuant to the Management Agreement referenced in Section 14.13
of the Purchase Agreement (the "Management Fees"), provided that if, as a result
of the continued existence of such a Default, payment of the Management Fees
otherwise due in any fiscal year is not permitted by this clause (i) to be paid
in such fiscal year, (x) such Management Fees may be paid in any subsequent
fiscal year if, after giving effect thereto, no such Default under Section 7(a)
shall have occurred and be continuing and (y) the payment of such deferred
Management Fees in such subsequent fiscal year shall be disregarded in
determining whether any other Management Fees may be paid in
<PAGE> 64
59
such subsequent fiscal year in accordance with the provisions of this clause
(i), and (ii) reimburse any Affiliate for amounts expended by such Affiliate in
cash on behalf of the Company or any Subsidiary.
7.12 LIMITATION ON SALES AND LEASEBACKS. Enter into any
arrangement with any Person providing for the leasing by either Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by such Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of such Borrower or such
Subsidiary.
7.13 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year
of the Company to end on a day other than April 30, 1998, December 31, 1998 or
December 31 of any calendar year thereafter.
7.14 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any
Person any agreement, other than (a) this Agreement and (b) purchase money
mortgages or Financing Leases permitted by this Agreement (in which cases, any
prohibition or limitation shall only be effective against the assets financed
thereby), which prohibits or limits the ability of either Borrower or any
Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, to secure
the obligations of the Borrowers and the Subsidiaries hereunder or under any
other Loan Document.
7.15 LIMITATION ON LINES OF BUSINESS. Enter into any business,
either directly or through any Subsidiary, except for the business of providing
directory services or classified advertising.
7.16 LIMITATION ON DESIGNATED SENIOR DEBT. Permit any
Indebtedness to be designated as "Designated Senior Debt" or "Designated Senior
Indebtedness" as such terms are defined in the Bridge Securities Purchase
Agreement or any indenture pursuant to which any High-Yield Debt shall be
issued.
7.17 LIMITATION ON ACTIVITIES OF HOLDINGS. Permit Holdings to
engage in any business other than the provision of management to the Company, or
own any material assets other than its membership interest in the Company and
the Predecessor Subsidiary.
7.18 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF
SUBORDINATED DEBT. (a) Make any optional payment or prepayment on or redemption
or defeasance of any Subordinated Debt (except for prepayments of Acquisition
Debt or, to the extent permitted by subsection 7.8, Subordinated Management
Notes), or (b) amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms relating to the payment or prepayment
of principal of or interest on, any Subordinated Debt (other than any such
amendment, modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon); provided that, in connection
with any issuance of equity by the Company, if the Company's Total Leverage
Ratio, determined as described in subsection 3.8(e) is less than 5.00 to 1.0,
then the Company may apply up to
<PAGE> 65
60
50% of the Net Cash Proceeds from such equity issuance to prepay (i) the
High-Yield Debt in accordance with any indenture pursuant to which such
Indebtedness is issued or (ii) the Conversion Securities in accordance with the
Bridge Securities Purchase Agreement.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrowers shall fail to pay any principal of any Loan
when due in accordance with the terms thereof or hereof; or the
Borrowers shall fail to pay any interest on any Loan, or any other
amount payable hereunder, within five days after any such interest or
other amount becomes due in accordance with the terms thereof or hereof;
or
(b) Any representation or warranty made or deemed made by either
Borrower or any other Loan Party herein or in any other Loan Document or
which is contained in any certificate, document or financial or other
written statement furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to have
been incorrect in any material respect on or as of the date made or
deemed made; or
(c) Either Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 6 hereof
and Section 4 of the Borrowers Security Agreement; or
(d) Either Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after the earlier of (i) the
first date on which a Responsible Officer of the Company learns of such
default and (ii) receipt by the Company of notice thereof from an Agent
or any Lender; or
(e) Either Borrower shall (i) default in any payment of principal
of or interest of any of its Indebtedness (other than the Loans) or in
the payment of any Guarantee Obligation, beyond the period of grace (not
to exceed 30 days), if any, provided in the instrument or agreement
under which such Indebtedness or Guarantee Obligation was created, if
the aggregate amount of the Indebtedness and/or Guarantee Obligations in
respect of which such default or defaults shall have occurred is at
least $1,000,000; or (ii) default in the observance or performance of
any other agreement or condition relating to any such Indebtedness or
Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur
or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the
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giving of notice if required, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable; or
(f) (i) Either Borrower shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it
or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or
any substantial part of its assets, or either Borrower shall make a
general assignment for the benefit of its creditors; or (ii) there shall
be commenced against either Borrower any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of 60
days; or (iii) there shall be commenced against either Borrower any
case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process on a claim exceeding
$1,000,000 against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending appeal within
60 days from the entry thereof; or (iv) either Borrower shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) either Borrower shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Company or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Company or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or
conditions, if any, could have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
either Borrower involving in the aggregate a liability (not paid or
fully covered by
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insurance) of $1,000,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any
reason, to be in full force and effect, or the Borrowers or any other
Loan Party which is a party to any of the Security Documents shall so
assert or (ii) the Lien created by any of the Security Documents shall
cease to be enforceable and of the same effect and priority purported to
be created thereby; or
(j) (i) Thomas H. Lee Equity Fund III, L.P. and its Affiliates
shall, at any time prior to the date upon which Holdings, either
Borrower or any Subsidiary to which assets shall be transferred as
permitted by subsection 7.6(f) shall have completed an initial
registered public offering of shares of its Capital Stock, (1) cease to
own, directly or indirectly, shares of Capital Stock representing at
least 20% of the equity interest in Holdings and (2) not have the power
(whether or not exercised) to elect a majority of the Board of Directors
of the Company or Holdings, or (ii) there shall occur any "Change in
Control" as such term (or any comparable term) is defined in the
indenture pursuant to which the High-Yield Debt shall be issued or (iii)
Holdings shall, at any time subsequent to the Closing Date, cease to own
99% of the ownership interests in the Company; or
(k) The representations and warranties set forth in Section 4
that are qualified by the phrase "except, until Day 45, as set forth in
the Disclosure Schedule" shall not be true and correct in all material
respects on the day that is 46 days after the Closing Date;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to either
Borrower, automatically the Revolving Credit Commitments shall immediately
terminate and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement shall immediately become due and payable, and
(B) if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Company, declare the Revolving
Credit Commitments to be terminated forthwith, whereupon the Revolving Credit
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Company,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable forthwith, whereupon
the same shall immediately become due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
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SECTION 9. THE AGENTS
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the administrative agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement, the Documentation Agent shall not have any rights,
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Documentation Agent.
9.2 DELEGATION OF DUTIES. The Administrative Agent and the
Documentation Agent may execute any of their respective duties under this
Agreement and the other Loan Documents by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Neither the Administrative Agent nor the Documentation Agent shall
be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
9.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent, the
Documentation Agent nor any of their respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by the Borrowers or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Administrative
Agent or the Documentation Agent under or in connection with, this Agreement or
any other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrowers to perform their obligations hereunder or
thereunder. Neither the Administrative Agent nor the Documentation Agent shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrowers.
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64
9.4 RELIANCE BY AGENTS. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrowers), independent accountants and other experts
selected by such Agent. Each Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent. The Agents shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless they shall first
receive such advice or concurrence of the Required Lenders as they deem
appropriate or they shall first be indemnified to their satisfaction by the
Lenders against any and all liability and expense which may be incurred by them
by reason of taking or continuing to take any such action. Each Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
9.5 NOTICE OF DEFAULT. Neither Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender or either Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be directed by the
Required Lenders; provided that (i) the Administrative Agent shall not be
required to take any action that exposes the Administrative Agent to liability
or that is contrary to this Agreement or applicable law and (ii) unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
9.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender
expressly acknowledges that neither the Administrative Agent, the Documentation
Agent nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by either Agent hereinafter taken, including any review of the
affairs of the Borrowers, shall be deemed to constitute any representation or
warranty by such Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon the Administrative Agent, the
Documentation Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrowers and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agents or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or
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not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent hereunder, neither Agent
shall have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Borrowers which
may come into the possession of such Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
9.7 INDEMNIFICATION. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by the Borrowers and without
limiting the obligation of the Borrowers to do so), ratably according to their
respective Percentages in effect on the date on which indemnification is sought
(or, if indemnification is sought after the date upon which the Revolving Credit
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with their Percentages immediately prior to such date),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of, the Revolving
Credit Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from such Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Loans and all other amounts payable hereunder.
9.8 AGENTS IN THEIR INDIVIDUAL CAPACITY. Each Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrowers as though such Agent were not the
Administrative or Documentation Agent, as the case may be, hereunder and under
the other Loan Documents. With respect to the Loans made by them, the Agents
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though they were not the
Administrative Agent and Documentation Agent, as the case may be, and the terms
"Lender" and "Lenders" shall include the Agents in their individual capacity.
9.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
approved by the Borrowers, whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed
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on the part of such former Administrative Agent or any of the parties to this
Agreement or any holders of the Loans. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 8 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
9.10 RELEASES OF COLLATERAL. In connection with the sale or other
disposition of Collateral permitted under subsection 7.6, the Administrative
Agent shall, and is hereby authorized by the Lenders to, promptly, upon the
request of the Borrowers and at the sole expense of the Borrowers, take all
actions reasonably necessary to release the Collateral subject to such sale or
other disposition and shall take any other actions reasonably requested by the
Borrowers to effect the transactions permitted under subsection 7.6.
SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the Borrowers
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Borrowers hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (i) reduce the amount or extend the scheduled date of
maturity of any Loan or of any installment thereof, or reduce the stated rate of
any interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the amount or extend the expiration date of any
Lender's Revolving Credit Commitment or amend the provisions of the first three
sentences of subsection 3.14(a), in each case without the consent of each
Lender, or (ii) amend, modify or waive any provision of this subsection or
reduce the percentage specified in the definition of Required Lenders, or
consent to the assignment or transfer by the Borrowers of any of their rights
and obligations under this Agreement and the other Loan Documents or release all
or substantially all of the Collateral, in each case without the written consent
of all the Lenders, or (iii) amend, modify or waive any provision of Section 8
without the written consent of the then Administrative Agent. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Borrowers, the Lenders, the
Administrative Agent and all future holders of the Loans. In the case of any
waiver, the Borrowers, the Lenders and the Administrative Agent shall be
restored to their former positions and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon.
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10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of the Borrowers and the
Administrative Agent, and as set forth in Schedule 1.1 in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:
The Borrowers: TransWestern Publishing Company LLC
TWP Capital Corp. II
8244 Clairemont Mesa Blvd.
San Diego, CA 92111
Attention: Joan Fiorito
Fax: (619) 292-4125
The Administrative
Agent: Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Susan E. Hanna
Fax: (212) 856-3558
With a copy to: Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Agency Services
Fax: (212) 856-3763
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 3.2, 3.4, 3.6, 3.8, 3.9 or 3.14 shall not
be effective until received.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of the Administrative Agent or any Lender,
any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
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10.5 PAYMENT OF EXPENSES AND TAXES. The Borrowers jointly and
severally agree (a) to pay or reimburse the Agents for all their respective
out-of-pocket costs and expenses incurred in connection with the development,
preparation, syndication and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agents, (b) to pay or reimburse the Lenders and the Agents for their reasonable
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to the Lenders
and the Agents, (c) to pay, indemnify, and hold each Lender and each of the
Agents harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and each of the Agents harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents or
the use of the proceeds of the Loans in connection with the Recapitalization and
any such other documents, including, without limitation, any of the foregoing
relating to the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Company or any of the
Properties (all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that the Borrowers shall have no obligation hereunder
to the Agents or any Lender with respect to indemnified liabilities arising from
(i) the gross negligence or willful misconduct of the Agents or any such Lender
or (ii) legal proceedings commenced against the Agents or any such Lender by any
security holder or creditor thereof arising out of and based upon rights
afforded any such security holder or creditor solely in its capacity as such.
The agreements in this subsection shall survive repayment of the Loans and all
other amounts payable hereunder.
10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrowers,
the Lenders, the Agents and their respective successors and assigns, except that
the Borrowers may not assign or transfer any of their rights or obligations
under this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, any Revolving Credit Commitment of such Lender or any
other interest of such Lender hereunder and under the other Loan Documents. In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the
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other parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrowers and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. The Borrowers
agree that if amounts outstanding under this Agreement are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall, to the maximum extent
permitted by applicable law, be deemed to have the right of setoff in respect of
its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to share
with the Lenders the proceeds thereof as provided in subsection 10.7(a) as fully
as if it were a Lender hereunder. The Borrowers also agree that each Participant
shall be entitled to the benefits of subsections 3.16, 3.17 and 3.18 with
respect to its participation in the Revolving Credit Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that, in the case
of subsection 3.17, such Participant shall have complied with the requirements
of said subsection and provided, further, that no Participant shall be entitled
to receive any greater amount pursuant to any such subsection than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time and from
time to time assign to any Lender or any affiliate thereof or, with the consent,
unless an Event of Default has occurred and is continuing, of the Borrowers
(except in the case of assignments made by CIBC and First Union National Bank in
connection with its initial syndication of the Loans and Revolving Credit
Commitments) and the Administrative Agent (which consents shall not be
unreasonably withheld or delayed) to an additional bank or financial institution
(an "Assignee") all or any part of its rights and obligations under this
Agreement and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit E, executed by such Assignee, such
assigning Lender and delivered to the Administrative Agent for its acceptance
and recording in the Register, provided that, in the case of any such assignment
to an additional bank or financial institution, the sum of the aggregate
principal amount of the Loans and the aggregate amount of the Available
Commitment being assigned and, if such assignment is of less than all of the
rights and obligations of the assigning Lender, the sum of the aggregate
principal amount of the Loans and the aggregate amount of the Available
Commitment remaining with the assigning Lender are each not less than $5,000,000
(or such lesser amount as may be agreed to by the Borrowers and the
Administrative Agent). Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Revolving Credit Commitment as set
forth therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
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covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such assigning Lender shall cease to be a
party hereto). Notwithstanding any provision of this paragraph (c) and paragraph
(e) of this subsection, the consent of the Borrowers shall not be required, and,
unless requested by the Assignee and/or the assigning Lender, new Notes shall
not be required to be executed and delivered by the Borrowers, for any
assignment which occurs at any time when any of the events described in Section
7(f) shall have occurred and be continuing. Notwithstanding any provision of
this paragraph (c) and paragraph (e) of this subsection, no Assignment and
Acceptance shall be effective unless and until it shall have been accepted by
the Administrative Agent and recorded in the Register as provided in paragraph
(d) of this subsection.
(d) The Administrative Agent, on behalf of the Borrowers, shall
maintain at the address of the Administrative Agent referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
and the Revolving Credit Commitments of, and principal amounts of the Loans
owing to, each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the
Administrative Agent and the Lenders may (and, in the case of any Loan or other
obligation hereunder not evidenced by a Note, shall) treat each Person whose
name is recorded in the Register as the owner of a Loan or other obligation
hereunder as the owner thereof for all purposes of this Agreement and the other
Loan Documents, notwithstanding any notice to the contrary. Any assignment of
any Loan or other obligation hereunder not evidenced by a Note shall be
effective only upon appropriate entries with respect thereto being made in the
Register. The Register shall be available for inspection by the Borrowers or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an Assignee together with payment to the Administrative
Agent of a registration and processing fee of $3,500, the Administrative Agent
shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Lenders and the Borrowers.
(f) The Borrowers authorize each Lender to disclose, subject to
the provisions of subsection 10.15, to any Participant or Assignee (each, a
"Transferee") and any prospective Transferee any and all financial information
in such Lender's possession concerning the Borrowers and its Affiliates which
has been delivered to such Lender by or on behalf of the Borrowers pursuant to
this Agreement or which has been delivered to such Lender by or on behalf of the
Borrowers in connection with such Lender's credit evaluation of the Borrowers
and its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
<PAGE> 76
71
10.7 ADJUSTMENTS; SET-OFF. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loans, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrowers, any such notice being expressly waived by the Borrowers to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrowers hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrowers. Each Lender agrees
promptly to notify the Borrowers and the Administrative Agent after any such
set-off and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application.
10.8 COUNTERPARTS. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Borrowers and the Administrative Agent.
10.9 SEVERABILITY. 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 without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Borrowers, the Agents and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agents or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
<PAGE> 77
72
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. Each Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Borrower at its address set forth in subsection 10.2 or
at such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
10.13 ACKNOWLEDGEMENTS. Each Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents;
(b) neither of the Agents nor any Lender has any fiduciary
relationship with or duty to such Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and
the relationship between the Agents and Lenders, on one hand, and such
Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrowers and the Lenders.
<PAGE> 78
73
10.14 PARTNER LIABILITY. None of the limited partners (or any of
their respective heirs, representatives, successors or assigns) of Holdings will
have any personal liability for the payment of the Loans or any other
obligations secured pursuant to the Security Documents or for the performance of
any obligations of the Borrowers or any Subsidiaries under this Agreement,
whether arising by law or contract.
10.15 CONFIDENTIALITY. Each Lender agrees to keep confidential
any written information (a) provided to it by or on behalf of the Borrowers
pursuant to or in connection with this Agreement or (b) obtained by such Lender
based on a review of the books and records of the Borrowers; provided that
nothing herein shall prevent any Lender from disclosing any such information (i)
to the Agents or any other Lender, (ii) to any Transferee which agrees to comply
with the provisions of this subsection, (iii) to its employees, directors,
agents, attorneys, accountants and other professional advisors, (iv) upon the
request or demand of any Governmental Authority having jurisdiction over such
Lender, (v) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(vi) which has been publicly disclosed other than in breach of this Agreement,
or (vii) in connection with the exercise of any remedy hereunder.
10.16 WAIVERS OF JURY TRIAL. THE BORROWERS, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
[rest of page intentionally left blank]
<PAGE> 79
74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
TRANSWESTERN PUBLISHING COMPANY LLC
By: /s/ JOAN M. FIORITO
-------------------------------------------
Title: Vice President and Chief Financial
Officer
TWP CAPITAL CORP. II
By: /s/ JOAN M. FIORITO
-------------------------------------------
Title: Vice President and Chief Financial
Officer
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, as Administrative Agent
By: /s/ SUSAN GOULD
-------------------------------------------
Title: Director, CIBC Oppenheimer Corp.,
as Agent
CIBC INC., as a Lender
By: /s/ SUSAN GOULD
-------------------------------------------
Title: Director, CIBC Oppenheimer Corp.,
as Agent
<PAGE> 80
75
FIRST UNION NATIONAL BANK, as
Documentation Agent and as a Lender
By: /s/ Jim Redman
------------------------------------------
Title:
<PAGE> 1
EXHIBIT 10.5
EXECUTIVE AGREEMENT
THIS AGREEMENT is made as of October 1, 1997 between TransWestern
Publishing Company, L.P., a Delaware limited partnership (the "Partnership"),
and [Executive Name] ("Executive").
Executive entered into a Securities Purchase and Redemption
Agreement dated August 27, 1997 with the Partnership and certain other persons
listed on the signature pages thereto, pursuant to which Executive acquired
certain Preferred Units, certain Class A Units and certain shares of Common
Stock of the TransWestern Communications Company, Inc., the general partners of
the Partnership. The Partnership and Executive desire to enter into this
Agreement pursuant to which Executive will purchase, and the Partnership will
sell certain Class B Common Units (as defined herein). Preferred Units, Class A
Common Units and Class B Common Units acquired by Executive are referred to
herein as "Executive Units". Certain definitions are set forth in paragraph 9 of
this Agreement.
The parties hereto agree as follows:
1. Purchase and Sale of Executive Units.
(a) Upon execution of this Agreement, Executive or his Permitted
Transferees (as defined in the Investors Agreement) will purchase, and the
Partnership will sell ___ of the Class B Common Units at a purchase price of
$1.00 per Unit for a total purchase price of $______. The Partnership will
deliver to Executive a copy of, and a receipt for, the certificate representing
such Common Units, and Executive will deliver to the Partnership a cashier's or
certified check or wire transfer of funds in the aggregate amount of $______.
(b) Within 30 days after Executive purchases any Executive Units
from the Partnership, Executive will make an effective election with the
Internal Revenue Service under Sec tion 83(b) of the Internal Revenue Code and
the regulations promulgated thereunder substantially in the form of Exhibit A
attached hereto.
(c) In connection with the purchase and sale of the Executive
Units hereunder, Executive represents and warrants to the Partnership that:
(i) The Executive Units to be acquired by Executive pursuant to
this Agreement will be acquired for Executive's own account and not with
a view to, or intention of, distri bution thereof in violation of the
1933 Act, or any applicable state securities laws, and the
<PAGE> 2
Executive Units will not be disposed of in contravention of the 1933 Act
or any applicable state securities laws.
(ii) Executive is an executive officer of the Partnership, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Units.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Units for an indefinite period of time
because the Executive Units have not been registered under the 1933 Act
and, therefore, cannot be sold unless subsequently registered under the
1933 Act or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Units and has had full access to such other information
concerning the Partnership as he has requested. Executive has reviewed,
or has had an opportunity to review, a copy of the Third Amended and
Restated Agreement of Limited Partnership, dated as of the date hereof,
between the General Partner and the Limited Partners listed on Schedule
I thereto, and Executive is familiar with the terms and conditions with
respect to the Executive Units described therein.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by Executive
does not and will not conflict with or violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject.
(d) As an inducement to the Partnership to issue the Executive
Units to Executive and as a condition thereto, Executive acknowledges and agrees
that:
(i) neither the issuance of the Executive Units to Executive nor
any provision contained herein shall entitle Executive to remain in the
employment of the General Partner or the Partnership or affect the right
of the General Partner or the Partnership to terminate Executive's
employment at any time for any reason; and
(ii) the Partnership shall have no duty or obligation to disclose
to Executive, and Executive shall have no right to be advised of, any
material information regarding the Partnership at any time prior to,
upon or in connection with the repurchase of Executive Units following
the termination of Executive's employment with the General Partner and
the Partnership or as otherwise provided hereunder.
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<PAGE> 3
2. Vesting of Common Units.
(a) Except as otherwise provided in paragraph 2(b) below, all of
the Executive Units (including the Preferred Units and the Class A Units
acquired under the Securities Purchase and Redemption Agreement, but other than
those which consist of the Common Units purchased hereunder) will be fully
vested as of the date hereof and the Common Units purchased hereunder will
become vested in accordance with the following schedule, if as of each such date
Executive is still employed by the General Partner or the Partnership:
<TABLE>
<CAPTION>
Cumulative
Anniversary Percentage of
Date Common Units
----------- --------------
<S> <C>
10/31/1997 20%
10/31/1998 36%
10/31/1999 52%
10/31/2000 68%
10/31/2001 84%
10/31/2002 100%
</TABLE>
(b) If Executive ceases to be employed by the Partnership on any
date other than an Anniversary Date given above, the cumulative percentage of
Common Units that will become vested will be determined on a pro-rata basis
according to the number of days elapsed since the prior Anniversary Date. Upon
the Sale of the Partnership, all Common Units which have not yet become vested
shall become vested at the time of such Sale of the Partnership, and upon the
termination of Executive's employment as described below in clauses (i), (ii) or
(iii) of paragraph 4(a), all Common Units which would have become vested during
the 365-day period following such termination shall become vested at the time of
such termination and all Common Units which would have vested thereafter shall
remain unvested. Common Units which have become vested along with any other
Executive Units are referred to herein as "Vested Units," and all other such
Common Units are referred to herein as "Unvested Units."
3. Call Option.
(a) In the event that (i) employment of Executive is terminated
(A) by the Partnership or the General Partner for any reason or (B) by Executive
for any reason or (C) on account of Executive's death or disability or (ii)
there is a Performance Shortfall (each such event referred to as a
"Termination"), the Executive's Securities (whether held by Executive or one or
more of Executive's Permitted Transferees) will be subject to repurchase by the
Partnership and the Investors (as defined in the Investors Agreement) pursuant
to the terms and conditions set forth in this paragraph 3 (the "Repurchase
Option"). Upon a Termination, all Unvested Units will be forfeited to the
Partnership and deemed canceled without consideration.
- 3 -
<PAGE> 4
(b) The purchase price for each Security will be the Formula
Value for such Security.
(c) The Partnership may elect to purchase all or any portion of
the Securities by delivering written notice (the "Repurchase Notice") to the
holder or holders of the Securities originally purchased by Executive within
ninety (90) days after a Termination. The Repurchase Notice will set forth the
number of Securities to be acquired from the Executive and each Permitted
Transferee of the Executive's Securities then holding such Securities, the
aggregate consideration to be paid for such Securities and the time and place
for the closing of the transaction. The number of Securities to be repurchased
by the Partnership shall first be satisfied to the extent possible from the
Securities held by Executive at the time of delivery of the Repurchase Notice.
If the number of Securities then held by Executive is less than the total number
of Securities the Partnership has elected to purchase, the Partnership shall
purchase the remaining Securities elected to be purchased under this paragraph 3
from one or more of Executive's Permitted Transferees then holding Securities
originally purchased by Executive, pro rata according to the number of
Securities held by such other holder(s), respectively, at the time of delivery
of such Repurchase Notice (determined as nearly as practicable to the nearest
Unit).
(d) If for any reason the Partnership does not elect to purchase
all of the Executive's Securities pursuant to the Repurchase Option, the
Investors shall be entitled to exercise the Repurchase Option for the Securities
the Partnership has not elected to purchase (the "Available Securities"). As
soon as practicable after the Partnership has determined that there will be
Available Securities, but in any event within 45 days after the Termination, the
Partnership shall give written notice (the "Option Notice") to the Investors
setting forth the number of Available Securities and the purchase price for the
Available Securities. The Investors may elect to purchase any or all of the
Available Securities by giving written notice to the Partnership within 30 days
after the Option Notice has been given by the Partnership. If the Investors
elect to purchase an aggregate number of Securities greater than the number of
Available Securities, the Available Securities shall be allocated among the
Investors based upon the number of Units owned by each Investor on a
fully-diluted basis. As soon as practicable, and in any event within ten days
after the expiration of the 30-day period set forth above, the Partnership shall
notify each holder of Securities as to the number of Securities to be purchased
from such holder by the Investors and the time and place for the closing of the
transaction (the "Supplemental Repurchase Notice"). At the time the Partnership
delivers the Supplemental Repurchase Notice to such holder(s) of Securities, the
Partnership shall also deliver written notice to the Investors setting forth the
number of Securities such Investors are entitled to purchase, the aggregate
purchase price and the time and place of the closing of the transaction.
(e) The closing of the purchase of the Securities pursuant to the
Repurchase Option shall take place on the date designated by the Partnership in
the Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than 60 days nor less than five days after the delivery of the later of
either such notice to be delivered, subject to the provisions of subparagraph
3(g). The Partnership and/or the Investors will pay for the Securities to be
purchased pursuant to the Repurchase Option by delivery of (i) a check or wire
transfer of funds, (ii) a
- 4 -
<PAGE> 5
subordinated note or notes payable in up to, three equal annual installments,
beginning on the first anniversary of the closing of such purchase, and bearing
interest (payable quarterly) at a rate per annum equal to the prime rate
announced from time to time by Canadien Imperial Bank of Commerce but in no
event will such rate be less than the applicable federal rate in effect at such
time or (iii) both (i) and (ii), in the aggregate amount of the purchase price
for such Securities. The purchasers of Securities under this Section 3 will be
entitled to receive customary representations and warranties from the sellers
regarding such sale and to require all sellers' signatures be guaranteed.
(f) The right of the Partnership and the Investors to repurchase
Securities pursuant to this paragraph 3 shall terminate upon the first to occur
of the Sale of the Partnership or a Qualified Public Offering.
(g) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Securities by the Partnership shall be subject to
applicable restrictions contained in the Delaware Revised Uniform Limited
Partnership Act and in the Partnership's equity or debt financing agreements as
in effect on the date hereof. If any such restrictions prohibit the repurchase
for cash of Securities hereunder which the Partnership is otherwise entitled or
required to make or prohibit payments on the subordinated note described in
subparagraph (e) above, the Partnership will use reasonable best efforts to
obtain the waiver of such restrictions, shall not be obligated to repurchase
such Securities for cash or to make cash payments on such notes until not so
prohibited from doing so and shall make such repurchases for cash or make cash
payments on such notes, as applicable, as soon as it is permitted to do so under
such restrictions.
4. Put Option.
(a) Upon the termination of Executive's employment (i) by the
Partnership without Cause, (ii) by Executive for Good Reason or (iii) on account
of Executive's death or disability (as determined by the General Partner) (each,
an "Involuntary Termination"), all Unvested Units which would have vested (but
for such termination) during the 365-day period immediately following the date
of such Involuntary Termination will automatically be deemed to become vested
and at the option of Executive and/or one or more of Executive's Permitted
Transferees, the Execu tive and/or one or more of Executive's Permitted
Transferees may require the Partnership to purchase all Securities (other than
Unvested Units) held by Executive and/or one or more of Executive's Permitted
Transferees pursuant to the terms and conditions set forth in this paragraph 4.
Upon any such Termination, all Unvested Units (determined after taking into
account the accelerated vesting described in the foregoing sentence) will be
forfeited to the Partnership and deemed canceled without consideration.
(b) The purchase price for all Securities (other than the
Unvested Units) will be the greater of (i) the Original Cost of such Securities
and (ii) the Formula Value for such Securities.
- 5 -
<PAGE> 6
(c) In the event that Executive or one or more of Executive's
Permitted Transferees does not elect to exercise this put option within ninety
(90) days following an Involuntary Termination by providing the Partnership with
written notice (the "Put Notice") of Executive's and/or one or more of
Executive's Permitted Transferee's election to exercise this put option, the
right to exercise such put option will expire. The Put Notice will set forth the
number of Securities held by Executive and/or Executive's Permitted Transferees
required to be purchased by the Partnership from each such holder of Securities.
Within 45 days after receipt of the Put Notice by the Partnership, the
Partnership will deliver written notice (the "Put Reply Notice") to Executive
and/or Executive's Permitted Transferees, as applicable, setting forth the
aggregate consideration to be paid for the Securities held by each such holder
and the time and place for the closing of the transaction.
(d) The closing of the purchase of the Securities pursuant to the
Put Option shall take place on the date designated by the Partnership in the Put
Reply Notice, which date shall not be more than 60 days nor less than five days
after the delivery of the Put Reply Notice, subject to the provisions of
subparagraph 4(f). The Partnership will pay for the Securities to be purchased
pursuant to the Put Option by delivery of (i) a check or wire transfer of funds,
(ii) a subordinated note or notes payable in up to three equal annual
installments, beginning on the first anniversary of the closing of such
purchase, and bearing interest (payable quarterly) at a rate per annum equal to
the prime rate announced from time to time by Canadien Imperial Bank of Commerce
but in no event will such rate be less than the applicable federal rate in
effect at such time or (iii) both (i) and (ii), in the aggregate amount of the
purchase price for such Securities to the holder(s) of such Securities. The
purchaser(s) of such Securities hereunder will be entitled to receive customary
representations and warranties from the sellers regarding such sale and to
require all sellers' signatures be guaranteed.
(e) The right of the Executive and/or Executive's Permitted
Transferees to require the Partnership to repurchase Securities pursuant to this
paragraph 4 shall terminate upon the first to occur of the Sale of the
Partnership or a Qualified Public Offering.
(f) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Securities by the Partnership shall be subject to
applicable restrictions contained in the Delaware Revised Uniform Limited
Partnership Act and in the Partnership's equity or debt financing agreements as
in effect on the date hereof. If any such restrictions prohibit the repurchase
for cash of Partnership Securities under this Section 4 which the Partnership is
otherwise required to make or prohibit payments on the subordinated note
described in subparagraph (d) above, the Partnership will use reasonable efforts
to obtain the waiver of such restrictions, shall not be obligated to repurchase
such Securities hereunder for cash or make cash payments on such notes until
such time when the Partnership is not prohibited from doing so and shall make
such repurchases or cash payments on such notes as soon as it is permitted to do
so under such restrictions.
5. Restrictions on Transfers.
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<PAGE> 7
(a) Transfer of Executive Units. Executive will not sell, pledge
or otherwise transfer any interest in any Executive Units, except pursuant to
(i) the provisions of paragraphs 3 or 4 hereof, (ii) the provisions of paragraph
5(b) below, (iii) the provisions of the Investors Agreement, or (iv) pursuant to
the Registration Agreement.
(b) Certain Permitted Transfers. The restrictions contained in
this paragraph 5 will not apply with respect to transfers of Executive Units
pursuant to applicable laws of descent and distribution, provided that the
restrictions contained in this paragraph 5 will continue to be applicable to the
Executive Units after any such transfer and the transferees of such Executive
Units shall agree in writing to be bound by the provisions of this Agreement.
Any transferee of Executive Units pursuant to a transfer in accordance with the
provisions of this subparagraph 5 is herein referred to as a "Permitted
Transferee". Upon the transfer of Executive Units pursuant to this paragraph
5(b), the Permitted Transferee(s) will deliver a written notice (the "Transfer
Notice") to the Partnership. The Transfer Notice will disclose in reasonable
detail the identity of the Permitted Transferee(s).
6. Additional Restrictions on Transfer.
(a) The certificates representing the Executive Units will bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION
FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS
SET FORTH IN AN EXECUTIVE AGREEMENT BETWEEN THE ISSUER (THE
"COMPANY") AND A CERTAIN EMPLOYEE OF THE COMPANY DATED AS OF
OCTOBER 1, 1997, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER
HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
(b) No holder of Executive Units may sell, transfer or dispose of
any Executive Units (except pursuant to an effective registration statement
under the 1933 Act) without first delivering to the Partnership an opinion of
counsel reasonably acceptable in form and substance to the Partnership (and
which counsel shall be reasonably acceptable to the Partnership) that registra
tion under the 1933 Act is not required in connection with such transfer.
7. Definition of Executive Units For purposes of this Agreement,
Executive Units will continue to be Executive Units in the hands of any holder
other than Executive (except
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<PAGE> 8
for the Partnership, the Investors and purchasers pursuant to an offering
registered under the 1933 Act or purchasers pursuant to a Rule 144 transaction),
and each such other holder of Executive Units will succeed to all rights and
obligations attributable to Executive as a holder of Executive Units hereunder.
Executive Units will also include partnership equity interests issued with
respect to Executive Units by way of a split, distribution or other
recapitalization.
8. Investors Agreement and Registration Agreement. By execution
of this Agreement, each holder of Executive Units hereby agrees to become a
party to the Investors Agreement and become subject to the terms and provisions
thereof. By execution of this Agreement, each holder of Executive Units hereby
agrees to become a party to the Registration Agreement and become subject to the
terms and provisions thereof.
9. Definitions.
"Cause" means (i) the commission of a felony or a crime involving
moral turpitude or the commission of any other act involving dishonesty,
disloyalty or fraud with respect to the Partnership or any of its Subsidiaries,
(ii) conduct tending to bring the Partnership or any of its Subsidiaries into
substantial public disgrace or disrepute, (iii) substantial and repeated failure
to perform duties as reasonably directed by the General Partner, (iv) gross
negligence or willful misconduct with respect to the Partnership or any of its
Subsidiaries, or (v) any other material breach of this Agreement which is not
cured within 15 days after written notice thereof to Executive.
"Class A Common Unit" has the meaning given to such term in the
Partnership Agreement.
"Class B Common Unit" has the meaning given to such term in the
Partnership Agreement.
"Common Unit" means a Class A Common Unit or a Class B Common
Unit, as the context may require.
"EBITDA" means, for any period, the net income of the Partnership
for any such period plus the amount deducted (or in the case of extraordinary
gains, minus any amount added) in the computation thereof for (i) all federal,
state and local income taxes, (ii) interest expense, (iii) any extraordinary
gains or losses, (iv) depreciation, and (v) amortization of goodwill and other
intangibles determined in accordance with generally accepted accounting
principles consistently applied. For purposes of this Agreement, EBITDA will be
determined, after deducting annual bonuses paid or payable with respect to such
period, from the audited financial statements of the Partnership and the
components of EBITDA contained in the financial statements will be conclusive
and binding upon the parties.
"Formula Value" of each Security means five (5) times the
12-month trailing EBITDA minus (i) the principal and interest outstanding on all
Partnership debt and (ii) the
- 8 -
<PAGE> 9
Unreturned Capital (as defined in the Partnership Agreement) on the Preferred
Units and all Unpaid Yield (as defined in the Partnership Agreement) thereon,
divided by the aggregate number of Securities outstanding. For purposes of
determining the Formula Value pursuant to Section 3 hereof, the Formula Value of
the Class B Common Units will be deemed to be zero unless such units are
entitled to participate with the Class A Common Units in distributions pursuant
to the Partnership Agreement with respect to the Common Units.
"General Partner" means TransWestern Communications Company, Inc.
(or its successors or assigns), in its capacity as the general partner of the
Partnership.
"Good Reason" means (i) a reduction in Executive's Base Salary by
more than 20% of the Base Salary (in effect immediately prior to such
reduction), (ii) any reduction in Executive's Base Salary (in effect immediately
prior to such reduction) if in the year prior to such reduction the EBITDA for
such prior fiscal year was equal to or greater than 80% of the Target EBITDA for
such year, (iii) any wilful action by the Partnership that is intentionally
inconsistent with the terms of this Agreement or (iv) any material reduction by
the Partnership or the General Partner in the powers, duties or responsibilities
of which Executive was entitled to exercise as of the date of this Agreement
(other than any such reduction which is a result of a termination of such
Executive's employment for Cause).
"Investors Agreement" means that certain Investors Agreement,
dated as of the date hereof, by and among the Partnership, the General Partner
and those certain partners and stock holders thereof, as amended or modified.
"1933 Act" means the Securities Act of 1933, as amended from time
to time.
"Original Cost" of each Unit purchased hereunder shall be the
price set forth above in subparagraph 1(a) (as proportionately adjusted for any
equity splits, dividends or recapitalization of the Partnership).
"Partnership Agreement" means the Third Amended and Restated
Agreement of Limited Partnership, dated as of the date hereof, by and among the
General Partner and the limited partners listed on Schedule I attached thereto
(as may be amended or restated from time to time).
"Partnership Securities" means (i) any Common Units, (ii) any
Preferred Units, (iii) any equity securities issued or issuable directly or
indirectly with respect to the securities referred to in clauses (i) and (ii)
above by any of a split, or dividend or in connection with a combination of
securities, recapitalization, merger, consolidation or other reorganization.
"Performance Shortfall" means, if at the end of the fiscal year,
EBITDA for such year is below 70% of the Target EBITDA for such year.
"Permitted Transferee" has the meaning given to such term in
paragraph 5(b).
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<PAGE> 10
"Preferred Units" have the meaning given to such term in the
Partnership Agreement.
"Qualified Public Offering" has the meaning given to such term in
the Investors Agreement.
"Sale of the Partnership" has the meaning given to such term in
the Investors Agreement.
"Securities" means collectively, any Partnership Securities and
Common Stock of the General Partner.
"Subsidiary" means, with respect to any person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that person or one or more of the other
Subsidiaries of that person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof, a
person or persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such person or persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
"Target EBITDA" means, as of any fiscal year end, the amount
indicated opposite such year end in the table below:
<TABLE>
<S> <C>
1998 $31.0 million
1999 $35.5 million
2000 $42.2 million
2001 $50.2 million
2002 $59.5 million
</TABLE>
; it being understood that the foregoing calculation of the Target EBITDA
assumes that the Partnership's fiscal year ends April 30. In the event that the
Partnership's fiscal year is changed, the foregoing calculation of the Target
EBITDA may be adjusted by the board of directors of the General Partner to
reflect the impact of such change in fiscal year.
"Unit" has the meaning given to such term in the Partnership
Agreement.
- 10 -
<PAGE> 11
10. Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
To the Partnership:
TransWestern Publishing Company, L.P.
c/o Thomas H. Lee Corporation
75 State Street
Boston, Massachusetts 02109
Attention: Scott A Schoen
C. Hunter Boll
To Executive:
[Executive Address]
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
11. General Provisions.
(a) Transfers in Violation of Agreement. Any sale, assignment,
transfer, pledge, redemption or repurchase (a "Transfer") or attempted Transfer
of any Executive Units in violation of any provision of this Agreement shall be
void, and the Partnership shall not record such Transfer on its books or treat
any purported transferee of such Executive Units as the owner of such Executive
Units for any purpose.
(b) Executive Time and Attention. So long as Executive is
employed by the Partnership, Executive shall devote such Executive's full
business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Partnership and its Subsidiaries. Executive shall perform such
Executive's duties and responsibilities to the best of such Executive's
abilities in a diligent, trustworthy, businesslike and efficient manner.
(c) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other
- 11 -
<PAGE> 12
provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
(d) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(e) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Partnership, the Investors and their respective successors and
assigns (including subsequent holders of Executive Units); provided that the
rights and obligations of Executive under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Units hereunder.
(g) Choice of Law. The limited partnership law of the State of
Delaware will govern all questions concerning the relative rights of the
Partnership and its partners and all questions concerning the construction,
validity and interpretation of this Agreement.
(h) Remedies. Each of the parties to this Agreement (including
the Investors) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction (without posting any
bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(i) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Partnership,
Executive and the Investors.
(j) Absence of Conflicting Agreements. Executive hereby warrants
and covenants that his employment by the Partnership and his ownership of the
Executive Units does not result in a breach of the terms, conditions or
provisions of any agreement to which Executive is subject.
(k) Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in the
state in which the Partnership's chief
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<PAGE> 13
executive office is located, the time period shall be automatically extended to
the business day immediately following such Saturday, Sunday or holiday.
(l) Third Party Beneficiaries. The parties hereto acknowledge and
agree that the Investors are third party beneficiaries of this Agreement and
this Agreement shall inure to the benefit of and be enforceable by the Investors
and their respective successors and assigns.
* * * * *
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
TRANSWESTERN PUBLISHING COMPANY, L.P.
By TransWestern Communications Company, Inc.
Its General Partner
By
-------------------------------------------
Its
------------------------------------------
---------------------------------------------
[Executive]
(SIGNATURE PAGE TO EXECUTIVE AGREEMENT)
<PAGE> 1
EXHIBIT 10.6
- --------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
by and among
TRANSWESTERN HOLDINGS L.P.,
TWP CAPITAL CORP.,
TRANSWESTERN PUBLISHING COMPANY LLC
and
TRANSWESTERN COMMUNICATIONS COMPANY, INC.
and
THE INITIAL PURCHASERS NAMED HEREIN
------------------------------
Dated as of November 6, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Accounting Terms; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE OF
NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASERS
Section 2.1. Issue of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2. Purchase, Sale and Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.3. Registration Rights of Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.4. Offering by the Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of the Issuers . . . . . . . . . . . . . . . . . . . . 7
Section 3.2. Resale of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of
the Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.2. Conditions Precedent to Obligations of
the Issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE VII
INDEMNITY
<S> <C> <C>
Section 7.1. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.2. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.3. Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.2. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.3. No Waiver; Modifications in Writing . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.4. Information Supplied by the Initial
Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.5. Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.6. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.7. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.9. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . 37
SCHEDULE I
Exhibit A
Disclosure Schedule
</TABLE>
-ii-
<PAGE> 4
SECURITIES PURCHASE AGREEMENT, dated as of November 6, 1997
(the "Agreement"), among TRANSWESTERN HOLDINGS L.P., a Delaware limited
partnership (the "Company"), TWP CAPITAL CORP., a Delaware corporation
("Capital" and together with the Company, the "Issuers"), TRANSWESTERN
PUBLISHING COMPANY LLC, a Delaware limited liability company ("TWP"),
TRANSWESTERN COMMUNICATIONS COMPANY, INC., a Delaware corporation and the
general partner of the Company ("Communications"), and CIBC OPPENHEIMER CORP.
("CIBC") and FIRST UNION CAPITAL MARKETS CORP. ("First Union") (the "Initial
Purchasers").
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Accredited Investor" has the meaning provided therefor in Section 3.2 of this
Agreement.
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control such specified Person. For purposes
of this definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof and in effect.
"Asset Drop-Down" means the Company's contribution of assets to TWP or prior to
November 6, 1997.
"Basic Documents" means, collectively, the Indenture, the
Notes, the Registration Rights Agreement and this Agreement.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of
<PAGE> 5
-2-
capital stock, partnership interests or any other participation, right or other
interest in the nature of an equity interest in such Person or any option,
warrant or other security convertible into or exercisable for any of the
foregoing.
"Closing" has the meaning provided therefor in Section 2.2 of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Act.
"Commonly Controlled Entity" has the meaning provided therefor in Section
3.1(y) of this Agreement.
"Default" means any event, act or condition which, with notice
or lapse of time or both, would constitute an Event of Default.
"Employee Benefit Plan" has the meaning provided therefor in
Section 3.1(y) of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, together with all rules and regulations
promulgated pursuant thereto, as amended from time to time.
"Event of Default" means any event defined as an Event of
Default in the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exchange Notes" shall have the meaning provided therefor in the Registration
Rights Agreement.
"Facilities" means any and all real property (including
without limitation, all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore owned, leased, operated or used by the
Issuers, TWP and Communications or any of their respective predecessors in
interest.
"Indemnified Party" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
<PAGE> 6
-3-
"Indemnifying Party" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
"Indenture" means the indenture dated as of November 12, 1997
among the Issuers, and Wilmington Trust Company, as Trustee, under which the
Notes will be issued.
"Initial Purchasers" has the meaning set forth in the
introductory paragraph to this Agreement.
"Intellectual Property Rights" has the meaning provided
therefor in Section 3.1(r) of this Agreement.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement (other than advance payments or customer deposits for goods
and services sold by the Company or TWP in the ordinary course of business),
security interest, lien, charge, easement, encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including without
limitation, any Capitalized Lease Obligations (as defined in the Indenture)),
conditional sales, or other title retention agreement having substantially the
same economic effect as any of the foregoing.
"Material Adverse Effect" means (i) a material adverse effect
on the business, assets, condition (financial or otherwise), results of
operations or properties of the Issuers and Communications, taken as a whole,
or (ii) a material adverse effect on the legality, validity, binding effect or
enforceability of this Agreement or the Basic Documents.
"Material Contract" has the meaning provided therefor in
Section 3.1(p) of this Agreement.
"Memorandum" has the meaning provided therefor in Section 2.1
of this Agreement.
"Notes" means the 11 7/8% Senior Discount Notes due 2008 of
the Issuers and shall include any Notes subsequently issued in kind in payment
of interest thereon.
"Offering" has the meaning assigned thereto in the Memorandum.
"Offering Materials" has the meaning provided therefor in Section 7.1 of this
Agreement.
<PAGE> 7
-4-
"Partnership Interest" means any general or limited
partnership interest and any interest as a member of a limited liability
company or a limited liability partnership.
"Person" means any individual, corporation, partnership,
limited liability company. joint venture, joint-stock company, trust,
unincorporated organization or association or government (including any agency
or political subdivision thereof).
"PORTAL" means the Private Offering, Resales, and Trading
through Automated Linkages Market.
"Private Exchange Notes" has the meaning provided therefor in
the Registration Rights Agreement.
"Proceeding" has the meaning provided therefor in Section
7.1(c) of this Agreement.
"QIB" has the meaning provided therefor in Section 3.2 of this
Agreement.
"Registration Rights Agreement" means the registration rights
agreement among the Issuers and the Initial Purchasers relating to the Notes.
"Regulation S" means Regulation S under the Act.
"State" means each of the states of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having
jurisdiction to enforce such State's securities laws.
"tax" has the meaning provided therefor in Section 3.1(w) of
this Agreement.
"Taxpayers" has the meaning provided therefor in Section
3.1(w) of this Agreement.
"Third Amended Partnership Agreement" has the meaning provided
therefor in Section 3.1(c) of this Agreement.
"Time of Purchase" has the meaning provided therefor in Section
2.2 of this Agreement.
"TransWestern Delivered Documents" has the meaning provided
therefor in Section 3.1(e) of this Agreement.
<PAGE> 8
-5-
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and the rules and regulations of the Commission thereunder.
Section 1.2. Accounting Terms; Financial Statements. All
accounting terms used herein not expressly defined in this Agreement shall have
the respective meanings given to them in accordance with sound accounting
practice. The term "sound accounting practice" shall mean such accounting
practice as, in the opinion of the independent accountants regularly retained
by the Company, conforms at the time to generally accepted accounting
principles in the United States applied on a consistent basis except for
changes with which such accountants concur. All determinations to which
accounting principles apply shall be made in accordance with sound accounting
practice.
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE
OF NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASERS
Section 2.1. Issue of Notes. The Company and Capital have
authorized the issuance of $32,500,000 initial aggregate principal amount
($57,916,000 at maturity) of the Notes which are to be issued pursuant to the
Indenture. Each Note will be substantially in the form of the Note set forth
as Exhibit A to the Indenture.
The Notes will be offered and sold to the Initial Purchasers
without being registered under the Act, in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Issuers have
prepared an offering memorandum dated November 6, 1997 (the "Memorandum")
setting forth or including a description of the terms of the Notes, the terms
of the offering, a description of the Issuers and any material developments
relating to the Issuers occurring after the date of the most recent financial
statements included therein.
Section 2.2. Purchase, Sale and Delivery of Notes. On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Issuers
agree that they will sell to each Initial Purchaser, and each Initial Purchaser
agrees, acting severally and not jointly, that it will purchase from the
Issuers at the Time of Purchase, the principal amount of the Notes set
<PAGE> 9
-6-
forth opposite the name of such Initial Purchaser on Schedule I hereto at a
price of $544.33 per $1,000 principal amount thereof.
The purchase, sale and delivery of the Notes will take place
at a closing (the "Closing") at the offices of Cahill Gordon & Reindel, 80 Pine
Street, New York, New York 10005, at 9:00 A.M., New York time, on November 12,
1997, or such later date and time, if any, as the Initial Purchasers and the
Company shall agree. The time at which such Closing is concluded is herein
called the "Time of Purchase."
One or more certificates in definitive form for the Notes that
the Initial Purchasers have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchasers request upon notice to the Company at least 24 hours prior
to the Closing, shall be delivered by or on behalf of the Issuers to the
Initial Purchasers, against payment by or on behalf of the Initial Purchasers
of the purchase price therefor by wire transfer of immediately available funds
wired in accordance with the written instructions of the Company. The Issuers
will make such certificate or certificates for the Notes available for checking
and packaging by the Initial Purchasers at the offices of CIBC or First Union,
or such other place as CIBC and First Union may designate, at least 24 hours
prior to the Closing.
Section 2.3. Registration Rights of Holders of Notes. The
Initial Purchasers and their direct and indirect transferees of the Notes will
have such rights with respect to the registration thereof under the Act and
qualification of the Indenture under the Trust Indenture Act as are set forth
in the Registration Rights Agreement.
Section 2.4. Offering by the Initial Purchasers. The Initial
Purchasers propose to make an offering of the Notes at the price and upon the
terms set forth in the Memorandum, as soon as practicable after this Agreement
is entered into and as in the judgment of the Initial Purchasers is advisable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of the Issuers.
The Company, TWP, Capital and Communications jointly and severally represent
and warrant to and agree with each of the Initial Purchasers as follows:
<PAGE> 10
-7-
(a) Memorandum. The Memorandum, as of its date does not, and
at the Time of Purchase will not, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties set forth in this Section 3.1(a) do not apply to statements
or omissions made in reliance upon and in conformity with information
relating to the Initial Purchasers furnished to the Company in writing
by the Initial Purchasers expressly for use in the Memorandum or any
amendment or supplement thereto as set forth in Section 8.4 hereof.
The statistical and market-related data included in the Memorandum are
based on or derived from sources which the Issuers and TWP believe to
be reliable and accurate or represents the Issuers' and TWP's good
faith estimates that are made on the basis of data derived from such
sources. The Notes, the Indenture and the Registration Rights
Agreement conform in all material respects to the description thereof
in the Memorandum.
(b) Financial Statements. The audited financial statements
of the Company set forth in the Memorandum are in accordance with the
books and records of the Company, fairly present in all material
respects the financial position, results of operations, partnership
deficit and cash flows of the Company at the dates and for the periods
to which they relate and have been prepared in accordance with
generally accepted accounting principles consistently applied (except
as otherwise stated therein); the unaudited financial statements of
the Company set forth in the Memorandum were prepared in a manner
consistent with TWP's historical practices and in the reasonable
judgment of management fairly present in all material respects the
financial position and results of operations of the Company at the
date and for the period to which they relate, subject only to year end
adjustments, the absence of footnote disclosures and adjustment
required by generally accepted accounting principles; the summary and
selected financial data in the Memorandum present fairly the financial
information shown therein and have been prepared and compiled on a
basis consistent with audited and unaudited financial statements
included therein, except as otherwise stated therein; and the adjusted
financial information and the related notes thereto included in the
Memorandum have been prepared using reasonable assumptions and have
been prepared in accordance with the applicable requirements of the
Act and include all adjustments necessary to present fairly such
financial information. Ernst & Young LLP, which has reported upon the
audited financial statements included in the Memorandum, is
<PAGE> 11
-8-
an independent public accounting firm as required by the Act and
the rules and regulations thereunder.
(c) Organization. The Company is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the power and authority to carry on its
business as now being conducted and to own and operate the properties
and assets now owned and being operated by it. The Company has
delivered to the Initial Purchasers complete and correct copies of its
Certificate of Limited Partnership and the Third Amended and Restated
Agreement of Limited Partnership, as amended as of November 4, 1997
(the "Third Amended Partnership Agreement"), as in effect on the date
hereof. The Company is duly qualified or licensed to do business and
is in good standing in each jurisdiction in which such qualification
is necessary under the applicable law as a result of the conduct of
its business or the ownership of its properties except where the
failure to be so qualified, licensed or in good standing does not have
a Material Adverse Effect.
TWP is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has the power and authority to carry on its business as now being
conducted and to own and operate the properties and assets now owned
and being operated by it. TWP has delivered to the Initial Purchasers
complete and correct copies of its Certificate of Formation and
Limited Liability Company Agreement (the "LLC Agreement"), as in
effect on the date hereof.
Capital is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
corporate power and authority to carry on its business as now being
conducted and to own and operate the properties and assets now owned
and being operated by it. Capital has delivered to the Initial
Purchasers complete and correct copies of its Certificate of
Incorporation and By-Laws as in effect on the date hereof. Capital is
duly qualified or licensed to do business and is in good standing in
each jurisdiction in which such qualification is necessary under the
applicable law except where the failure to be so qualified, licensed
or in good standing does not have a Material Adverse Effect.
Communications is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to carry on its business as
now being conducted and to own and operate
<PAGE> 12
-9-
the properties and assets now owned and being operated by it.
Communications has delivered to the Initial Purchasers complete and
correct copies of its Certificate of Incorporation and By-Laws as in
effect on the date hereof. Communications is duly qualified or
licensed to do business and is in good standing in each jurisdiction
in which such qualification is necessary under the applicable law
except where the failure to be so qualified, licensed or in good
standing does not have a Material Adverse Effect.
(d) Capitalization, Equity Ownership. As of the Time of
Purchase (after giving effect to the Offering), the Company will have
the capitalization as set forth in the Memorandum, except as otherwise
noted therein, the authorized capital stock of Capital will consist of
1,000 shares of its common stock (all of which will be issued and
outstanding and owned and held by the Company), TWP will have the
capitalization as set forth in the Memorandum and the authorized
capital stock of Communications will consist of 30,000 shares of its
common stock (9,800.05 of which will be issued and outstanding);
except as described in the Memorandum, all of the issued and
outstanding securities of the Company, TWP and Communications have
been duly authorized and validly issued and are fully paid and non-
assessable and none of them have been issued in violation of any
preemptive or other right; and, except as contemplated in this
Agreement or the other agreements, instruments or documents delivered
in connection with the transactions contemplated hereby, neither the
Company, Capital, TWP nor Communications is a party to or bound by any
contract, agreement or arrangement to issue, sell or otherwise dispose
of or redeem, purchase or otherwise acquire any Capital Stock,
Partnership Interest or any other security of the Company, Capital,
TWP or Communications or any other security exercisable or
exchangeable for or convertible into any Capital Stock, Partnership
Interest or any other security of the Company, Capital, TWP or
Communications.
(e) Authority. The Company, Capital, TWP and Communications
have the power to enter into the Basic Documents (to the extent a
party thereto) and all other agreements, instruments and documents
executed and delivered by the Company, Capital, TWP or Communications
pursuant thereto (collectively, the "TransWestern Delivered
Documents") and to carry out their respective obligations thereunder,
including without limitation issuing the Notes in the manner and for
the purpose contemplated by this Agreement. The execution, delivery
and performance of the TransWestern Delivered Documents and the
consummation of the transactions contemplated thereby have been duly
authorized
<PAGE> 13
-10-
by the Company, Capital, TWP and Communications (to the extent a party
thereto), and no other proceeding or approval on the part of the
Company, Capital, TWP or Communications is necessary to authorize the
execution and delivery of the TransWestern Delivered Documents or the
performance of any of the transactions contemplated thereby.
(f) Purchase Agreement. This Agreement has been duly
authorized, executed and delivered by the Issuers, TWP and
Communications and (assuming the due authorization, execution and
delivery thereof by the Initial Purchasers), is a valid and legally
binding agreement of the Issuers and TWP, enforceable against each of
them in accordance with its terms except (i) that the enforcement
hereof may be subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and to
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (ii) as any rights to
indemnity or contribution hereunder may be limited by federal and
state securities laws and public policy considerations.
(g) Indenture. The Indenture has been duly authorized by the
Issuers and, when executed and delivered by the Issuers (assuming the
due authorization, execution and delivery thereof by the Trustee),
will constitute a valid and legally binding agreement of the Issuers,
enforceable against each of them in accordance with its terms except
that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought.
(h) Registration Rights Agreement. The Registration Rights
Agreement has been duly authorized by the Issuers and, when executed
and delivered by the Issuers (assuming the due authorization,
execution and delivery thereof by the Initial Purchasers), will
constitute a valid and legally binding agreement of the Issuers,
enforceable against each of them in accordance with its terms except
(i) that the enforcement thereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity and the discretion of
the court before which any proceeding therefor may be brought and (ii)
as any rights to indemnity or contribution thereunder may be limited
by
<PAGE> 14
-11-
federal and state securities laws and public policy considerations.
(i) Notes. The Notes, the Exchange Notes and the Private
Exchange Notes have each been duly authorized by the Issuers and, when
executed by the Issuers and authenticated by the Trustee in accordance
with the provisions of the Indenture and, in the case of the Notes,
delivered to and paid for by the Initial Purchasers in accordance with
the terms of this Agreement (or, in the case of the Notes to be issued
in payment of interest on the Notes, delivered to holders of the Notes
in accordance with the terms of the Indenture), will be entitled to
the benefits of the Indenture and will constitute valid and legally
binding obligations of the Issuers enforceable in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought.
(j) Other Documents. Each other TransWestern Delivered
Document executed and delivered by the Issuers, TWP or Communications
(to the extent a party thereto) has been duly and validly authorized,
executed and delivered by the Issuers, TWP and Communications (to the
extent a party thereto) and constitutes or will constitute a valid and
legally binding obligation of the Issuers, TWP and Communications (to
the extent a party thereto), enforceable against them in accordance
with its terms, except (i) that the enforcement thereof may be subject
to bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and to general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought and (ii) as any rights to indemnity and contribution
hereunder and thereunder may be limited by applicable law.
(k) Solvency. Immediately after the consummation of the
transactions contemplated by this Agreement (including the use of
proceeds from the sale of Notes at the Time of Purchase), the fair
value and present fair saleable value of the assets of each of the
Company and TWP (on a consolidated basis) will exceed the sum of its
stated liabilities and identified contingent liabilities; each of the
Company and TWP (on a consolidated basis) will not be, after giving
effect to the execution, delivery and performance of this Agreement
and the consummation of the transactions
<PAGE> 15
-12-
contemplated hereby (including the use of proceeds from the sale of
Notes at the Time of Purchase), (i) left with unreasonably small
capital with which to carry on its business as it is proposed to be
conducted, (ii) unable to pay its debts (contingent or otherwise) as
they mature or (iii) otherwise insolvent.
(l) Absence of Certain Changes. Subsequent to the date as of
which information is given in the Memorandum, except as described in
the Memorandum, there has not been (i) any event or condition that has
a Material Adverse Effect, (ii) any transaction entered into by the
Issuers or TWP, other than in the ordinary course of business, that
has a Material Adverse Effect, or (iii) any dividend or distribution
of any kind declared, paid or made by the Company on its Partnership
Interests other than Permitted Tax Distributions and other
distributions permitted under the Indenture.
(m) No Violation. Neither the execution, delivery or
performance of any of the TransWestern Delivered Documents nor the
consummation of any of the transactions contemplated thereby (i) will
violate or conflict with the Certificate of Limited Partnership or the
Third Amended Partnership Agreement of the Company or the LLC
Agreement of TWP, (ii) will violate or conflict with Capital's or
Communications' Certificate of Incorporation or By-Laws, (iii) other
than as a result of the Asset Drop-Down, will, as of the Time of
Purchase, result in any breach of or default under any provision of
any material contract or agreement to which the Company, Capital, TWP
or Communications is a party or by which the Company, Capital, TWP or
Communications is bound or to which any property or assets of the
Company, Capital, TWP or Communications is subject, (iv) violates, is
prohibited by or requires the Company, Capital, TWP or Communications
to obtain or make any consent, authorization, approval, registration
or filing under any statute, law, ordinance, regulation (including
without limitation Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System), rule, judgment, decree or order of any
court or governmental agency, board, bureau, body, department or
authority, or of any other person, presently in effect or in effect at
the Time of Purchase, (v) will cause any acceleration of maturity of
any note, instrument or other indebtedness to which the Company,
Capital, TWP or Communications is a party or by which the Company,
Capital, TWP or Communications is bound or with respect to which the
Company, Capital, TWP or Communications is an obligor or guarantor, or
(vi) except as contemplated by this Agreement and the other Basic
Documents, will result in the creation or
<PAGE> 16
-13-
imposition of any Lien upon or give to any other person any interest
or right (including any right of termination or cancellation) in or
with respect to the equity or any of the properties, assets, business,
agreements or contracts of the Company, Capital, TWP or
Communications, other than any violation, conflict, breach, default,
acceleration or Lien which individually or in the aggregate does not
have a Material Adverse Effect.
(n) Title and Condition of Properties and Assets. As of the
date hereof, except as a result of the Asset Drop-Down, the Company,
TWP and Communications have good and valid title to all of their
respective owned assets and properties which are material to their
business, taken as a whole, and Capital has no operating assets. As
of the Time of Purchase, except as a result of the Asset Drop-Down,
the Company, TWP and Communications will have good and valid title to
all of their respective assets and properties which are material to
their business, taken as a whole, (except as sold or otherwise
disposed of in the ordinary course of business), subject to no Liens
other than Permitted Liens (as defined in the Indenture).
(o) Leased Property. Except as a result of the Asset
Drop-Down, each lease of real property or personal property that is
material to the business of the Company, TWP and Communications, taken
as a whole, is in full force and effect and is valid and enforceable
in accordance with its terms. Except as a result of the Asset
Drop-Down, there is not under any such lease any default by the
Company, TWP or Communications, or any event that with notice or lapse
of time or both would constitute such a default by the Company, TWP or
Communications and with respect to which the Company, TWP or
Communications has not taken adequate steps to prevent such default
from occurring, except for any such default as has not had a Material
Adverse Effect; all of such events, if any, and the aforesaid steps
taken by the Company, TWP or Communications are set forth in the
Memorandum. There is not under any such lease any default by any
other party thereto or any event that with notice or lapse of time or
both would constitute such a default thereunder by such party, which
default has a Material Adverse Effect. Neither the Company, TWP nor
Communications owns any real property.
(p) Litigation. Except as set forth in the Memorandum, there
are no actions, suits, proceedings or investigations, either at law or
in equity, or before any commission or other administrative authority
in any United States jurisdiction, of any kind now pending or, to the
best of the Company's, Capital's, TWP's or Communications'
<PAGE> 17
-14-
knowledge, threatened involving the Company, Capital, TWP or
Communications that (i) seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance and sale of the
Notes by the Issuers or any of the other material transactions
contemplated hereby, (ii) questions the legality or validity of any
such transactions or seeks to recover damages or obtain other relief
in connection with any such transactions or (iii) which has
individually or in the aggregate, a Material Adverse Effect.
(q) Patents, Copyrights and Trademarks. There are no
material copyrights, patents, trade names, trademarks and service
marks, identifying whether registered or at common law, and all
applications therefor that are pending or in the process of
preparation (collectively, the "Intellectual Property Rights"), that
are directly or indirectly owned, licensed, used, required for use or
controlled in whole or in part by the Company, TWP or Communications
and no licenses and other agreements allowing the Company, TWP or
Communications to use Intellectual Property Rights of third parties in
the United States that are not accurately described in the Memorandum.
Except as otherwise described in the Memorandum, the Company and TWP
are the sole and exclusive owners of the Intellectual Property Rights
described therein, free and clear of any Lien (other than Permitted
Liens) and such Intellectual Property Rights have not been and are not
being challenged in any way or involved in any pending or threatened
unfair competition proceeding. Except as set forth in the Memorandum,
there has been and is no claim challenging the scope, validity or
enforceability of any of the Intellectual Property Rights. Neither
the Company, TWP nor Communications has infringed, or is infringing or
is subject to any unfair competition claim with respect to any service
mark or trade name registration or application therefor, trademark,
trademark registration or application therefor, copyright, copyright
registration or application therefor, patent, patent registration or
application therefor, or any other proprietary or intellectual
property right of any person or entity and neither the Company, TWP
nor Communications has received or has any knowledge, after due
inquiry, of any such claim or other notice of any such violation or
infringement.
(r) Compliance with Laws, Etc. The Company, Capital, TWP and
Communications are in compliance with, and the execution and delivery
of this Agreement and the other TransWestern Delivered Documents and
the consummation by the Company, Capital, TWP and Communications of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes in the manner and for
<PAGE> 18
-15-
the purpose contemplated by this Agreement) will comply with,
all federal, state and local statutes, laws, ordinances, regulations,
rules, permits, judgments, orders or decrees applicable to the Company,
Capital, TWP or Communications and there does not exist any basis for
any claim of default under or violation of any such statute, law,
ordinance, regulation, rule, judgment, order or decree except such
noncompliance, defaults or violations, if any, that in the aggregate do
not have a Material Adverse Effect. Except as set forth in the
Memorandum, the Company, Capital, TWP and Communications are in
compliance with (i) all applicable requirements of all United States,
state and local governmental authorities with respect to environmental
protection, including, without limitation, regulations establishing
quality criteria and standards for air, water, land and hazardous
materials, (ii) all applicable requirements of the Occupational Safety
and Health Act of 1970 within the United States and rules, regulations
and orders thereunder and (iii) all applicable laws and related rules
and regulations of all United States jurisdictions affecting labor
union activities, civil rights or employment, including, without
limitation, in the United States, the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Equal Employment
Opportunity Act of 1972, the Employee Retirement Income Security Act of
1974, the Equal Pay Act and the National Labor Relations Act, in each
case, other than any such noncompliance which in the aggregate has a
Material Adverse Effect. Neither of the Issuers nor TWP is currently
or, after giving effect to the consummation of the transactions
contemplated by this Agreement and the Basic Documents, will be (i) in
violation of its respective organizational documents, or (ii) in
default (nor will an event occur which with notice or passage of time
or both would constitute such a default) under or in violation of any
indenture or loan or credit agreement or any other material agreement
or instrument to which it is a party or by which it or any of its
properties or assets may be bound or affected (except as set forth in
the Memorandum), which default or violation (individually or in the
aggregate) (x) materially and adversely affects the legality, validity
or enforceability of this Agreement or any of the Basic Documents or
(y) has a Material Adverse Effect. As of the Closing, neither the
Company, Capital, TWP nor Communications is engaged in any printing or
manufacturing activities.
(s) Governmental Authorizations and Regulations. There are
no material licenses, franchises, permits and other governmental
authorizations held by the Company, Capital, TWP or Communications
with respect to the conduct of their respective businesses that are
not accurately described in the Memorandum. Except as set forth in
the Memorandum, no
<PAGE> 19
-16-
authorization, consent, approval, license, qualification or formal
exemption from, nor any filing, declaration or registration with, any
court, governmental agency, securities exchange or any regulatory
authority is required in connection with the execution, delivery or
performance by the Issuers and TWP of this Agreement or any of the
other Basic Documents or any of the transactions contemplated thereby,
except (i) as may be required under state securities or "blue sky"
laws or the laws of any foreign jurisdiction in connection with the
offer and sale of the Notes, (ii) as may be required in connection
with the Asset Drop-Down or (iii) as does not (individually or in the
aggregate) have a Material Adverse Effect. All such authorizations,
consents, approvals, licenses, qualifications, exemptions, filings,
declarations and registrations set forth in the Memorandum (other than
as disclosed therein) which are required to have been obtained by the
date hereof have been obtained or made, as the case may be, and are in
full force and effect and not the subject of any pending or, to the
knowledge of the Company, threatened attack by appeal or direct
proceeding or otherwise.
(t) Labor Matters. No employees of the Company, Capital, TWP
or Communications are currently represented by a labor union or labor
organization, no labor union or labor organization has been certified
or recognized as a representative of any such employees, and neither
the Company, Capital, TWP nor Communications has any obligation under
any collective bargaining agreement or other agreement with any labor
union or labor organization that, in any way, affects the Company,
Capital, TWP or Communications.
(u) Employees. Except as set forth in the Memorandum, there
has been no resignation or termination of employment of any officer or
key employee of the Company, Capital, TWP or Communications and
neither the Company, Capital, TWP nor Communications has any knowledge
of any impending or threatened resignation or termination of
employment in any case that would have a Material Adverse Effect.
Except as set forth in the Memorandum, neither the Company, Capital,
TWP nor Communications has entered into any severance or similar
arrangement in respect of any present or former employees required to
be disclosed therein.
(v) Brokers. Except as described in the Memorandum, there
are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the
Company, Capital, TWP or Communications.
<PAGE> 20
-17-
(w) Tax Matters. The Company and Communications (hereinafter
referred to collectively as the "Taxpayers") have duly filed all tax
reports and returns required to be filed by them, including all
federal, state, local and foreign tax returns and reports, and the
Taxpayers have paid in full all taxes required to be paid by such
Taxpayers before such payment became delinquent other than taxes being
contested in good faith and for which adequate reserves have been
established in accordance with GAAP, except where the failure to file
such return or pay such tax does not have a Material Adverse Effect.
(x) Investment Company. Neither of the Issuers, TWP nor
Communications is and immediately after the Time of Purchase none of
them will be, "investment companies" or, to the Company's knowledge,
companies "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(y) ERISA. The execution and delivery of this Agreement and
the other Basic Documents and the sale of the Notes to the Initial
Purchasers will not involve any non-exempt prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code
on the part of the Issuers. The preceding representation is made in
reliance on and subject to the accuracy of the Initial Purchasers'
representations and warranties in Section 3.2 hereof. No Reportable
Event (as defined in Section 4043 of ERISA) has occurred during the
five-year period prior to the date on which this representation is
made or deemed made with respect to any Employee Benefit Plan, and the
Issuers and Commonly Controlled Entities have complied in all material
respects with the applicable provisions of ERISA and the Code in
connection with the Employee Benefit Plans. The present value of all
accrued benefits under each Employee Benefit Plan subject to Title IV
of ERISA (based on the current liability, interest rate and other
assumptions used in preparation of the plan's Form 5500 Annual Report)
did not, as of the last annual valuation date prior to the date on
which this representation is made or deemed made, exceed the value of
the assets of such plan allocable to such accrued benefits. Neither
of the Issuers, nor any Commonly Controlled Entity (as defined below)
has had a complete or partial withdrawal from any Multiemployer Plan
(as defined in Section 4001(a)(3) of ERISA), and neither the Issuers,
nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Issuers, or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which such
representation is made or
<PAGE> 21
-18-
deemed made. No such Multiemployer Plan is in reorganization or
insolvent. There are no material liabilities of the Issuers or any
Commonly Controlled Entity for post-retirement benefits to be provided
to their current and former employees under Plans which are welfare
benefit plans (as described in Section 3(1) of ERISA). With respect
to each Employee Benefit Plan, no event has occurred and there exists
no conditions or set of circumstances in connection with which the
Company or any of its subsidiaries may, directly or indirectly
(through a Commonly Controlled Entity or otherwise) be subject to
material liability under the Code, ERISA or any other applicable law,
except for liability for benefit claims and funding obligations
payable in the ordinary course. "Commonly Controlled Entity" means
any person or entity that, together with any Issuer, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code.
"Employee Benefit Plan" means an employee benefit plan, as defined in
Section 3(3) of ERISA, which is maintained or contributed to by an
Issuer, or any Commonly Controlled Entity or to which an Issuer, or
any Commonly Controlled Entity may have liability.
(z) The Offering. No form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act)
was used by the Issuers or their representatives in connection with
the offer and sale of the Notes. Neither of the Issuers nor any
Person authorized to act for any of them has, either directly or
indirectly, sold or offered for sale any of the Notes or any other
similar security of the Issuers to, or solicited any offers to buy any
thereof from, or has otherwise approached or negotiated in respect
thereof with, any Person or Persons other than with or through the
Initial Purchasers; and the Issuers agree that neither they nor any
Person acting on their behalf will sell or offer for sale any Notes
to, or solicit any offers to buy any Notes from, or otherwise approach
or negotiate in respect thereof with, any Person or Persons so as
thereby to bring the issuance or sale of any of the Notes within the
provisions of Section 5 of the Act. Assuming the accuracy of the
Initial Purchasers' representations and warranties set forth in
Section 3.2 hereof, and the due performance by the Initial Purchasers
of the covenants and agreements set forth in Section 3.2 hereof, the
offer and sale of the Notes to the Initial Purchasers in the manner
contemplated by this Agreement and the Memorandum does not require
registration under the Act and the Indenture does not require
qualification under the Trust Indenture Act. No securities of the
Issuers are of the same class (within the meaning of Rule 144A under
the Act) as the Notes and listed on a national securities exchange
registered under Section 6 of
<PAGE> 22
-19-
the Exchange Act, or quoted in a U.S. automated interdealer quotation
system. Neither of the Issuers has taken, nor will either of them
take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or
manipulation of the price of the Notes. Neither of the Issuers nor
any of their respective Affiliates or any person acting on its or
their behalf (other than the Initial Purchasers) has engaged in any
directed selling efforts (as that term is defined in Regulation S with
respect to the Notes and the Company and their respective Affiliates
and any person acting on its or their behalf (other than the Initial
Purchasers) have acted in accordance with the offering restrictions
requirements of Regulation S.
(aa) Insurance. TWP and/or the Company carry insurance
(including self insurance) in such amounts and covering such risks as
in their reasonable determination is adequate for the conduct of their
business and the value of their properties.
(bb) Asset-Drop-Down. On or prior to the date hereof, there
were transferred by the Company to TWP all of the following assets
owned by the Company as of such date: receivables, customer lists and
inventory located at property owned or leased by the Company; after
giving effect to such transfer TWP has good title to such assets, and
none of such assets are subject to any Lien except Permitted Liens (as
defined in the Indenture). Except as set forth on the Disclosure
Schedule attached hereto, TWP has a valid leasehold interest in all
its real property used in its business, and good title to, or a valid
leasehold interest in, all its other material property (other than
assets described in the preceding sentence) used in its business, and
none of such property described in this sentence is subject to any
Lien (except Permitted Liens), except insofar as the failure to have
such title or leasehold interest or the presence of any non-permitted
Lien would not reasonably be expected to have a Material Adverse
Effect.
Section 3.2. Resale of Notes. Each of the Initial Purchasers
represents and warrants (as to itself only) that it is a "qualified
institutional buyer" as defined in Rule 144A of the Act ("QIB"). Each of the
Initial Purchasers agrees with the Issuers (as to itself only) that (a) it has
not and will not solicit offers for, or offer or sell, the Notes by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act; and (b) it has and will solicit offers
for the Notes only from, and
<PAGE> 23
-20-
will offer the Notes only to (A) in the case of offers inside the United
States, (i) Persons whom the Initial Purchasers reasonably believe to be QIBs
or, if any such Person is buying for one or more institutional accounts for
which such Person is acting as fiduciary or agent, only when such Person has
represented to the Initial Purchasers that each such account is a QIB, to whom
notice has been given that such sale or delivery is being made in reliance on
Rule 144A, and, in each case, in transactions under Rule 144A or (ii) a limited
number of other institutional investors reasonably believed by the Initial
Purchasers to be "Accredited Investors" (as defined in Rule 501(a)(1), (2), (3)
or (7) of the Act) that, prior to their purchase of the Notes, deliver to the
Initial Purchasers a letter containing the representations and agreements set
forth in Annex A to the Memorandum and (B) in the case of offers outside the
United States, to Persons other than U.S. Persons ("foreign purchasers," which
term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other
than an estate or trust)); provided, however, that, in the case of this clause
(B), in purchasing such Notes such Persons are deemed to have represented and
agreed as provided under the caption "Notice to Investors" contained in the
Memorandum.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the
Initial Purchasers. The obligation of each Initial Purchaser to purchase the
Notes to be purchased at the Closing is subject, at the Time of Purchase, to
the satisfaction of the following conditions:
(a) At the Time of Purchase, the Initial Purchasers shall
have received the opinions, dated as of the Time of Purchase and
addressed to the Initial Purchasers, of Kirkland & Ellis, counsel for
the Issuers, in form and substance reasonably satisfactory to counsel
for the Initial Purchasers, to the effect as set forth on Exhibit A
hereto.
(b) The Initial Purchasers shall have received an opinion,
addressed to the Initial Purchasers in form and substance satisfactory
to the Initial Purchasers and dated the Time of Purchase, of Cahill
Gordon & Reindel, counsel to the Initial Purchasers.
(c) The Initial Purchasers shall have received from Ernst &
Young LLP a comfort letter or letters dated the date
<PAGE> 24
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hereof and the Closing in form and substance reasonably satisfactory
to counsel to the Initial Purchasers.
(d) The representations and warranties made by the Issuers,
TWP and Communications herein shall be true and correct in all
material respects (except for changes expressly provided for in this
Agreement) on and as of the Time of Purchase with the same effect as
though such representations and warranties had been made on and as of
the Time of Purchase, the Issuers shall have complied in all material
respects with all agreements as set forth in or contemplated hereunder
and in the Basic Documents required to be performed by it at or prior
to the Time of Purchase and the Company shall have furnished to each
Initial Purchaser a certificate, dated the Time of Purchase, to such
effect.
(e) Subsequent to the date of the Memorandum, (i) there shall
not have been any change which has a Material Adverse Effect and (ii)
the Issuers and TWP shall not have taken any voluntary, affirmative
action to conduct their respective businesses other than in the
ordinary course.
(f) At the Time of Purchase and after giving effect to the
consummation of the transactions contemplated by this Agreement and
the Basic Documents, there shall exist no Default or Event of Default.
(g) The purchase of and payment for the Notes by the Initial
Purchasers hereunder shall not be prohibited or enjoined (temporarily
or permanently) by any applicable law or governmental regulation
(including, without limitation, Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System).
(h) At the Time of Purchase, the Initial Purchasers shall
have received a certificate, dated the Time of Purchase, from the
Company, Capital, TWP and Communications stating that the conditions
specified in Sections 4.1(d), (e), (f) and (g) have been satisfied or
duly waived at the Time of Purchase.
(i) Each of the Basic Documents shall have been executed and
delivered by all the respective parties thereto and shall be in full
force and effect.
(j) All proceedings required in order to issue the Notes and
consummate the transactions contemplated by this Agreement and all
documents and papers relating thereto shall be reasonably satisfactory
to the Initial Purchasers and counsel to the Initial Purchasers. The
Initial Purchasers
<PAGE> 25
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and counsel to the Initial Purchasers shall have received copies of
such papers and documents of the Issuers as they may reasonably
request in connection therewith, all in form and substance reasonably
satisfactory to them.
(k) The sale of the Notes hereunder shall not have been
enjoined (temporarily or permanently) at the Time of Purchase.
On or before the Closing, the Initial Purchasers and counsel
to the Initial Purchasers shall have received such further documents, opinions,
certificates and schedules or other instruments relating to the business,
corporate, legal and financial affairs of the Issuers as they may reasonably
request.
Section 4.2. Conditions Precedent to Obligations of the
Issuers. The obligations of the Issuers to deliver the Notes shall be subject
to the accuracy as of the date hereof and at the Time of Purchase (as if made
on and as of the time of Purchase) of the representations and warranties of the
Initial Purchasers herein (delivery of the purchase price by the Initial
Purchasers for the Notes being an affirmation by the Initial Purchasers of the
accuracy of their representations and warranties).
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Issuers. The Issuers covenant
and agree with each of the Initial Purchasers that:
(a) The Issuers will not amend or supplement the Memorandum
or any amendment or supplement thereto of which the Initial Purchasers
shall not previously have been advised and furnished a copy for a
reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchasers shall not have given
their consent, which consent shall not be unreasonably withheld. The
Issuers will promptly, upon the reasonable request of the Initial
Purchasers or counsel to the Initial Purchasers, make any amendments
or supplements to the Memorandum that may be necessary or advisable in
connection with the resale of the Notes by the Initial Purchasers.
(b) The Issuers will cooperate with the Initial Purchasers in
arranging for the qualification of the Notes for offering and sale
under the securities or "blue sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such qualifications
in effect for as long
<PAGE> 26
-23-
as may be reasonably necessary to complete the resale of the Notes;
provided, however, that in connection therewith, the Issuers shall not
be required to qualify as a foreign corporation, to take any acts
which would require it to qualify to do business or to execute a
general consent to service of process in any jurisdiction or subject
itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchasers of the Notes, the Exchange
Notes or the Private Exchange Notes, any event occurs or information
becomes known as a result of which the Memorandum as then amended or
supplemented would include any untrue statement of a material fact, or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if for any other reason it is necessary at any time
to amend or supplement the Memorandum to comply with applicable law,
the Issuers will promptly notify the Initial Purchasers thereof (who
thereafter will not use such Memorandum until appropriately amended or
supplemented) and will prepare, at the expense of the Issuers, an
amendment or supplement to the Memorandum that corrects such statement
or omission or effects such compliance.
(d) The Issuers will, without charge, provide to the Initial
Purchasers and to counsel to the Initial Purchasers as many copies of
the Memorandum or any amendment or supplement thereto as the Initial
Purchasers may reasonably request.
(e) The Issuers will apply the net proceeds from the sale of
the Notes as set forth under "Use of Proceeds" in the Memorandum.
(f) For and during the period ending on the date no Notes are
outstanding, the Issuers will furnish to the Initial Purchasers copies
of all reports and other communications (financial or otherwise)
furnished by the Issuers to the Trustee or the holders of the Notes
and, promptly after available, copies of any reports or financial
statements furnished to or filed by the Issuers with the Commission or
any national securities exchange on which any class of securities of
the Company may be listed.
(g) Prior to the Time of Purchase, the Company will furnish
to the Initial Purchasers, as soon as they have been prepared in final
form, a copy of any unaudited interim financial statements of the
Company for any period subsequent
<PAGE> 27
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to the period covered by the most recent financial statements
appearing in the Memorandum.
(h) None of the Issuers nor any of their Affiliates will
sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any "security" (as defined in the Act) which could be
integrated with the sale of the Notes in a manner which would require
the registration under the Act of the Notes.
(i) The Issuers will not solicit any offer to buy or offer to
sell the Notes by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or
in any manner involving a public offering within the meaning of
Section 4(2) of the Act.
(j) For so long as any of the Notes remain outstanding and
are "restricted securities" within the meaning of Rule 144(a)(3) under
the Act and not saleable in full under Rule 144 under the Act (or any
successor provision), the Issuers will make available, upon request,
to any seller of such Notes the information specified in Rule
144A(d)(4) under the Act, unless the Issuers are then subject to
Section 13 or 15(d) of the Exchange Act.
(k) The Issuers will use their best efforts to (i) permit the
Notes to be included for quotation on PORTAL and (ii) permit the Notes
to be eligible for clearance and settlement through The Depository
Trust Company.
(l) The Issuers, TWP and Communications (to the extent a
party thereto) will do and perform all things required to be done and
performed by them under this Agreement and the other Basic Documents
prior to or after the Closing, subject to the qualifications and
limitations in the writing that expresses such obligations, and to
satisfy all conditions precedent on their part to the obligations of
the Initial Purchasers under this Agreement to purchase and accept
delivery of the Notes.
(m) In connection with Notes offered and sold in an offshore
transaction (as defined in Regulation S), the Issuers will not
register any transfer of such Notes not made in accordance with the
provisions of Regulation S and will not, except in accordance with the
provisions of Regulation S, if applicable, issue any such Notes in the
form of definitive securities.
ARTICLE VI
<PAGE> 28
-25-
FEES
Section 6.1. Costs, Expenses and Taxes. The Issuers, jointly
and severally, agree to pay all costs and expenses incident to the performance
of their obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 8.2 hereof, including, but not limited to, all costs and expenses
incident to (i) the Company's cost of preparation, printing, reproduction,
execution and delivery of this Agreement, each of the other Basic Documents,
any amendment or supplement to or modification of any of the foregoing and any
and all other documents furnished pursuant hereto or thereto or in connection
herewith or therewith, (ii) any costs of printing the Memorandum and any
amendment or supplement thereto, any other marketing related materials, (iii)
all arrangements relating to the delivery to the Initial Purchasers of copies
of the foregoing documents, (iv) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Issuers, (v)
preparation (including printing), issuance and delivery to the Initial
Purchasers of the Notes, (vi) the qualification of the Notes under state
securities and "blue sky" laws, including filing fees, word processing and
reproduction costs of any "blue sky" memoranda and fees (not to exceed $15,000)
and disbursements of counsel to the Initial Purchasers relating thereto, (vii)
one-half of the expenses in connection with any meetings with prospective
investors in the Notes, (viii) fees and expenses of the Trustee, including fees
and expenses of counsel to the Trustee, (ix) all expenses and listing fees
incurred in connection with the application for quotation of the Notes on
PORTAL, (x) any fees charged by investment rating agencies for the rating of
the Notes, and (xi) except as limited by Article VII, all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses), if
any, of the successful enforcement of this Agreement, the Notes or any other
agreement furnished pursuant hereto or thereto or in connection herewith or
therewith. In addition, the Issuers shall pay any and all stamp, transfer and
other similar taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, any other Basic Document or the
issuance of the Notes, and shall save and hold each Initial Purchaser harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying, or omission to pay, such taxes.
ARTICLE VII
INDEMNITY
<PAGE> 29
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Section 7.1. Indemnity.
(a) Indemnification by the Issuers. The Issuers and TWP,
jointly and severally, agree and covenant to hold harmless and indemnify each
of the Initial Purchasers and any Affiliates thereof (including any director,
officer, employee, agent or controlling Person of any of the foregoing) from
and against any losses, claims, damages, liabilities and expenses (including
expenses of investigation) to which such Initial Purchaser and its Affiliates
may become subject arising out of or based upon any untrue statement or alleged
untrue statement of any material fact contained in the Memorandum and any
amendments or supplements thereto, the Basic Documents or any application or
other documents filed with the Commission or any State Commission
(collectively, the "Offering Materials") or arising out of or based upon the
omission or alleged omission to state in any of the Offering Materials a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Issuers and TWP shall not
be liable under this paragraph (a) to the extent that such losses, claims,
damages or liabilities arose out of or are based upon an untrue statement or
omission made in any of the documents referred to in this paragraph (a) in
reliance upon and in conformity with the information relating to the Initial
Purchasers furnished in writing by such Initial Purchasers for inclusion
therein; provided, further, that the Issuers and TWP shall not be liable under
this paragraph (a) to the extent that such losses, claims, damages or
liabilities arose out of or are based upon an untrue statement or omission made
in any Memorandum that is corrected in any amendment or supplement thereto if
the person asserting such loss, claim, damage or liability purchased Notes from
an Initial Purchaser in reliance on such Memorandum but was not given the
amendment or supplement thereto on or prior to the confirmation of the sale of
such Notes. The Issuers and TWP, on a joint and several basis, further agree
to reimburse each Initial Purchaser for any reasonable legal and other expenses
as they are incurred by it in connection with investigating, preparing to
defend or defending any lawsuits, claims or other proceedings or investigations
arising in any manner out of or in connection with such Person being an Initial
Purchaser; provided that if the Issuers or TWP reimburse an Initial Purchaser
hereunder for any expenses incurred in connection with a lawsuit, claim or
other proceeding for which indemnification is sought, such Initial Purchaser
hereby agrees to refund such reimbursement of expenses to the extent that the
losses, claims, damages or liabilities are not entitled to indemnification
hereunder. The Issuers and TWP further agree that the indemnification,
contribution and reimbursement commitments set forth in this Article VII shall
apply whether or not an Initial Purchaser is a formal party to any such
lawsuits, claims or other proceedings. The indemnity,
<PAGE> 30
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contribution and expense reimbursement obligations of the Issuers under this
Article VII shall be in addition to any liability the Issuers or TWP may
otherwise have.
(b) Indemnification by the Initial Purchasers. Each of the
Initial Purchasers agrees and covenants, severally and not jointly, to hold
harmless and indemnify the Issuers and TWP and any Affiliates thereof
(including any director, officer, employee, agent or controlling Person of any
of the foregoing) from and against any losses, claims, damages, liabilities and
expenses insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement of any material fact contained in
the Offering Materials, or upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or omission was made in reliance upon and in conformity with
the information relating to such Initial Purchaser furnished in writing by such
Initial Purchaser for inclusion therein. The indemnity, contribution and
expense reimbursement obligations of the Initial Purchasers under this Article
VII shall be in addition to any liability the Initial Purchasers may otherwise
have.
(c) Procedure. If any Person shall be entitled to indemnity
hereunder (each an "Indemnified Party"), such Indemnified Party shall give
prompt written notice to the party or parties from which such indemnity is
sought (each an "Indemnifying Party") of the commencement of any action, suit,
investigation or proceeding, governmental or otherwise (a "Proceeding"), with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure so to notify the
Indemnifying Parties shall not relieve the Indemnifying Parties from any
obligation or liability except to the extent that the Indemnifying Parties have
been prejudiced materially by such failure. The Indemnifying Parties shall
have the right, exercisable by giving written notice to an Indemnified Party
promptly after the receipt of written notice from such Indemnified Party of
such Proceeding, to assume, at the Indemnifying Parties' expense, the defense
of any such Proceeding, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that an Indemnified Party or parties (if
more than one such Indemnified Party is named in any Proceeding) shall have the
right to employ separate counsel in any such Proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or parties unless: (1) the Indemnifying
Parties agree to pay such fees and expenses; or (2) the Indemnifying Parties
fail promptly to assume the defense of such Proceeding or fail to employ
counsel reasonably satisfactory to such Indemnified
<PAGE> 31
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Party or parties; or (3) the named parties to any such Proceeding (including
any impleaded parties) include both such Indemnified Party or parties and the
Indemnifying Party or an Affiliate of the Indemnifying Party and such
Indemnified Parties, and the Indemnified Parties shall have been advised in
writing by counsel that there may be one or more legal defenses available to
such Indemnified Party or parties that are different from or additional to
those available to the Indemnifying Parties, in which case, if such Indemnified
Party or parties notifies the Indemnifying Parties in writing that it elects to
employ separate counsel at the expense of the Indemnifying Parties, the
Indemnifying Parties shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Parties, it being
understood, however, that, unless there exists a conflict among Indemnified
Parties, the Indemnifying Parties shall not, in connection with any one such
Proceeding or separate but substantially similar or related Proceedings in the
same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party or Parties, or for fees and expenses that are
not reasonable. No Indemnified Party or Parties will settle any Proceeding
without the consent of the Indemnifying Party or Parties (but such consent
shall not be unreasonably withheld). No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened Proceeding in respect of which any Indemnified Party is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability or claims that are the
subject of such Proceeding.
Section 7.2. Contribution. If for any reason the
indemnification provided for in Section 7.1 of this Agreement is unavailable to
an Indemnified Party, or insufficient to hold it harmless, in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other, but
also the relative fault of the Indemnifying and Indemnified Parties in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Indemnifying and
Indemnified Parties shall be deemed to be in the same proportion as the total
proceeds from the offering of the
<PAGE> 32
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Notes (net of the Initial Purchasers' discounts and commissions but before
deducting expenses) received by the Issuers bear to the total discounts and
commissions received by each Initial Purchaser. The relative fault of the
Indemnifying and Indemnified Parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying or Indemnified Parties and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses incurred
by such party in connection with investigating or defending any such claim.
The Issuers, TWP and each of the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to the immediately
preceding paragraph were determined pro rata or per capita or by any other
method of allocation which does not take into account the equitable
considerations referred to in such paragraph. Notwithstanding any other
provision of this Section 7.2, no Initial Purchaser shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under
this Agreement, less the aggregate amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of the untrue or alleged
untrue statements or the omissions or alleged omissions to state a material
fact. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
Section 7.3. Registration Rights Agreement. Notwithstanding
anything to the contrary in this Article 7, the indemnification and
contribution provisions of the Registration Rights Agreement shall govern any
claim with respect thereto.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions. The representations,
warranties and covenants of the Issuers, TWP, Communications and the Initial
Purchasers made herein, the indemnity and contribution agreements contained
herein and each of the provisions of Articles VI, VII and VIII shall remain
operative and in full force and effect regardless of (a) any investigation
<PAGE> 33
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made by or on behalf of the Issuers, any Initial Purchaser or any Indemnified
Party, (b) acceptance of any of the Notes and payment therefor, (c) any
termination of this Agreement other than pursuant to Section 8.2, or (d)
disposition of the Notes by the Initial Purchasers whether by redemption,
exchange, sale or otherwise. With respect to any termination of this Agreement
pursuant to Section 8.2, this Agreement and the obligations contemplated hereby
shall terminate without liability to any party, and no party shall have any
continuing obligation hereunder or liability to any other party hereto, except
that each of the provisions of Articles VI, VII, and VIII shall remain
operative and in full force and effect regardless of any termination pursuant
thereto.
Section 8.2. Termination. (a) This Agreement may be
terminated in the sole discretion of the Initial Purchasers by notice to the
Company given prior to the Time of Purchase in the event that the Issuers shall
have failed, refused or been unable to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing:
(i) the Issuers or TWP shall have sustained any loss or
interference with respect to their businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work
stoppage or any legal or governmental proceeding, which loss or
interference, in the sole judgment of the Initial Purchasers, has a
Material Adverse Effect, or there shall have been, in the sole judgment
of the Initial Purchasers, any event or development that, individually
or in the aggregate, has a Material Adverse Effect (including without
limitation a Change of Control (as defined in the Indenture)), except
in each case as described in the Memorandum (exclusive of any amendment
or supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or
the Nasdaq National Market shall have been suspended or minimum or
maximum prices shall have been established on any such exchange or
market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or
<PAGE> 34
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any other national or international calamity or emergency, or (C) any
material change in the financial markets of the United States which, in
the case of (A), (B) or (C) above and in the sole judgment of the
Initial Purchasers, makes it impracticable or inadvisable to proceed
with the offering or the delivery of the Notes as contemplated by the
Memorandum; or
(v) any securities of the Company or TWP shall have been
downgraded or placed on any "watch list" for possible downgrading by
any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section
8.2 shall be without liability of any party to any other party except as
provided in Section 8.1 hereof.
Section 8.3. No Waiver; Modifications in Writing. No failure
or delay on the part of the Issuers or either Initial Purchaser in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies provided for herein are cumulative and
are not exclusive of any remedies that may be available to the Issuers or any
Initial Purchaser at law or in equity or otherwise. No waiver of or consent to
any departure by the Issuers from any provision of this Agreement shall be
effective unless signed in writing by the party hereto entitled to the benefit
thereof, provided that notice of any such waiver shall be given to each party
hereto as set forth below. Except as otherwise provided herein, no amendment,
modification or termination of any provision of this Agreement shall be
effective unless signed in writing by or on behalf of each of the Issuers and
each Initial Purchaser. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Issuers from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on the Issuers in any case
shall entitle the Issuers to any other or further notice or demand in similar
or other circumstances.
Section 8.4. Information Supplied by the Initial Purchasers.
The statements set forth in the first paragraph on page i and in the fourth and
fifth sentences of the fifth paragraph and the eighth paragraph under the
heading "Plan of Distribution" in the Memorandum (to the extent such statements
relate to the Initial Purchasers) constitute the only information
<PAGE> 35
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furnished by the Initial Purchasers to the Company for the purposes of Sections
3.1(a) and 7.1(a) and (b) hereof.
Section 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if to the
Initial Purchasers, shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, addressed to CIBC Oppenheimer Corp., 425 Lexington Avenue, 3rd floor,
New York, New York 10017, and First Union Capital Markets Corp., 301 South
College Street, Charlotte, North Carolina, with a copy to Cahill Gordon &
Reindel, 80 Pine Street, New York, New York, 10005, Attention: Roger Meltzer,
Esq. and (b) if to the Issuers, TWP or Communications, shall be given by
similar means to TransWestern Holdings L.P., TWP Capital Corp., TransWestern
Publishing Company LLC and TransWestern Communications Company, Inc., 8344
Clairemont Mesa Boulevard, San Diego, CA 92111, Attn: Chief Financial
Officer, with copies to Kirkland & Ellis, 200 East Randolph Drive, Chicago, IL
60601, Attn: William S. Kirsch, P.C. In each case notices, demands and other
communications shall be deemed given when received.
Section 8.6. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 8.7. Successors. This Agreement shall inure to the
benefit of and be binding upon the Initial Purchasers, the Issuers and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
Person any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such Persons and for the benefit of no other Person
except that (i) the indemnities of the Issuers contained in Section 7.1(a) of
this Agreement shall also be for the benefit of the directors, officers,
employees and agents of the Initial Purchasers and any Person or Persons who
control the Initial Purchasers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Initial
Purchasers contained in Section 7.1(b) of this Agreement shall also be for the
benefit of the directors of the Issuers, their directors, officers, employees
and agents and any Person or Persons who control the Issuers within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No
<PAGE> 36
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purchaser of Notes from the Initial Purchasers will be deemed a successor
because of such purchase.
Section 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL
PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 8.9. 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 without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Headings. The Article and Section headings and
Table of Contents used or contained in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
TRANSWESTERN HOLDINGS L.P.
By: TRANSWESTERN COMMUNICATIONS
COMPANY, INC., its general
partner
By: /s/ Joan Fiorito
---------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
TWP CAPITAL CORP.
By: /s/ Joan Fiorito
---------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
TRANSWESTERN PUBLISHING COMPANY LLC
By: /s/ Joan Fiorito
---------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
TRANSWESTERN COMMUNICATIONS COMPANY, INC.
By: /s/ Joan Fiorito
---------------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
CIBC OPPENHEIMER CORP.
By: /s/ Walter McLallen
---------------------------------------
Name: Walter McLallen
Title: Managing Director
FIRST UNION CAPITAL MARKETS CORP.
By: /s/ Eric Lloyd
---------------------------------------
Name: Eric Lloyd
Title: Director
<PAGE> 38
SCHEDULE I
Principal Amount
at Maturity
Initial Purchaser of Notes
- ---------------- -----------------
CIBC Oppenheimer Corp. $38,611,000
First Union Capital Markets Corp. 19,305,000
-----------
Total $57,916,000
-----------
<PAGE> 39
DISCLOSURE SCHEDULE
On or prior to the date hereof, the Company and TWP executed a bill of sale to
transfer all of the Company's right, title and interest in all its tangible and
intangible assets to TWP, it being understood that certain consents, approvals,
qualifications, filings, notices, licenses and permits are required in
connection therewith but have not been obtained, made, delivered or received,
as the case may be.
<PAGE> 1
EXHIBIT 10.7
================================================================================
TRANSWESTERN HOLDINGS L.P.
(formerly TransWestern Publishing Company, L.P.)
and TWP CAPITAL CORP.,
as Issuers,
and
WILMINGTON TRUST COMPANY,
as Trustee
________________
INDENTURE
Dated as of November 12, 1997
$57,916,000 Principal Amount at Maturity
11 7/8% Senior Discount Notes due 2008
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b)(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02; 4.04;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04; 10.05
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04; 10.05
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01; 7.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05; 7.01;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a) (last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.04
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.12
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
</TABLE>
- --------------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 1
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 1
Section 1.02 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.03 Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . 24
Section 1.04 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 2 THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.01 Amount of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.02 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.03 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.04 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.05 Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.06 Noteholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.07 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.08 Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.09 Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.10 Treasury Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.11 Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.12 Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.13 Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.14 CUSIP Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.15 Deposit of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.16 Book-Entry Provisions for Global Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.17 Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.18 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 3 REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.01 Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.02 Selection by Trustee of Notes to Be Redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.03 Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.04 Effect of Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.05 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.06 Notes Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 4 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.01 Payment of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.02 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.03 Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.04 Compliance Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
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<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 4.05 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.06 Limitation on Additional Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.07 Limitation on Preferred Stock of Restricted Subsidiaries. . . . . . . . . . . . . . . . . . . . 44
Section 4.08 Limitation on Capital Stock of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.09 Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.10 Limitation on Certain Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.11 Limitation on Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.12 Limitations on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.13 Limitations on Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.14 Limitation on Creation of Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.15 Limitation on Sale and Lease-Back Transactions. . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.16 Payments for Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.17 Legal Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.18 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.19 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 4.20 Maintenance of Properties; Insurance; Books and Records; Compliance with Law. . . . . . . . . . 55
Section 4.21 Further Assurance to the Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.22 Limitation on Conduct of Business of Capital. . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 5 SUCCESSOR CORPORATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 5.01 Limitation on Consolidation, Merger and Sale of Assets. . . . . . . . . . . . . . . . . . . . . 56
Section 5.02 Successor Person Substituted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 6 DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.02 Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.03 Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.04 Waiver of Past Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.05 Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.06 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.07 Rights of Holders to Receive Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.08 Collection Suit by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.09 Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.10 Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.12 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE 7 TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.01 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 7.02 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.03 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.04 Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.05 Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.06 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.07 Compensation and Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.08 Replacement of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.09 Successor Trustee by Consolidation, Merger, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.11 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.12 Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE 8 AMENDMENTS, SUPPLEMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.01 Without Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.02 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.03 Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.04 Revocation and Effect of Consents. . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.05 Notation on or Exchange of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.06 Trustee to Sign Amendments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE 9 DISCHARGE OF INDENTURE; DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.01 Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.02 Legal Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.03 Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.04 Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.05 Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions . . 77
Section 9.06 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 9.07 Moneys Held by Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 9.08 Moneys Held by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE 10 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.01 Trust Indenture Act Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.02 Notices. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.03 Communications by Holders with Other Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.04 Certificate and Opinion as to Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.05 Statements Required in Certificate and Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.06 Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.07 Business Days; Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
</TABLE>
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Section 10.09 No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.10 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.13 Table of Contents, Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.14 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
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EXHIBITS
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Exhibit A Form of Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B Form of Legend and Assignment for 144A Note . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C Form of Legend and Assignment for
Regulation S Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D Form of Legend for Global Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
Exhibit E Form of Certificate to Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
Exhibit F Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to
Regulation S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
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<PAGE> 9
INDENTURE, dated as of November 12, 1997, among TRANSWESTERN
HOLDINGS L.P., a Delaware limited partnership (formerly TransWestern Publishing
Company, L.P.) (the "Company"), TWP CAPITAL CORP., a Delaware corporation
("Capital" and, together with the Company, the "Issuers"), and WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Issuers' 11
7/8% Senior Discount Notes due 2008 (the "Notes," which term shall include any
Notes issued in lieu of cash interest on the Notes as and to the extent
permitted by this Indenture):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
"Accreted Value" means, as of any date prior to November 15,
2002, an amount per $1,000 principal amount at maturity of Notes that is equal
to the sum of (a) $561.16 and (b) the portion of the excess of the principal
amount at maturity of each Note over $561.16 which shall have been amortized on
a daily basis and compounded semi-annually on each May 15 and November 15 at
the rate of 11-7/8% per annum from the Issue Date through the date of
determination computed on the basis of a 360-day year of twelve 30-day months;
and, as of any date on or after November 15, 2002, the Accreted Value of each
Note shall mean the aggregate principal amount at maturity of such Note.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary) existing at the time such Person becomes
a Restricted Subsidiary or assumed in connection with the acquisition of assets
from such Person.
"Additional Interest" means additional interest on the Notes
which the Issuers, jointly and severally, agree to pay to the Holders pursuant
to Section 4 of the Registration Rights Agreement.
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise.
<PAGE> 10
-2-
"Agent" means the Registrar, any Paying Agent, or agent for
service of notices and demands.
"Asset Sale" means the sale, transfer or other disposition in
any single transaction or series of related transactions having a fair market
value in excess of $2,000,000 of (a) any Capital Stock of or other equity
interest in any Restricted Subsidiary of the Issuers, (b) all or substantially
all of the assets of the Issuers, (c) real property or (d) all or substantially
all of the assets of a division, line of business or comparable business
segment of the Issuers; provided that Asset Sales shall not include the
contribution of any assets to a joint venture, partnership or other Person
(which may be a Subsidiary) to the extent such contribution constitutes a
Permitted Investment (other than by operation of clause (iv) of the definition
thereof).
"Asset Sale Proceeds" means, with respect to any Asset Sale,
(i) cash received by the Issuers from such Asset Sale (including cash received
as consideration for the assumption of liabilities incurred in connection with
or in anticipation of such Asset Sale), after (a) provision for all income or
other taxes (including taxes required to be distributed under the partnership
agreement of the Company) measured by or resulting from such Asset Sale, (b)
payment of all brokerage commissions, underwriting and other fees and expenses
related to such Asset Sale, (c) provision for minority interest holders in any
Restricted Subsidiary as a result of such Asset Sale and (d) deduction of
appropriate amounts to be provided by the Issuers as a reserve, in accordance
with GAAP, against any liabilities associated with the assets sold or disposed
of in such Asset Sale and retained by the Issuers after such Asset Sale,
including, without limitation, severance, healthcare, pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with the assets
sold or disposed of in such Asset Sale, and (ii) promissory notes and other
non-cash consideration received by the Issuers from such Asset Sale or other
disposition upon the liquidation or conversion of such notes or noncash
consideration into cash.
"Attributable Indebtedness" in respect of a Sale and
Lease-Back Transaction means, as at the time of determination, the greater of
(i) the fair value of the property subject to such arrangement (as determined
by the Board of Directors of the Company) and (ii) the present value of the
total obligations (discounted at a rate of 10%, compounded annually) of the
lessee for rental payments during the remaining term of the lease included in
such Sale and Lease-Back Transaction (including any period for which such lease
has been extended).
"Available Asset Sale Proceeds" means, with respect to any
Asset Sale, the aggregate Asset Sale Proceeds from such Asset Sale that have
not been applied in accordance
<PAGE> 11
-3-
with clause (iii)(a) or (iii)(b) of Section 4.10(a), and that have not been the
basis for an Excess Proceeds Offer in accordance with clause (iii)(c) of
Section 4.10(a).
"Board of Directors" means (i) in the case of a Person that is
a limited partnership, the board of directors of its corporate general partner
or any committee authorized to act therefor (or, if the general partner is
itself a limited partnership, the board of directors of such general partner's
corporate general partner or any committee authorized to act therefor), (ii) in
the case of a Person that is a corporation, the board of directors of such
Person or any committee authorized to act therefor and (iii) in the case of any
other Person, the board of directors, management committee or similar governing
body or any authorized committee thereof responsible for the management of the
business and affairs of such Person.
"Board Resolution" means a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors of an Issuer and to be in full force and effect, and delivered to the
Trustee.
"Capital" means the party named as such in the first paragraph
of this Indenture until a successor replaces such party pursuant to Article 5
of this Indenture and thereafter means the successor.
"Capital II" means TWP Capital Corp. II, a Delaware
corporation and a Wholly-Owned Subsidiary of TWP.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of capital stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into or exercisable for any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Equivalents" means (i) direct obligations of the United
States of America or any agency thereof, or obligations guaranteed or insured
by the United States of America; provided that in each case such obligations
mature within one year from the date of acquisition thereof, (ii) certificates
of deposit maturing within one year from the date of creation thereof issued by
any U.S. national or state banking institution having capital, surplus and
undivided profits aggregating at least $250,000,000 and at the time of
investment rated at least A-1 by S&P and P-1 by Moody's, (iii) commercial paper
with a maturity of 180 days or
<PAGE> 12
-4-
less issued by a corporation (except an Affiliate of the Company) organized
under the laws of any state of the United States or the District of Columbia
and at the time of investment rated at least A-1 by S&P or at least P-1 by
Moody's, (iv) repurchase agreements and reverse repurchase agreements relating
to marketable direct obligations issued or unconditionally guaranteed by the
United States of America or issued by an agency thereof and backed by the full
faith and credit of the United States of America, in each case maturing within
one year from the date of acquisition; provided that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency, and (v) tax-exempt auction rate
securities and municipal preferred stock, in each case, subject to reset no
more than 35 days after the date of acquisition and having a rating of at least
AA by S&P or Aa by Moody's at the time of investment.
"Change of Control" means the occurrence of one or more of the
following events: (i) any Person (including a Person's Affiliates and
associates), other than a Permitted Holder, becomes the beneficial owner (as
defined under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of 50% or more of the total voting or economic power of the
Common Stock of the Company or Communications, (ii) any Person (including a
Person's Affiliates and associates), other than a Permitted Holder, becomes the
beneficial owner of more than 33 1/3% of the total voting power of the Common
Stock of the Company or Communications, and the Permitted Holders beneficially
own, in the aggregate, a lesser percentage of the total voting power of the
Common Stock of the Company or Communications, as the case may be, than such
other Person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors of the Company, (iii) the Company ceases to directly own 99% of the
total voting and economic power of the Common Stock of TWP, (iv) the admission
of any Person as a general partner of the Company after which Communications,
together with one or more Permitted Holders, do not have the sole power,
directly or indirectly, to take all of the actions they are entitled or
required to take under the partnership agreement of the Company as in effect on
the Issue Date, (v) there shall be consummated any consolidation or merger of
either Issuer in which such Issuer is not the continuing or surviving
corporation or pursuant to which the Common Stock of such Issuer would be
converted into cash, securities or other property, other than a merger or
consolidation of such Issuer in which the beneficial owners of the Common Stock
of such Issuer outstanding immediately prior to the consolidation or merger
hold, directly or indirectly, at least a majority of the Common Stock of the
surviving corporation immediately after such consolidation or merger, or (vi)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of Communications (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of Communications has been approved by a
majority of the directors then still in office who either were directors at
<PAGE> 13
-5-
the beginning of such period or whose election or recommendation for election
was previously so approved) cease to constitute a majority of the Board of
Directors of Communications.
"CIBC Merchant Fund" means the CIBC WG Argosy Merchant Fund 2,
L.L.C.
"CIVC" means Continental Illinois Venture Corporation.
"Commodity Hedge Agreement" shall mean any option, hedge or
other similar agreement or arrangement designed to protect against fluctuations
in commodity or materials prices.
"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or
others that will control the management and policies of such Person.
"Communications" means TransWestern Communications Company,
Inc., a Delaware corporation, which is the general partner of the Company and
the managing member of TWP.
"Company" means the party named as such in the first paragraph
of this Indenture until a successor replaces such party pursuant to Article 5
of this Indenture and thereafter means the successor.
"Consolidated Interest Expense" means, with respect to any
Person, for any period, the aggregate amount of interest which, in conformity
with GAAP, would be set forth opposite the caption "interest expense" or any
like caption on an income statement for such Person and its Subsidiaries on a
consolidated basis (including, but not limited to, Redeemable Dividends,
whether paid or accrued, on Preferred Stock of Subsidiaries, imputed interest
included in Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, amortization of
other financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other non-cash
interest expense (other than interest amortized to cost of sales)) plus,
without duplication, all net capitalized interest for such period and all
interest incurred or paid under any guarantee of Indebtedness (including a
guarantee of principal, interest or any combination thereof) of any Person,
plus the amount of all dividends or distributions paid on Disqualified Capital
Stock (other than dividends paid or payable in shares of Capital Stock of the
Company), less the amortization of deferred financing costs.
<PAGE> 14
-6-
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP, plus, in the case of the Company, payments by the Company to the
Equity Compensation Trust for the benefit of the beneficiaries thereof, minus
Permitted Tax Distributions (to the extent such Permitted Tax Distributions are
made); provided, however, that (a) the Net Income of any Person (the "other
Person") in which the Person in question or any of its Subsidiaries has less
than a 100% interest (which interest does not cause the net income of such
other Person to be consolidated into the net income of the Person in question
in accordance with GAAP) shall be included only to the extent of the amount of
dividends or distributions paid to the Person in question or the Subsidiary,
(b) the Net Income of any Subsidiary of the Person in question (other than TWP,
if the Person in question is the Company) that is subject to any restriction or
limitation on the payment of dividends or the making of other distributions
(other than pursuant to the Notes or as permitted under Section 4.21) shall be
excluded to the extent of such restriction or limitation, (c) (i) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition and (ii) any net gain (but not
loss) resulting from an Asset Sale by the Person in question or any of its
Subsidiaries other than in the ordinary course of business shall be excluded,
and (d) extraordinary, unusual and non-recurring gains and losses (including
any related tax effects on the Issuers) shall be excluded.
"Consolidated Net Worth" means, with respect to any Person at
any date, the consolidated stockholder's equity of such Person less the amount
of such stockholder's equity attributable to Disqualified Capital Stock of such
Person and its Subsidiaries, as determined in accordance with GAAP.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
10890.
"Default" means any condition or event that is, or with the
passing of time or giving of any notice expressly required under Section 6.01
(or both) would be, an Event of Default.
"Depository" means, with respect to the Notes issued in the
form of one or more Global Notes, The Depository Trust Company or another
Person designated as Depository by the Issuers, which Person must be a clearing
agency registered under the Exchange Act.
<PAGE> 15
-7-
"Disqualified Capital Stock" means any Capital Stock of the
Company or a Restricted Subsidiary thereof which, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable at
the option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness; provided that Capital Stock of the Company that is held by a
current or former employee of the Company subject to a put option and/or a call
option with the Company triggered by termination of such employee's employment
with the Company and/or the Company's performance shall not be deemed to be
Disqualified Capital Stock solely by virtue of such call option and/or put
option. Without limitation of the foregoing, Disqualified Capital Stock shall
be deemed to include (i) any Preferred Stock of a Restricted Subsidiary of the
Company and (ii) any Preferred Stock of the Company, with respect to either of
which, under the terms of such Preferred Stock, by agreement or otherwise, such
Restricted Subsidiary or the Company is obligated to pay current dividends or
distributions in cash (other than Permitted Tax Distributions) during the
period prior to the maturity date of the Notes; provided, however, that
Preferred Stock of the Company or any Restricted Subsidiary thereof that is
issued with the benefit of provisions requiring a change of control offer to be
made for such Preferred Stock in the event of a change of control of the
Company or such Restricted Subsidiary, which provisions have substantially the
same effect as the provisions described in Section 4.18, shall not be deemed to
be Disqualified Capital Stock solely by virtue of such provisions.
"EBITDA" means, for any Person, for any period, an amount
equal to (a) the sum of (i) Consolidated Net Income for such period, plus (ii)
the provision for taxes for such period based on income or profits to the
extent such income or profits were included in computing Consolidated Net
Income and any provision for taxes utilized in computing net loss under clause
(i) hereof, plus (iii) Consolidated Interest Expense for such period (but only
including Redeemable Dividends in the calculation of such Consolidated Interest
Expense to the extent that such Redeemable Dividends have not been excluded in
the calculation of Consolidated Net Income), plus (iv) depreciation for such
period on a consolidated basis, plus (v) amortization of intangibles for such
period on a consolidated basis, plus (vi) any other non-cash items reducing
Consolidated Net Income for such period, plus (vii) without duplication,
Permitted Tax Distributions, plus (viii) cash payments of expenses arising in
connection with the Recapitalization, minus (b) all non-cash items increasing
Consolidated Net Income for such period, all for such Person and its
Subsidiaries determined in accordance with GAAP, except that with respect to
the Issuers each of the foregoing items shall be determined on a consolidated
basis with respect to the Issuers and their Restricted Subsidiaries only;
provided, however, that, for purposes of calculating EBITDA during any fiscal
quarter, cash income from a particular Investment (other than in TWP or any
Subsidiary
<PAGE> 16
-8-
which under GAAP is consolidated) of such Person shall be included only (x) if
cash income has been received by such Person with respect to such Investment,
or (y) if the cash income derived from such Investment is attributable to
Temporary Cash Investments.
"Equity Compensation Trust" means the Company's Equity
Compensation Trust for the benefit of certain of its employees, established
pursuant to the Equity Compensation Trust Agreement, dated as of November 4,
1993, as amended by an agreement dated as of October 1, 1997 between the
Company and the trustees thereof, and any successor trust with terms
substantially similar thereto (with an additional requirement of continued
employment status).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" shall have the meaning assigned thereto in the Registration
Rights Agreement.
"First Union" means First Union Corporation.
"GAAP" means generally accepted accounting principles
consistently applied as in effect in the United States from time to time.
"incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable," and "incurring"
shall have meanings correlative to the foregoing); provided that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Indebtedness shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to
any Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to
a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (excluding, without limitation, any balances that
constitute accounts payable or trade payables or liabilities arising from
advance payments or customer deposits for goods and services sold by the
Company in the ordinary course of business, and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in
<PAGE> 17
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accordance with GAAP, and shall also include, to the extent not otherwise
included (i) any Capitalized Lease Obligations, (ii) obligations secured by a
Lien to which the property or assets owned or held by such Person is subject,
whether or not the obligation or obligations secured thereby shall have been
assumed (provided, however, that if such obligation or obligations shall not
have been assumed, the amount of such Indebtedness shall be deemed to be the
lesser of the principal amount of the obligation or the fair market value of
the pledged property or assets), (iii) guarantees of items of other Persons
which would be included within this definition for such other Persons (whether
or not such items would appear upon the balance sheet of the guarantor), (iv)
all obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (provided that in the case of
any such letters of credit, the items for which such letters of credit provide
credit support are those of other Persons which would be included within this
definition for such other Persons), (v) in the case of the Issuers,
Disqualified Capital Stock of the Issuers or any Restricted Subsidiary thereof,
and (vi) obligations of any such Person under any Interest Rate Agreement
applicable to any of the foregoing (if and to the extent such Interest Rate
Agreement obligations would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP). The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency
giving rise to the obligation, provided (i) that the amount outstanding at any
time of any Indebtedness issued with original issue discount is the principal
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP and (ii) that Indebtedness shall not include any liability
for federal, state, local or other taxes. Notwithstanding any other provision
of the foregoing definition, any trade payable arising from the purchase of
goods or materials or for services obtained in the ordinary course of business
shall not be deemed to be "Indebtedness" of the Company or any Restricted
Subsidiary for purposes of this definition. Furthermore, guarantees of (or
obligations with respect to letters of credit supporting) Indebtedness
otherwise included in the determination of such amount shall not also be
included.
"Indenture" means this Indenture as amended, restated or
supplemented from time to time.
"Individual Investors" means the individuals listed on
Schedule 1.01 hereto.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501 (a)(1), (2),
(3) or (7) promulgated under the Securities Act.
<PAGE> 18
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"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Rate Agreement" shall mean any interest or foreign
currency rate swap, cap, collar, option, hedge, forward rate or other similar
agreement or arrangement designed to protect against fluctuations in interest
rates or currency exchange rates.
"Investments" means, directly or indirectly, any advance,
account receivable (other than an account receivable arising in the ordinary
course of business or acquired as part of the assets acquired by the Issuers in
connection with an acquisition of assets which is otherwise permitted by the
terms of this Indenture), loan or capital contribution to (by means of
transfers of property to others, payments for property or services for the
account or use of others or otherwise), the purchase of any stock, bonds,
notes, debentures, partnership or joint venture interests or other securities
of, the acquisition, by purchase or otherwise, of all or substantially all of
the business or assets or stock or other evidence of beneficial ownership of,
any Person or the making of any investment in any Person. Investments shall
exclude extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices.
"Issue Date" means the date the Notes are first issued by the
Issuers and authenticated by the Trustee under this Indenture.
"Issuer Request" means any written request signed in the names
of each of the Issuers by the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer or the Treasurer of each of the Issuers
and attested to by the Secretary or any Assistant Secretary of each of the
Issuers.
"Issuers" means the parties named as such in the first
paragraph of this Indenture until a successor replaces such parties pursuant to
Article 5 of this Indenture and thereafter means the successor and any other
obligor on the Notes.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement (other than advance payments or customer deposits for goods
and services sold by the Company in the ordinary course of business), security
interest, lien, charge, easement, encumbrance, preference, priority, or other
security agreement or preferential arrangement of any kind or nature whatsoever
on or with respect to such property or assets (including, without limitation,
any Capitalized Lease Obligation, conditional sales, or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
<PAGE> 19
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"Management Subordinated Notes" means notes issued to current
or former employees of the Company in accordance with the terms of the
Executive Agreements between the Company, TWP or Communications and such
current or former employees in existence on the Issue Date or pursuant to
agreements between the Company and then current or former employees with
substantially similar terms regarding such issuance entered into after the
Issue Date.
"Maturity Date" means November 15, 2008.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Income" means, with respect to any Person for any period,
the net income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital
Stock by an Issuer, the aggregate net proceeds received by such Issuer, after
payment of expenses, commissions and the like incurred in connection therewith,
whether such proceeds are in cash or in property (valued at the fair market
value thereof, as determined in good faith by the Board of Directors of such
Issuer, at the time of receipt) and (b) in the case of any exchange, exercise,
conversion or surrender of outstanding securities of any kind for or into
shares of Capital Stock of the Company which is not Disqualified Capital Stock,
the net book value of such outstanding securities on the date of such exchange,
exercise, conversion or surrender (plus any additional amount required to be
paid by the holder to the Company upon such exchange, exercise, conversion or
surrender, less any and all payments made to the holders, e.g., on account of
fractional shares and less all expenses incurred by the Company in connection
therewith).
"Non-Payment Event of Default" means any event (other than a
Payment Default) the occurrence of which entitles one or more Persons to
accelerate the maturity of any Designated Senior Indebtedness.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Notes" means the securities (including any Notes issued in
lieu of cash interest on the Notes as and to the extent permitted by this
Indenture) that are issued under this Indenture, as amended or supplemented
from time to time pursuant to this Indenture.
"Obligations" means, with respect to any Indebtedness, any
principal, premium, interest, penalties, fees, indemnifications,
reimbursements, damages and other expenses payable under the documentation
governing such Indebtedness.
<PAGE> 20
-12-
"Offering" means the offering of the Notes as described in the
Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum dated
November 6, 1997 pursuant to which the Notes were offered.
"Officer," with respect to any Person (other than the
Trustee), means the Chief Executive Officer, the President, any Vice President
and the Chief Financial Officer, the Treasurer or the Secretary of such Person,
or any other officer designated by the Board of Directors of such Person, as
the case may be.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President and the Chief Financial Officer or any Treasurer of such Person that
shall comply with applicable provisions of this Indenture and delivered to the
Trustee or, with respect to a Person that is a limited partnership, the Chief
Executive Officer, the President or any Vice President and the Chief Financial
Officer or any Treasurer of the corporate general partner of such Person that
shall comply with applicable provisions of this Indenture and delivered to the
Trustee.
"100% Affiliate" of any specified Person means any Affiliate
of such Person that is a Wholly-Owned Subsidiary of such Person, of which such
Person is a Wholly-Owned Subsidiary or that is a Wholly-Owned Subsidiary of a
third Person of which the specified Person is also a Wholly-Owned Subsidiary.
"Opinion of Counsel" means a written opinion reasonably
satisfactory in form and substance to the Trustee from legal counsel which
counsel is reasonably acceptable to the Trustee stating the matters required by
Section 10.05 and delivered to the Trustee.
"Permitted Asset Swap" means any transfer of properties or
assets by the Company or any of its Subsidiaries in which 90% of the
consideration received by the transferor consists of properties or assets
(other than cash) that will be used in the business of the transferor;
provided, that (i) the aggregate fair market value (as determined in good faith
by the Board of Directors of the Company) of the property or assets being
transferred by the Company or such Subsidiary is not greater than the aggregate
fair market value (as determined in good faith by the Board of Directors) of
the property or assets received by the Company or such Subsidiary in such
exchange and (ii) the aggregate fair market value (as determined in good faith
by the Board of Directors) of all property or assets transferred by the Company
and any of its Subsidiaries (A) in connection with any single transfer or
series of related transfers shall not exceed $2,000,000 and (B) in connection
with all such transfers following the Issue Date shall not exceed $5,000,000 in
the aggregate.
<PAGE> 21
-13-
"Permitted Holders" means, collectively, (i) the Company and
Communications, (ii) THL, CIVC, CIBC Merchant Fund, First Union and any
Affiliate of (including any equity fund advised by) any of the foregoing (other
than any portfolio company with operating assets) and (iii) the Individual
Investors, each of the spouses, children (adoptive or biological) or other
lineal descendants of the Individual Investors, the probate estate of any such
individual and any trust, so long as one or more of the foregoing individuals
retain substantially all of the controlling or beneficial interest thereunder.
"Permitted Indebtedness" means:
(i) Indebtedness (A) of any Restricted Subsidiary (1)
arising under or in connection with the Senior Credit Facility
in an amount, when taken together with the amount of any
outstanding Indebtedness described in clause (B) below, not to
exceed $125,000,000, which amount shall be reduced by any
mandatory prepayments actually made thereunder required as a
result of any Asset Sale or similar sale of assets (to the extent,
in the case of payments of revolving credit indebtedness, that the
corresponding commitments have been permanently reduced) and any
scheduled payments actually made thereunder, or (2) that
constitutes Acquisition Debt (as defined in the Senior Credit
Facility) under the Senior Credit Facility to the extent such
Indebtedness permanently reduces the aggregate commitments
available under the Senior Credit Facility and (B) of the Company
or Capital (as Co-borrowers with TWP) that has been reinstated
under the Senior Credit Facility as a result of the failure of any
assets to be transferred to TWP in the Asset Drop-Down, but only
to the extent of the value of the assets not so transferred and
only for so long as the representations in the Senior Credit
Facility relating thereto remain untrue;
(ii) Indebtedness under the Notes;
(iii) Indebtedness under the Senior Subordinated Notes
and the guarantees thereof;
(iv) Indebtedness not covered by any other clause of
this definition which is outstanding on the date of this
Indenture;
(v) Indebtedness of the Company to any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary to the
Company or another Restricted Subsidiary;
(vi) Interest Rate Agreements;
<PAGE> 22
-14-
(vii) Refinancing Indebtedness;
(viii) Indebtedness under Commodity Hedge Agreements
entered into in the ordinary course of business consistent with
reasonable business requirements and not for speculation;
(ix) Indebtedness consisting of guarantees made in
the ordinary course of business by the Company or its Subsidiaries
of obligations of the Issuers or any of their Subsidiaries, which
obligations are otherwise permitted under this Indenture;
(x) contingent obligations of the Company or its
Subsidiaries in respect of customary indemnification and purchase
price adjustment obligations incurred in connection with an Asset
Sale; provided that the maximum assumable liability in respect of
all such obligations shall at no time exceed the gross proceeds
actually received by the Company and its Subsidiaries in
connection with such Asset Sale;
(xi) Purchase Money Indebtedness and Capitalized
Lease Obligations of the Company and its Subsidiaries incurred
to acquire property in the ordinary course of business and any
refinancings, renewals or replacements of any such Purchase Money
Indebtedness or Capitalized Lease Obligation (subject to the
limitations on the principal amount thereof set forth in this
clause (xi)), the principal amount of which Purchase Money
Indebtedness and Capitalized Lease Obligations shall not in the
aggregate at any one time outstanding exceed 5% of the Company's
consolidated total assets stated in accordance with GAAP as of the
end of the last preceding fiscal quarter for which financial
statements are available;
(xii) the Management Subordinated Notes; and
(xiii) additional Indebtedness of the Company or any
of its Subsidiaries (other than Indebtedness specified in clauses
(i) through (xii) above) not to exceed $5,000,000 in the
aggregate at any one time outstanding.
"Permitted Investments" means, for any Person, Investments
made on or after the date of this Indenture consisting of:
(i) Investments by the Company or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary;
<PAGE> 23
-15-
(ii) Temporary Cash Investments;
(iii) Investments by the Company, or by a Restricted
Subsidiary thereof, in a Person, if as a result of such
Investment (a) such Person becomes a Restricted Subsidiary of the
Company, (b) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted
Subsidiary thereof or (c) such business or assets are owned by the
Company or a Restricted Subsidiary;
(iv) an Investment that is made by the Company in the
form of any stock, bonds, notes, debentures, partnership or
joint venture interests or other securities that are issued by a
third party to either or both of the Issuers solely as partial
consideration for the consummation of an Asset Sale that is
otherwise permitted by Section 4.10;
(v) Investments consisting of (a) purchases and
acquisitions of inventory, supplies, materials and equipment,
or (b) licenses or leases of intellectual property and other
assets in each case in the ordinary course of business;
(vi) Investments consisting of (a) loans and advances to
employees for reasonable travel, relocation and business
expenses in the ordinary course of business not to exceed
$1,000,000 in the aggregate at any one time outstanding, (b) loans
to employees of the Company for the sole purpose of purchasing
equity of the Company, (c) extensions of trade credit in the
ordinary course of business, and (d) prepaid expenses incurred in
the ordinary course of business;
(vii) without duplication, Investments consisting of
Indebtedness permitted pursuant to clause (v) of the definition
of Permitted Indebtedness;
(viii) Investments existing on the date of this Indenture;
(ix) Investments of the Company under Interest Rate
Agreements;
(x) Investments under Commodity Hedge Agreements entered
into in the ordinary course of business consistent with
reasonable business requirements and not for speculation;
(xi) Investments consisting of endorsements for
collection or deposit in the ordinary course of business; and
<PAGE> 24
-16-
(xii) Investments (other than Investments specified in
clauses (i) through (xi) above) in an aggregate amount, as
valued at the time each such Investment is made, not exceeding
$5,000,000 for all such Investments from and after the Issue Date;
provided that the amount available for Investments to be made
pursuant to this clause (xii) shall be increased from time to time
to the extent any return on capital is received by the Company or
a Restricted Subsidiary on an Investment previously made in
reliance on this clause (xii).
"Permitted Liens" means (i) Liens on any shares of stock of
any corporation or other entity existing at the time such corporation or other
entity becomes a Restricted Subsidiary of the Company; provided that such Liens
are not incurred in connection with, or in contemplation of, such corporation
or other entity becoming a Restricted Subsidiary of the Company, (ii) Liens
securing Refinancing Indebtedness; provided that any such Lien does not extend
to or cover any Property, shares or debt other than the Property, shares or
debt securing the Indebtedness so refunded, refinanced or extended, (iii) Liens
in favor of the Issuers or any of their Restricted Subsidiaries, (iv) Liens
securing industrial revenue bonds, (v) Liens to secure Purchase Money
Indebtedness and Capitalized Lease Obligations that are permitted under clause
(xi) of the definition of "Permitted Indebtedness"; provided that (a) with
respect to any Purchase Money Indebtedness, any such Lien is created solely for
the purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including sales and excise taxes, installation
and delivery charges and other direct costs of, and other direct expenses paid
or charged in connection with, such purchase or construction) of such Property,
(b) with respect to any Purchase Money Indebtedness, the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of such costs, and
(c) such Lien does not extend to or cover any Property other than the item of
Property that is the subject of such Purchase Money Indebtedness or Capitalized
Lease Obligation, as the case may be, and any improvements on such item, (vi)
statutory liens or landlords', carriers', warehousemen's, mechanics',
suppliers', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which do not secure any Indebtedness and with
respect to amounts not yet delinquent or being contested in good faith by
appropriate proceedings, if a reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor,
(vii) Liens for taxes, assessments or governmental charges that are being
contested in good faith by appropriate proceedings, (viii) Liens existing on
the Issue Date, (ix) any extensions, substitutions, replacements or renewals of
the foregoing, (x) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other forms of
government insurance or benefits, or to secure the performance of letters of
credit, bids, tenders, statutory obligations, surety and appeal bonds, leases,
government contracts and other similar obligations (other than obligations for
borrowed money) entered into in the ordinary course of business, (xi) any
attachment or judgment Lien not constituting an Event of Default under this
Indenture that is being
<PAGE> 25
-17-
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP (if so required), (xii)
Liens arising from the filing, for notice purposes only, of financing
statements in respect of operating leases, (xiii) Liens arising by operation of
law in favor of depositary banks and collecting banks, incurred in the ordinary
course of business, (xiv) Liens consisting of restrictions on the transfer of
securities pursuant to applicable federal and state securities laws, (xv)
interests of lessors and licensors under leases and licenses to which the
Issuers are party, (xvi) with respect to any real property occupied by the
Company, all easements, rights of way, licenses and similar encumbrances on or
defects of title that do not materially impair the use of such property for its
intended purposes and (xvii) Liens on assets of the Company or Capital not
transferred to TWP in the Asset Drop-Down that have been reinstated under the
Senior Credit Facility, but only to the extent of the value of the assets not
so transferred and only for so long as the representations in the Senior Credit
Facility relating thereto shall remain untrue.
"Permitted Tax Distributions" means distributions by the
Company or TWP to their respective partners or members from time to time in an
amount approximately equal to the income tax liability of such partners or
members of the Company or TWP, as the case may be, resulting from the taxable
income of the Company or TWP, as the case may be (after taking into account, to
the extent they may reduce such tax liability, all of the prior tax losses of
the Company or TWP, as the case may be, to the extent such losses have not
previously been deemed to reduce the taxable income of the Company or TWP, as
the case may be, and thereby reduce distributions for taxes in accordance
herewith); such distribution for taxes shall be based on the approximate
highest combined tax rate that applies to any one of the partners or members of
the Company or TWP, as the case may be.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government (including any agency or
political subdivision thereof).
"Physical Notes" means certificated Notes in registered form
in substantially the form set forth in Exhibit A.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the
holders of other Capital Stock issued by such Person.
"Preferred Units" means the Preferred Units provided for by
the Company's Third Amended and Restated Agreement of Limited Partnership.
<PAGE> 26
-18-
"Private Exchange Notes" shall have the meaning assigned
thereto in the Registration Rights Agreement.
"Private Placement Legend" means the legend initially
set forth on the Rule 144A Notes and on any Physical Notes (other than
Regulation S Notes) delivered prior to the issuance of the Exchange Notes in
the form set forth in Exhibit B.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Public Equity Offering" means a public offering by the
Company, Communications Capital, TWP or Capital II of shares of its Common
Stock (however designated and whether voting or non-voting) and any and all
rights, warrants or options to acquire such Common Stock; provided, however,
that in connection with any such Public Equity Offering, the net proceeds of
such Public Equity Offering are contributed to the Company as common equity.
"Purchase Money Indebtedness" means any Indebtedness incurred
by a Person to finance (within 90 days from incurrence) the cost (including the
cost of construction) of an item of Property acquired in the ordinary course of
business, the principal amount of which Indebtedness does not exceed the sum of
(i) 100% of such cost and (ii) reasonable fees and expenses of such Person
incurred in connection therewith.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A promulgated under the Securities Act.
"Recapitalization" means the transactions described in the
Recapitalization Agreement.
"Recapitalization Agreement" means the Securities Purchase and
Redemption Agreement dated August 27, 1997 by and among the Company, TCC, TWP
Recapitalization Corp., THL and certain limited partners of the Company and
TCC, as amended as of September 30, 1997.
"Redeemable Dividend" means, for any dividend or distribution
(other than Permitted Tax Distributions) with regard to Disqualified Capital
Stock, the quotient of the dividend or distribution divided by the difference
between one and the maximum statutory federal income tax rate (expressed as a
decimal number between 1 and 0) then applicable to the issuer of such
Disqualified Capital Stock.
<PAGE> 27
-19-
"Redemption Date" when used with respect to any Note to be
redeemed means the date fixed for such redemption pursuant to the terms of the
Notes.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances or extends any Indebtedness of the Company outstanding on the Issue
Date or other Indebtedness permitted to be incurred by the Company or its
Restricted Subsidiaries pursuant to the terms of this Indenture, but only to
the extent that (i) the Refinancing Indebtedness is subordinated to the Notes
to at least the same extent as the Indebtedness being refunded, refinanced or
extended, if at all, (ii) the Refinancing Indebtedness is scheduled to mature
either (a) no earlier than the Indebtedness being refunded, refinanced or
extended, or (b) after the maturity date of the Notes, (iii) the portion, if
any, of the Refinancing Indebtedness that is scheduled to mature on or prior to
the maturity date of the Notes has a weighted average life to maturity at the
time such Refinancing Indebtedness is incurred that is equal to or greater than
the weighted average life to maturity of the portion of the Indebtedness being
refunded, refinanced or extended that is scheduled to mature on or prior to the
maturity date of the Notes, (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is equal to or less than the sum of (a) the
aggregate principal amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (b) the amount of accrued and unpaid
interest, if any, and premiums owed, if any, not in excess of preexisting
prepayment provisions on such Indebtedness being refunded, refinanced or
extended and (c) the amount of customary fees, expenses and costs related to
the incurrence of such Refinancing Indebtedness, and (v) such Refinancing
Indebtedness is incurred by the same Person that initially incurred the
Indebtedness being refunded, refinanced or extended, except that the Company
may incur Refinancing Indebtedness to refund, refinance or extend Indebtedness
of any Wholly-Owned Subsidiary of the Company.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of November 12, 1997 among the Issuers and CIBC Oppenheimer
Corp. and First Union Capital Markets Corp., as Initial Purchasers.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Responsible Officer," when used with respect to the Trustee,
means an officer or assistant officer assigned to the corporate trust
department of the Trustee (or any successor group of the Trustee) including any
vice president, assistant vice president, assistant secretary, treasurer or
assistant treasurer or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
<PAGE> 28
-20-
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution or payment on
Capital Stock of the Issuers or any Restricted Subsidiary of the Issuers or any
payment made to the direct or indirect holders (in their capacities as such) of
Capital Stock of the Issuers or any Restricted Subsidiary of the Issuers (other
than (x) dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Disqualified Capital Stock), (y) Permitted Tax
Distributions, and (z) in the case of Restricted Subsidiaries of the Company,
dividends or distributions payable to the Company or to a Wholly-Owned
Subsidiary of the Company), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company or any of its
Restricted Subsidiaries (other than Capital Stock owned by the Company or a
Wholly-Owned Subsidiary of the Company, excluding Disqualified Capital Stock),
(iii) the making of any principal payment on, or the purchase, defeasance,
repurchase, redemption or other acquisition or retirement for value, prior to
any scheduled maturity, scheduled repayment or scheduled sinking fund payment,
of any Indebtedness which is subordinated in right of payment to the Notes
other than subordinated Indebtedness acquired in anticipation of satisfying a
scheduled sinking fund obligation, principal installment or final maturity (in
each case due within one year of the date of acquisition), (iv) without
limiting the generality of the foregoing clause (iii), the making of any
principal or interest payment on the Management Subordinated Notes, (v) the
making of any payments to the Equity Compensation Trust, (vi) the making of any
Investment or guarantee of any Investment in any Person other than a Permitted
Investment, (vii) any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary on the basis of the Investment by the Issuers therein and (viii)
forgiveness of any Indebtedness of an Affiliate of the Issuers (other than a
Restricted Subsidiary) to the Issuers or a Restricted Subsidiary. For purposes
of determining the amount expended for Restricted Payments, cash distributed or
invested shall be valued at the face amount thereof and property other than
cash shall be valued at its fair market value determined by the Company's Board
of Directors. In no event shall the term "Restricted Payment" include any
payment from TWP to the Company (in its capacity as a member of TWP).
"Restricted Subsidiary" means TWP and any other Subsidiary of
the Company other than an Unrestricted Subsidiary. The Board of Directors of
the Company may designate any Unrestricted Subsidiary or any Person that is to
become a Subsidiary as a Restricted Subsidiary if immediately after giving
effect to such action (and treating any Acquired Indebtedness as having been
incurred at the time of such action), the Issuers could have incurred at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant
to Section 4.06.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
<PAGE> 29
-21-
"Sale and Lease-Back Transaction" means any arrangement with
any Person providing for the leasing by the Company or any Restricted
Subsidiary of the Company of any real or tangible personal Property, which
Property has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person in contemplation of such leasing.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the United States Securities and Exchange
Commission as constituted from time to time or any successor performing
substantially the same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit Agreement, dated as
of October 1, 1997, among TWP, Capital II, the lenders listed therein and
Canadian Imperial Bank of Commerce, as administrative agent, and First Union
National Bank, as documentation agent, as amended and restated as of November
6, 1997, together with the documents related thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including adding Subsidiaries of TWP as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.
"Senior Subordinated Notes" means the 9 5/8% Senior
Subordinated Notes due 2007 of TWP and Capital II.
"Subsidiary" of any specified Person means any corporation,
partnership, limited liability company, joint venture, association or other
business entity, whether now existing or hereafter organized or acquired, (i)
in the case of a corporation, of which more than 50% of the total voting power
of the Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, officers or trustees thereof
is held by such first-named Person or any of its Subsidiaries; or (ii) in the
case of a partnership, limited liability company, joint venture, association or
other business entity, with respect to which such first-named Person or any of
its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise or if in
accordance with GAAP such entity is consolidated with the first-named Person
for financial statement purposes.
<PAGE> 30
-22-
"Temporary Cash Investments" means (i) Investments in
marketable direct obligations issued or guaranteed by the United States of
America, or of any governmental agency or political subdivision thereof,
maturing within 365 days of the date of purchase; (ii) Investments in
certificates of deposit issued by a bank organized under the laws of the United
States of America or any state thereof or the District of Columbia, in each
case having capital, surplus and undivided profits at the time of investment
totaling more than $500,000,000 and rated at the time of investment at least A
by S&P and A-2 by Moody's maturing within 365 days of purchase; or (iii)
Investments not exceeding 365 days in duration in money market funds that
invest substantially all of such funds' assets in the Investments described in
the preceding clauses (i) and (ii).
"THL" means Thomas H. Lee Equity Fund III, L.P.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of this Indenture (except as
provided in Section 8.03 hereof).
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"TWP" means TransWestern Publishing Company LLC, a Delaware
limited liability company.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary and (b) any Subsidiary of the Company which is
classified after the Issue Date as an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors of the Company; provided that a Subsidiary
organized or acquired after the Issue Date may be so classified as an
Unrestricted Subsidiary only if such classification is in compliance with the
covenant set forth in Section 4.09 hereof and with the indenture relating to
the Senior Subordinated Notes. The Trustee shall be given prompt notice by the
Company of each resolution adopted by the Board of Directors of the Company
under this provision, together with a copy of each such resolution adopted.
"U.S. Government Obligations" means (a) securities that are
direct obligations of the United States of America for the payment of which its
full faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and shall
also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment
<PAGE> 31
-23-
of principal of or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or a specific payment of principal or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt.
"Wholly-Owned Subsidiary" of a specified Person means any
Subsidiary (or, if such specified Person is the Company, a Restricted
Subsidiary), all of the outstanding voting securities (other than directors'
qualifying shares) of which are owned, directly or indirectly, by such Person.
Notwithstanding the foregoing, TWP will be deemed a Wholly-Owned Subsidiary of
the Company so long as the Company owns at least 99% of the total voting and
economic power of the Common Stock of TWP.
Section 1.02 Other Definitions.
The definitions of the following terms may be found in the
sections indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
- ---- ------------------
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11(a)
"Agent Members" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16(a)
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.07
"CEDEL" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16(a)
"Change of Control Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.18(a)
"Change of Control Payment Date" . . . . . . . . . . . . . . . . . . . . . . . . . 4.18(b)
"Change of Control Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . 4.18(a)
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.03
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Euroclear" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16(a)
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Excess Proceeds Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(a)
"Global Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16(a)
"Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.02
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.07
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(b)
"Other Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
</TABLE>
<PAGE> 32
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<TABLE>
<S> <C>
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(b)
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
"Regulation S Global Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16(a)
"Regulation S Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
"Reinvestment Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(a)
"Restricted Global Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16(a)
"Rule 144A Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
</TABLE>
Section 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
portion of such provision required to be incorporated herein in order for this
Indenture to be qualified under the TIA is incorporated by reference in and
made a part of this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture securityholder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor on the indenture securities" means the Issuers or any
other obligor on the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings therein assigned to them.
Section 1.04 Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it herein, whether
defined expressly or by reference;
<PAGE> 33
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(b) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the
plural include the singular;
(e) words used herein implying any gender shall apply to
every gender; and
(f) whenever in this Indenture there is mentioned, in any
context, principal, interest or any other amount payable under or with respect
to any Note, such mention shall be deemed to include mention of the payment of
Additional Interest to the extent that, in such context, Additional Interest
is, was or would be payable in respect thereof.
ARTICLE 2
THE NOTES
Section 2.01 Amount of Notes.
The Trustee shall authenticate Notes for original issue on the
Issue Date in an aggregate principal amount at maturity not to exceed
$57,916,000, upon a written order of the Company in the form of an Officers'
Certificate of the Company. Such written order shall specify the amount of
Notes to be authenticated and the date on which the Notes are to be
authenticated.
Upon receipt of an Issuer Request and an Officers' Certificate
certifying that a registration statement relating to an exchange offer
specified in the Registration Rights Agreement is effective and that the
conditions precedent to a private exchange thereunder have been met, the
Trustee shall authenticate an additional series of Notes in an aggregate
principal amount at maturity not to exceed $57,916,000 for issuance in exchange
for the Notes tendered for exchange pursuant to such exchange offer registered
under the Securities Act not bearing the Private Placement Legend or pursuant
to a Private Exchange. Exchange Notes or Private Exchange Notes may have such
distinctive series designations and such changes in the form thereof as are
specified in the Issuer Request referred to in the preceding sentence.
<PAGE> 34
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Upon receipt of a written order of the Company in the form of
an Officers' Certificate of the Company, the Trustee shall authenticate Notes
issued pursuant to this Indenture as interest on the Notes in lieu of cash
interest on the Notes.
Section 2.02 Form and Dating.
The Notes and the Trustee's certificate of authentication with
respect thereto shall be substantially in the form set forth in Exhibit A,
which is incorporated in and forms a part of this Indenture. The Notes may
have notations, legends or endorsements required by law, rule or usage to which
the Issuers are subject. Any such notations, legends or endorsements shall be
furnished to the Trustee in writing. Without limiting the generality of the
foregoing, Notes offered and sold to Qualified Institutional Buyers in reliance
on Rule 144A ("Rule 144A Notes") shall bear the legend and include the form of
assignment set forth in Exhibit B, Notes offered and sold in offshore
transactions in reliance on Regulation S ("Regulation S Notes") shall bear the
legend and include the form of assignment set forth in Exhibit C, and Notes
offered and sold to Institutional Accredited Investors in transactions exempt
from registration under the Securities Act not made in reliance on Rule 144A or
Regulation S ("Other Notes") shall be represented by Physical Notes bearing the
Private Placement Legend. Each Note shall be dated the date of its
authentication.
The terms and provisions contained in the Notes shall
constitute, and are expressly made, a part of this Indenture and, to the extent
applicable, the Issuers and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and agree to be
bound thereby.
The Notes may be presented for registration of transfer and
exchange at the offices of the Registrar in the Borough of Manhattan, The City
of New York.
Section 2.03 Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one
Officer (each of whom shall, in each case, have been duly authorized by all
requisite corporate actions) shall attest to, the Notes for each of the Issuers
by manual or facsimile signature.
If an Officer whose signature is on a Note was an Officer at
the time of such execution but no longer holds that office at the time the
Trustee authenticates the Note, the Note shall be valid nevertheless.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication
<PAGE> 35
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substantially in the form provided for herein executed by the Trustee by manual
signature, and such certificate upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Note shall have been
authenticated and delivered hereunder but never issued and sold by the Issuers,
and the Issuers shall deliver such Note to the Trustee for cancellation as
provided in Section 2.12, for all purposes of this Indenture such Note shall be
deemed never to have been authenticated and delivered hereunder and shall never
be entitled to the benefits of this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuers to authenticate the Notes. Unless otherwise provided
in the appointment, an authenticating agent may authenticate the Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with the Issuers and Affiliates of the
Issuers. Each Paying Agent is designated as an authenticating agent for
purposes of this Indenture.
The Notes shall be issuable only in registered form without
coupons in denominations of $1,000 principal amount at maturity and any
integral multiple thereof.
Section 2.04 Registrar and Paying Agent.
The Issuers shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Notes may be presented for registration of transfer or for exchange (the
"Registrar"), and an office or agency where Notes may be presented for payment
(the "Paying Agent") and an office or agency where notices and demands to or
upon the Issuers, if any, in respect of the Notes and this Indenture may be
served. The Issuers hereby initially designate the office of Wilmington Trust
Company, c/o Harris Trust Company of New York, 88 Pine Street, 19th Floor, Wall
Street Plaza, New York, New York 10005, as their office or agency in the
Borough of Manhattan, The City of New York. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Issuers may have
one or more additional Paying Agents. The term "Paying Agent" includes any
additional Paying Agent. Neither the Issuers nor any Affiliate thereof may act
as Paying Agent. The Issuers may change any Paying Agent or Registrar without
notice to any Noteholder.
The Issuers shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Issuers shall notify the Trustee of
the name and address of any such Agent. If the Issuers fail
<PAGE> 36
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to maintain a Registrar or Paying Agent, or fail to give the foregoing notice,
the Trustee shall act as such and shall be entitled to compensation in
accordance with Section 7.07.
The Issuers initially designate the Corporate Trust Office of
the Trustee as Registrar, Paying Agent and agent for service of notices and
demands in connection with the Notes and this Indenture.
Section 2.05 Paying Agent to Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Noteholders or the Trustee all money held by the Paying Agent for the payment
of principal of or premium or interest on the Notes (whether such money has
been paid to it by the Issuers or any other obligor on the Notes), and the
Issuers and the Paying Agent shall notify the Trustee of any default by the
Issuers (or any other obligor on the Notes) in making any such payment. Money
held in trust by the Paying Agent need not be segregated except as required by
law and in no event shall the Paying Agent be liable for any interest on any
money received by it hereunder. The Issuers at any time may require the Paying
Agent to pay all money held by it to the Trustee and account for any funds
disbursed and the Trustee may at any time during the continuance of any Event
of Default specified in Section 6.01(1) or (2), upon written request to the
Paying Agent, require such Paying Agent to pay forthwith all money so held by
it to the Trustee and to account for any funds disbursed. Upon making such
payment, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
Section 2.06 Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Noteholders. If the Trustee is not the Registrar, the Issuers
shall furnish to the Trustee at least five Business Days before each Interest
Payment Date, and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of the Noteholders.
Section 2.07 Transfer and Exchange.
Subject to Sections 2.16 and 2.17, when Notes are presented to
the Registrar with a request from the Holder of such Notes to register a
transfer or to exchange them for an equal principal amount of Notes of other
authorized denominations, the Registrar shall register the transfer as
requested. Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed or be accompanied by a written instrument of
transfer in form satisfactory to the Issuers and the Registrar, duly executed
by the Holder
<PAGE> 37
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thereof or his attorneys duly authorized in writing. To permit registrations
of transfers and exchanges, the Issuers shall issue and execute and the Trustee
shall authenticate new Notes evidencing such transfer or exchange at the
Registrar's request. No service charge shall be made to the Noteholder for any
registration of transfer or exchange. The Issuers may require from the
Noteholder payment of a sum sufficient to cover any transfer taxes or other
governmental charge that may be imposed in relation to a transfer or exchange,
but this provision shall not apply to any exchange pursuant to Section 2.11,
3.06, 4.10, 4.18 or 8.05 (in which events the Issuers shall be responsible for
the payment of such taxes). The Trustee shall not be required to exchange or
register a transfer of any Note for a period of 15 days immediately preceding
the selection of Notes to be redeemed or any Note selected for redemption.
Any Holder of the Global Note shall, by acceptance of such
Global Note, agree that transfers of the beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Global Note shall be required to be reflected in a book entry.
Each Holder of a Note agrees to indemnify the Issuers and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Note in violation of any provision of this
Indenture and/or applicable U.S. Federal or state securities law.
Except as expressly provided herein, neither the Trustee nor
the Registrar shall have any duty to monitor the Issuers' compliance with or
have any responsibility with respect to the Issuers' compliance with any
Federal or state securities laws.
Section 2.08 Replacement Notes.
If a mutilated Note is surrendered to the Registrar or the
Trustee, or if the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall
authenticate a replacement Note if the Holder of such Note furnishes to the
Issuers and the Trustee evidence reasonably acceptable to them of the ownership
and the destruction, loss or theft of such Note and if the requirements of
Section 8-405 of the New York Uniform Commercial Code as in effect on the date
of this Indenture are met. If required by the Trustee or the Issuers, an
indemnity bond shall be posted, sufficient in the judgment of both to protect
the Issuers, the Trustee or any Paying Agent from any loss that any of them may
suffer if such Note is replaced. The Issuers may charge such Holder for the
Issuers' reasonable out-of-pocket expenses in replacing such Note and the
Trustee may charge the Issuers for the Trustee's expenses (including, without
limitation, attorneys' fees and
<PAGE> 38
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disbursements) in replacing such Note. Every replacement Note shall constitute
an additional contractual obligation of the Issuers.
Section 2.09 Outstanding Notes.
The Notes outstanding at any time are all Notes that have been
authenticated by the Trustee except for (a) those canceled by it, (b) those
delivered to it for cancellation, (c) to the extent set forth in Sections 9.01
and 9.02, on or after the date on which the conditions set forth in Section
9.01 or 9.02 have been satisfied, those Notes theretofore authenticated and
delivered by the Trustee hereunder and (d) those described in this Section 2.09
as not outstanding. Subject to Section 2.10, a Note does not cease to be
outstanding because an Issuer or one of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.08, it ceases to
be outstanding unless the Trustee receives written notice that the replaced
Note is held by a bona fide purchaser in whose hands such Note is a legal,
valid and binding obligation of the Issuers.
If the Paying Agent holds, in its capacity as such, on any
Maturity Date or on any optional redemption date, money sufficient to pay all
accrued interest and Accreted Value or principal with respect to the Notes
payable on that date and is not prohibited from paying such money to the
Holders thereof pursuant to the terms of this Indenture, then on and after that
date such Notes cease to be outstanding, Accreted Value ceases to accrete or
interest on them ceases to accrue, as the case may be.
Section 2.10 Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any declaration of acceleration or notice of
default or direction, waiver or consent or any amendment, modification or other
change to this Indenture, Notes owned by an Issuer or any Affiliate of an
Issuer shall be disregarded as though they were not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such declaration, notice, direction, waiver or consent or any
amendment, modification or other change to this Indenture, only Notes as to
which a Responsible Officer of the Trustee has received an Officers'
Certificate stating that such Notes are so owned shall be so disregarded.
Notes so owned which have been pledged in good faith shall not be disregarded
if the pledgee establishes the pledgee's right so to act with respect to the
Notes and that the pledgee is not either of the Issuers, any other obligor or
guarantor on the Notes or any of their respective Affiliates.
<PAGE> 39
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Section 2.11 Temporary Notes.
Until definitive Notes are prepared and ready for delivery,
the Issuers may prepare and the Trustee shall authenticate temporary Notes.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Issuers consider appropriate for temporary Notes.
Without unreasonable delay, the Issuers shall prepare and the Trustee shall
authenticate definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.
Section 2.12 Cancellation.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall (subject to
the record-retention requirements of the Exchange Act) destroy canceled Notes
and deliver a certificate of destruction thereof to the Issuers. The Issuers
may not reissue or resell, or issue new Notes to replace, Notes that the
Issuers have redeemed or paid, or that have been delivered to the Trustee for
cancellation.
Section 2.13 Defaulted Interest.
If the Issuers default on a payment of Accreted Value,
principal or interest on the Notes, they shall pay interest on overdue Accreted
Value and principal and on overdue installments of interest, plus (to the
extent permitted by law) any interest payable on defaulted interest, pursuant
to Section 4.01 hereof, to the Persons who are Noteholders on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Issuers shall fix such special record date and payment
date and provide the Trustee at least 20 days notice of the proposed amount of
interest on overdue Accreted Value or principal and defaulted interest to be
paid and the special payment date and at the same time the Issuers shall
deposit with the Trustee the aggregate amount of cash or additional Notes
proposed to be paid in respect of such interest on overdue Accreted Value or
principal and defaulted interest. At least 15 days before such special record
date, the Issuers shall mail to each Noteholder a notice that states the
special record date, the payment date and the amount of interest on overdue
Accreted Value or principal and defaulted interest, and interest payable on
defaulted interest, if any, to be paid and whether interest will be paid in
cash or additional Notes. The Issuers may make payment of any defaulted
interest in any other lawful manner not inconsistent with the requirements (if
applicable) of any securities exchange on which the
<PAGE> 40
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Notes may be listed and, upon such notice as may be required by such exchange,
if, after written notice given by the Issuers to the Trustee of the proposed
payment pursuant to this sentence, such manner of payment shall be deemed
practicable by the Trustee.
Section 2.14 CUSIP Number.
The Issuers in issuing the Notes may use a "CUSIP" number, and
if so, such CUSIP number shall be included in notices of redemption or exchange
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Issuers shall
promptly notify the Trustee of any such CUSIP number used by the Issuers in
connection with the issuance of the Notes and of any change in the CUSIP
number.
Section 2.15 Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest
Payment Date and Maturity Date, the Issuers shall have deposited with the
Paying Agent in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date or Maturity Date, as the
case may be, in a timely manner which permits the Trustee to remit payment to
the Holders on such Interest Payment Date or Maturity Date, as the case may be.
The Accreted Value, principal and interest on Global Notes shall be payable to
the Depository or its nominee, as the case may be, as the sole registered owner
and the sole holder of the Global Notes represented thereby. The Accreted
Value, principal and interest on Physical Notes shall be payable at the office
of the Paying Agent. The Issuers shall deliver an Officers' Certificate to the
Trustee at least 5 business days before any applicable payment date setting
forth the amount of Additional Interest due per $1,000 aggregate principal
amount of Notes.
Section 2.16 Book-Entry Provisions for Global Notes.
() Rule 144A Notes initially shall be represented by one or
more notes in registered, global form without interest coupons (collectively,
the "Restricted Global Note"). Regulation S Notes initially shall be
represented by one or more notes in registered, global form without interest
coupons (collectively, the "Regulation S Global Note," and, together with the
Restricted Global Note and any other global notes representing Notes, the
"Global Notes"). The Global Notes shall bear legends as set forth in Exhibit
D. The Global Notes initially shall (i) be registered in the name of the
Depository or the nominee of such Depository, in each case for credit to an
account of an Agent Member (or, in the case of the Regulation S Global Notes,
Agent Members of the Depository holding for Euroclear System
<PAGE> 41
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("Euroclear") and Cedel Bank, S.A. ("CEDEL")), (ii) be delivered to the Trustee
as custodian for such Depository and (iii) bear legends as set forth in Exhibit
B with respect to Restricted Global Notes and Exhibit C with respect to
Regulation S Global Notes.
Members of, or direct or indirect participants in, the
Depository ("Agent Members") shall have no rights under this Indenture with
respect to any Global Note held on their behalf by the Depository, or the
Trustee as its custodian, or under the Global Notes, and the Depository may be
treated by the Issuers, the Trustee and any agent of the Issuers or the Trustee
as the absolute owner of the Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any
agent of the Issuers or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note.
(ii) Transfers of Global Notes shall be limited to transfer
in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Notes may be
transferred or exchanged for Physical Notes in accordance with the rules and
procedures of the Depository and the provisions of Section 2.17. In addition,
a Global Note shall be exchangeable for Physical Notes if (i) the Depository
(x) notifies the Issuers that it is unwilling or unable to continue as
depository for such Global Note and the Issuers thereupon fail to appoint a
successor depository or (y) has ceased to be a clearing agency registered under
the Exchange Act, (ii) the Issuers, at their option, notify the Trustee in
writing that they elect to cause the issuance of such Physical Notes or (iii)
there shall have occurred and be continuing a Default or an Event of Default
with respect to the Notes. In all cases, Physical Notes delivered in exchange
for any Global Note or beneficial interests therein shall be registered in the
names, and issued in any approved denominations, requested by or on behalf of
the Depository (in accordance with its customary procedures).
(iii) In connection with any transfer or exchange of a
portion of the beneficial interest in any Global Note to beneficial owners
pursuant to paragraph (b), the Registrar shall (if one or more Physical Notes
are to be issued) reflect on its books and records the date and a decrease in
the principal amount at maturity of the Global Note in an amount equal to the
principal amount at maturity of the beneficial interest in the Global Note to
be transferred, and the Issuers shall execute, and the Trustee shall upon
receipt of a written order from the Issuers authenticate and make available for
delivery, one or more Physical Notes of like tenor and amount.
(iv) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall
be deemed to be surrendered to the
<PAGE> 42
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Trustee for cancellation, and the Issuers shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depository
in writing in exchange for its beneficial interest in the Global Notes, an
equal aggregate principal amount of Physical Notes of authorized denominations.
(v) Any Physical Note constituting a Restricted Note
delivered in exchange for an interest in a Global Note pursuant to paragraph
(b), (c) or (d) shall, except as otherwise provided by paragraphs (a)(i)(x) and
(c) of Section 2.17, bear the Private Placement Legend or, in the case of the
Regulation S Global Note, the legend set forth in Exhibit C, in each case,
unless the Issuers determine otherwise in compliance with applicable law.
(vi) On or prior to the 40th day after the later of the
commencement of the offering of the Notes represented by a Regulation S Global
Note and the original issue date of such Notes (such period through and
including such 40th day, the "Restricted Period"), a beneficial interest in the
Regulation S Global Note may be held only through Euroclear or CEDEL, as
indirect participants in DTC, unless transferred to a Person who takes delivery
in the form of an interest in the corresponding Restricted Global Note, only
upon receipt by the Trustee of a written certification from the transferor to
the effect that such transfer is being made (i)(a) to a Person who the
transferor reasonably believes is a Qualified Institutional Buyer in a
transaction meeting the requirements of Rule 144A or (b) pursuant to another
exemption from the registration requirements under the Securities Act which is
accompanied by an opinion of counsel regarding the availability of such
exemption and (ii) in accordance with all applicable securities laws of any
state of the United States or any other jurisdiction.
(vii) Beneficial interests in the Restricted Global Note may
be transferred to a Person who takes delivery in the form of an interest in the
Regulation S Global Note, whether before or after the expiration of the
Restricted Period, only if the transferor first delivers to the Trustee a
written certificate to the effect that such transfer is being made in
accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available) and
that, if such transfer occurs prior to the expiration of the Restricted Period,
the interest transferred will be held immediately thereafter through Euroclear
or CEDEL.
(viii) Any beneficial interest in one of the Global Notes
that is transferred to a Person who takes delivery in the form of an interest
in another Global Note shall, upon transfer, cease to be an interest in such
Global Note and become an interest in such other Global Note and, accordingly,
shall thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
<PAGE> 43
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(ix) The Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
Section 2.17 Special Transfer Provisions.
(i) Transfers to Non-QIB Institutional Accredited Investors
and Non-U.S. Persons. The following provisions shall apply with respect
to the registration of any proposed transfer of a Note constituting a
Restricted Note to any Institutional Accredited Investor which is not a QIB or
to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Note, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after
November 12, 1999 or such other date as such Note shall be freely
transferable under Rule 144 as certified in an Officers' Certificate or
(y) (1) in the case of a transfer to an Institutional Accredited
Investor which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Registrar a certificate substantially in
the form of Exhibit E hereto or (2) in the case of a transfer to a
Non-U.S. Person (including a QIB), the proposed transferor has delivered
to the Registrar a certificate substantially in the form of Exhibit F
hereto; provided that in the case of a transfer of a Note bearing the
Private Placement Legend for a Note not bearing the Private Placement
Legend, the Registrar has received an Officers' Certificate authorizing
such transfer; and
(ii) if the proposed transferor is an Agent Member holding
a beneficial interest in a Global Note, upon receipt by the Registrar
of (x) the certificate, if any, required by paragraph (i) above and
(y) instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Registrar shall reflect on its books and records the date and an
increase in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note transferred or
the Issuers shall execute and the Trustee shall authenticate and make available
for delivery one or more Physical Notes of like tenor and amount.
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(ii) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed registration of transfer of a
Note constituting a Restricted Note to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the
box provided for on such Holder's Note stating, or has otherwise
advised the Issuers and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on such
Holder's Note stating, or has otherwise advised the Issuers and the
Registrar in writing, that it is purchasing the Note for its own
account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within
the meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Issuers as it has requested pursuant to
Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and
the Notes to be transferred consist of Physical Notes which after
transfer are to be evidenced by an interest in the Restricted Global
Note, upon receipt by the Registrar of instructions given in
accordance with the Depository's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and an
increase in the principal amount at maturity of the Restricted Global
Note in an amount equal to the principal amount at maturity of the
Physical Notes to be transferred, and the Trustee shall cancel the
Physical Notes so transferred.
(iii) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Notes not bearing the Private Placement
Legend, the Registrar shall deliver Notes that do not bear the Private
Placement Legend. Upon the registration of transfer, exchange or replacement
of Notes bearing the Private Placement Legend, the Registrar shall deliver only
Notes that bear the Private Placement Legend unless (i) it has received the
Officers' Certificate required by paragraph (a)(i)(x) of this Section 2.17,
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Issuers to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act or (iii) such Note has been sold
pursuant to an effective registration statement under the Securities Act and
the Registrar has received an Officers' Certificate from the Issuers to such
effect.
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(iv) General. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Note only as
provided in this Indenture.
The Registrar shall retain for a period of two years copies of
all letters, notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. The Issuers shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable notice to the Registrar.
Section 2.18 Computation of Interest.
Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE 3
REDEMPTION
Section 3.01 Notices to Trustee.
If the Issuers elect to redeem Notes pursuant to paragraph 5
of the Notes, at least 45 days prior to the Redemption Date or during such
other period as the Trustee may agree to (which agreement shall not
unreasonably be withheld) the Issuers shall notify the Trustee in writing of
the Redemption Date, the principal amount at maturity of Notes to be redeemed
and the redemption price, and deliver to the Trustee an Officers' Certificate
stating that such redemption will comply with the conditions contained in
paragraph 5 of the Notes, as appropriate.
Section 3.02 Selection by Trustee of Notes to Be Redeemed.
In the event that fewer than all of the Notes are to be
redeemed, the Trustee shall select the Notes to be redeemed, if the Notes are
listed on a national securities exchange, in accordance with the rules of such
exchange or, if the Notes are not so listed, either on a pro rata basis or by
lot, or such other method as it shall deem fair and equitable; provided,
however, that the Issuers shall have previously notified the Trustee in writing
of any such exchange on which the Notes are listed, and provided, further, that
if a partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portion thereof
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for redemption shall be made by the Trustee on a pro rata basis, unless such a
method is prohibited. The Trustee shall promptly notify the Issuers of the
Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount at maturity thereof to be redeemed.
The Trustee may select for redemption portions of the principal of the Notes
that have denominations larger than $1,000 principal amount at maturity. Notes
and portions thereof the Trustee selects shall be redeemed in amounts of $1,000
principal amount at maturity or whole multiples of $1,000 principal amount at
maturity. For all purposes of this Indenture unless the context otherwise
requires, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
Section 3.03 Notice of Redemption.
At least 30 days, and no more than 60 days, before a
Redemption Date, the Issuers shall mail, or cause to be mailed, a notice of
redemption by first-class mail to each Holder of Notes to be redeemed at his or
her last address as the same appears on the registry books maintained by the
Registrar pursuant to Section 2.03 hereof.
The notice shall identify the Notes to be redeemed (including
the CUSIP numbers thereof) and shall state:
(a) the Redemption Date;
(b) the redemption price and the amount of premium and
accrued interest, if any, to be paid;
(c) if any Note is being redeemed in part, the portion of
the principal amount at maturity of such Note to be redeemed and that,
after the Redemption Date and upon surrender of such Note, a new Note
or Notes in principal amount equal to the unredeemed portion will be
issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(f) that unless the Issuers default in making the
redemption payment, Accreted Value will cease to accrete and interest
on Notes called for redemption ceases to accrue on and after the
Redemption Date;
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(g) the provision of paragraph 5 of the Notes pursuant to
which the Notes called for redemption are being redeemed; and
(h) the aggregate principal amount at maturity of Notes
that are being redeemed.
At the Issuers' written request made at least five Business
Days prior to the date on which notice is to be given, the Trustee shall give
the notice of redemption in the Issuers' name and at the Issuers' sole expense.
Section 3.04 Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the redemption price, including any premium, plus interest accrued,
if any, to the Redemption Date. Upon surrender to the Paying Agent, such Notes
shall be paid at the redemption price, including any premium, plus interest
accrued, if any, to the Redemption Date, provided that if the Redemption Date
is after a regular record date and on or prior to the Interest Payment Date,
the accrued interest shall be payable to the Holder of the redeemed Notes
registered on the relevant record date, and provided, further, that if a
Redemption Date is a Legal Holiday, payment shall be made on the next
succeeding Business Day and no interest shall accrue for the period from such
Redemption Date to such succeeding Business Day.
Section 3.05 Deposit of Redemption Price.
On or prior to 10:00 A.M., New York City time, on each
Redemption Date, the Issuers shall deposit with the Paying Agent in immediately
available funds money sufficient to pay the redemption price of and accrued
interest, if any, on all Notes to be redeemed on that date other than Notes or
portions thereof called for redemption on that date which have been delivered
by the Issuers to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay
the redemption price of and accrued interest, if any, on Notes called for
redemption shall have been made available in accordance with the preceding
paragraph, the Notes called for redemption will cease to accrue interest and
the only right of the Holders of such Notes will be to receive payment of the
redemption price of and, subject to the first proviso in Section 3.04, accrued
and unpaid interest on such Notes to the Redemption Date. If any Note
surrendered for redemption shall not be so paid, interest will be paid, from
the Redemption Date until such redemption payment is made, on the unpaid
principal of the Note and any interest not paid on such unpaid principal, in
each case, at the rate and in the manner provided in the Notes.
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Section 3.06 Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Trustee
shall authenticate for a Holder a new Note equal in principal amount at
maturity to the unredeemed portion of the Note surrendered.
ARTICLE 4
COVENANTS
Section 4.01 Payment of Notes.
The Issuers shall pay the Accreted Value or principal of and
interest (including all Additional Interest as provided in the Registration
Rights Agreement) on the Notes on the dates and in the manner provided in the
Notes and this Indenture. An installment of Accreted Value or principal or
interest shall be considered paid on the date it is due if the Trustee or
Paying Agent holds on that date money designated for and sufficient to pay such
installment.
The Issuers shall pay, to the extent such payments are lawful,
interest on overdue Accreted Value or principal (including post-petition
interest in a proceeding under any Bankruptcy Law), and overdue interest, to
the extent lawful, at the rate specified in the Notes.
Section 4.02 SEC Reports.
(i) The Issuers will file with the SEC all information,
documents and reports to be filed with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act, in the case of the Company, whether or not the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act, and in the case of Capital, only to the extent subject to such filing
requirements; provided, however, that the Company shall not be required to make
any such filings prior to the date on which the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended January 31, 1998 would have been
required to be filed, if, at the time such filings would have been required to
be made with the SEC, either (i) the Company shall have provided to each Holder
of the Notes the information that would have been required to be filed or (ii)
the Exchange Registration Statement (as such term is defined in the
Registration Rights Agreement) has been filed with the SEC but has not yet been
declared effective and copies of the Exchange Offer Registration Statement and
any amendments thereto (to the extent such Registration Statement and/or
amendments contain additional information not disclosed in the Offering
Memorandum that would have been the subject of a filing required
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to be made under Section 13 or 15(d) of the Exchange Act) have been provided to
each Holder of the Notes, provided that any exhibits to the Exchange
Registration Statement (or any amendments thereto) need not be delivered to any
Holder of the Notes, but sufficient copies thereof shall be furnished to the
Trustee as reasonably requested to permit the Trustee to deliver any such
exhibits to any Holder of the Notes upon request. The Issuers (at their own
expense) will file with the Trustee within 15 days after they file them with
the SEC, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which the Issuers file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. Upon qualification of
this Indenture under the TIA, the Issuers shall also comply with the provisions
of TIA Section 314(a). Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Issuers' compliance with any of their covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(ii) At the Issuers' expense, regardless of whether the
Issuers are required to furnish such reports and other information referred to
in paragraph (a) above to their equityholders pursuant to the Exchange Act, the
Company shall cause such reports and other information to be mailed to the
Holders at their addresses appearing in the register of Notes maintained by the
Registrar within 15 days after they file them with the SEC.
(iii) The Issuers shall, upon request, provide to any Holder
of Notes or any prospective transferee of any such Holder any information
concerning the Issuers (including financial statements) necessary in order to
permit such Holder to sell or transfer Notes in compliance with Rule 144A under
the Securities Act; provided, however, that the Issuers shall not be required
to furnish such information in connection with any request made on or after the
date which is two years from the later of (i) the date such Note (or any
predecessor Note) was acquired from the Issuers or (ii) the date such Note (or
any predecessor Note) was last acquired from an "affiliate" of the Issuers
within the meaning of Rule 144 under the Securities Act.
Section 4.03 Waiver of Stay, Extension or Usury Laws.
The Issuers covenant (to the extent that they may lawfully do
so) that they shall not at any time insist upon, or plead (as a defense or
otherwise) or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law which would
prohibit or forgive the Issuers from paying all or any portion of the Accreted
Value, principal of, premium, if any, and/or interest on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or
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the performance of this Indenture; and (to the extent that they may lawfully do
so) the Issuers hereby expressly waive all benefit or advantage of any such
law, and covenant that they will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 4.04 Compliance Certificate.
(i) The Issuers shall deliver to the Trustee, within 120 days
after the end of each fiscal year and on or before 50 days after the end of the
first, second and third quarters of each fiscal year, an Officers' Certificate
(one of the signers on behalf of each of the Issuers of which shall be the
principal executive officer, principal financial officer or principal
accounting officer of such Issuer) stating that a review of the activities of
the Issuers and their Subsidiaries during such fiscal year or fiscal quarter,
as the case may be, has been made under the supervision of the signing Officers
with a view to determining whether the Issuers have kept, observed, performed
and fulfilled their obligations under this Indenture, and further stating, as
to each such Officer signing such certificate, that to the best of his or her
knowledge the Issuers have kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and are not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action they are taking or propose to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence by
reason of which payments on account of the Accreted Value or principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Issuers are taking or propose to
take with respect thereto.
(ii) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.02 above shall be
accompanied by a written statement of the Issuers' independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Issuers have violated any provisions of this Article 4 or Article 5 of this
Indenture or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall
not be liable directly or indirectly for any failure to obtain knowledge of any
such violation.
(iii) The Issuers will, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default,
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an Officers' Certificate specifying such Default or Event of Default and what
action the Issuers are taking or propose to take with respect thereto.
(iv) Both the Company's and Capital's fiscal year currently
ends on April 30. The Company will provide notice to the Trustee of any change
in fiscal year.
Section 4.05 Taxes.
The Issuers shall, and shall cause each of their Subsidiaries
to, pay prior to delinquency all material taxes, assessments, and governmental
levies except as contested in good faith and by appropriate proceedings.
Section 4.06 Limitation on Additional Indebtedness.
The Issuers shall not, and shall not permit any Restricted
Subsidiary of the Issuers to, directly or indirectly, incur any Indebtedness
(including Acquired Indebtedness) unless (a) (1) in the case of Indebtedness of
TWP or any of its Restricted Subsidiaries, after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the ratio of the total Indebtedness of TWP and its Restricted
Subsidiaries (excluding any Indebtedness owed to a Restricted Subsidiary of TWP
by any other Restricted Subsidiary of TWP or TWP and any Indebtedness owed to
TWP by any Restricted Subsidiaries of TWP) to TWP's EBITDA (determined on a pro
forma basis for the last four fiscal quarters of TWP and its consolidated
Restricted Subsidiaries for which financial statements are available at the
date of determination) is less than (i) 6.25 to 1 if the Indebtedness is
incurred prior to November 15, 2000 and (ii) 6.0 to 1 if the Indebtedness is
incurred on or after November 15, 2000; and (2) in the case of Indebtedness of
the Company or any of its Restricted Subsidiaries other than TWP or its
Restricted Subsidiaries, after giving effect to the incurrence of such
Indebtedness and the receipt and application of the proceeds thereof, the ratio
of the total Indebtedness of the Issuers and their Restricted Subsidiaries
(excluding any Indebtedness owed to a Restricted Subsidiary by any other
Restricted Subsidiary or the Issuers and any Indebtedness owed to the Issuers
by any Restricted Subsidiary) to the Issuers' EBITDA (determined on a pro forma
basis for the last four fiscal quarters of the Issuers and their consolidated
Restricted Subsidiaries for which financial statements are available at the
date of determination) is less than (i) 7.25 to 1 if the Indebtedness is
incurred prior to November 15, 2000 and (ii) 7.0 to 1 if the Indebtedness is
incurred on or after November 15, 2000; provided, however, that if the
Indebtedness which is the subject of a determination under this provision is
Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, property or assets, then such
ratio shall be determined by giving effect to (on a pro forma basis, as if the
transaction had occurred at the beginning of the four-quarter period) both the
incurrence or
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assumption of such Acquired Indebtedness or such other Indebtedness by the
Issuers, TWP or any other Restricted Subsidiary (together with any other
Acquired Indebtedness or other Indebtedness incurred or assumed by the Issuers,
TWP and other Restricted Subsidiaries in connection with acquisitions
consummated by the Issuers during such four-quarter period) and the inclusion
in the Issuers' EBITDA of the EBITDA of the acquired Person, business, property
or assets and any pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act as in effect and as
applied as of the Issue Date (together with the EBITDA of, and pro forma
expense and cost reductions relating to, any other Person, business, property
or assets acquired by the Issuers, TWP or any other Restricted Subsidiary
during such four-quarter period), and (b) no Default or Event of Default shall
have occurred and be continuing at the time or as a consequence of the
incurrence of such Indebtedness. The accretion of original issue discount (and
any accruals of interest or payment of interest in additional Notes) on the
Notes shall not be deemed an incurrence of Indebtedness for purposes of this
Section 4.06.
Notwithstanding the foregoing, (a) the Issuers and their
Restricted Subsidiaries may incur Permitted Indebtedness and (b) the Issuers
shall not incur any Indebtedness (other than Permitted Indebtedness described
in clause (i)(B) of the definition thereof) that is either senior or pari passu
in right of payment to the Notes.
Section 4.07 Limitation on Preferred Stock of Restricted Subsidiaries.
The Issuers shall not permit any Restricted Subsidiary to
issue any Preferred Stock (except Preferred Stock to the Company or a
Restricted Subsidiary) or permit any Person (other than the Company or a
Subsidiary) to hold any such Preferred Stock unless the Company or such
Restricted Subsidiary would be entitled to incur or assume Indebtedness under
the first paragraph of Section 4.06 hereof in an aggregate principal amount
equal to the aggregate liquidation value of the Preferred Stock to be issued.
Section 4.08 Limitation on Capital Stock of Subsidiaries.
The Issuers shall not (i) sell, pledge, hypothecate or
otherwise convey or dispose of any Capital Stock of a Subsidiary (other than
under the Senior Credit Facility) or (ii) permit any of their Subsidiaries to
issue any Capital Stock, other than to the Issuers or a Wholly-Owned Subsidiary
of the Company. The foregoing restrictions shall not apply to an Asset Sale
made in compliance with Section 4.10 hereof or the issuance of Preferred Stock
in compliance with Section 4.07 hereof. In no event will the Company sell,
pledge, hypothecate or otherwise convey or dispose of any Capital Stock of
Capital or will Capital issue any Capital Stock.
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Section 4.09 Limitation on Restricted Payments.
The Issuers will not make, and will not permit any of their
Restricted Subsidiaries to, directly or indirectly, make, any Restricted
Payment, unless:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(ii) immediately after giving pro forma effect to such
Restricted Payment, the Issuers could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 4.06
hereof; and
(iii) immediately after giving effect to such Restricted
Payment, the aggregate of all Restricted Payments declared or made
after the Issue Date does not exceed the sum of (1) 50% of the
cumulative Consolidated Net Income of the Company subsequent to the
Issue Date (or minus 100% of any cumulative deficit in Consolidated
Net Income during such period) plus (2) 100% of the aggregate Net
Proceeds and the fair market value of securities or other property
received by the Company from the issue or sale, after the Issue Date,
of Capital Stock (other than Disqualified Capital Stock or Capital
Stock of the Company issued to any Subsidiary of the Company) of the
Company or any Indebtedness or other securities of the Company
convertible into or exercisable or exchangeable for Capital Stock
(other than Disqualified Capital Stock) of the Company which has been
so converted or exercised or exchanged, as the case may be, plus (3)
without duplication of any amounts included in clauses (1) and (2)
above, 100% of the aggregate net proceeds of any equity contribution
received by the Company from a holder of the Company's Capital Stock
plus (4) $5,000,000. For purposes of determining under this clause
(c) the amount expended for Restricted Payments, cash distributed
shall be valued at the face amount thereof and property other than
cash shall be valued at its fair market value determined, in good
faith, by the Board of Directors of the Company.
The provisions of this Section 4.09 shall not prohibit: (i)
The payment of any distribution within 60 days after the date of declaration
thereof, if at such date of declaration such payment would comply with the
provisions of this Indenture; (ii) the retirement of any shares of Capital
Stock of the Company or subordinated Indebtedness by conversion into, or by or
in exchange for, shares of Capital Stock (other than Disqualified Capital
Stock), or out of, the Net Proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Company) of other shares of Capital Stock of the
Company (other than Disqualified Capital Stock); (iii) the redemption or
retirement of Indebtedness of the Issuers subordinated to the
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Notes in exchange for, by conversion into, or out of the Net Proceeds of, a
substantially concurrent sale or incurrence of Indebtedness (other than any
Indebtedness owed to a Subsidiary) of the Issuers that is contractually
subordinated in right of payment to the Notes to at least the same extent as
the subordinated Indebtedness being redeemed or retired; (iv) the retirement of
any shares of Disqualified Capital Stock by conversion into, or by exchange
for, shares of Disqualified Capital Stock, or out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of
other shares of Disqualified Capital Stock; (v) so long as no Default or Event
of Default shall have occurred and be continuing at the time of or immediately
after giving effect to such payment, the purchase, redemption or other
acquisition for value of shares of Capital Stock of the Issuers or their
Subsidiaries (other than Disqualified Capital Stock) or options on such shares
held by the Issuers' or their Subsidiaries' officers or employees or former
officers or employees (or their estates or beneficiaries under their estates)
upon the death, disability, retirement or termination of employment of such
current or former officers or employees pursuant to the terms of an employee
benefit plan or any other agreement pursuant to which such shares of Capital
Stock or options were issued or pursuant to a severance, buy-sale or right of
first refusal agreement with such current or former officer or employee and
payments of principal and interest on the Management Subordinated Notes in
accordance with the terms thereof; provided that the aggregate cash
consideration paid, or distributions or payments made, pursuant to this clause
(v) shall not exceed $2,000,000 in any fiscal year or $10,000,000 in the
aggregate from and after the Issue Date; (vi) payments to the Equity
Compensation Trust, in an aggregate amount not to exceed $3,100,000, to be paid
up to 12 months after the Issue Date in connection with the Recapitalization;
(vii) the payment of management fees under the management agreement with THL
and its Affiliates, successors and assigns that do not exceed $500,000 per year
and the reimbursement of expenses pursuant thereto; (viii) the reimbursement of
the reasonable expenses of the Company, Capital, Capital II or Communications;
(ix) the redemption on the Issue Date of approximately one-half of the
outstanding Preferred Units with the proceeds from the sale of the Notes and
(x) the distribution of the proceeds of the offering of the Senior Subordinated
Notes to the Company on the Issue Date to the extent necessary to repay
outstanding Indebtedness under the Company's $75 million senior subordinated
financing facility provided by CIBC Oppeneheimer Corp. and First Union.
Notwithstanding the foregoing, the amount of any payments made in reliance on
clause (v) above shall reduce the amount otherwise available for Restricted
Payments pursuant to subparagraph (c) above.
Not later than the date of making any Restricted Payment, the
Issuers shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.09 were computed, which calculations
may be based upon the Issuers' latest available financial statements, and, to
the extent that the absence of a Default or an Event of Default is a condition
to the making of such Restricted Payment, that no Default or Event of Default
exists
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and is continuing and no Default or Event of Default will occur immediately
after giving effect to any Restricted Payments.
Section 4.10 Limitation on Certain Asset Sales.
(i) The Issuers shall not consummate an Asset Sale unless (i)
such Issuer receives consideration at the time of such sale or other
disposition at least equal to the fair market value thereof (as determined in
good faith by the Board of Directors of the Company, and evidenced by a Board
Resolution); (ii) not less than 75% of the consideration received by the
Issuers is in the form of cash or Temporary Cash Investments other than in the
case where the Company is undertaking a Permitted Asset Swap; and (iii) the
Asset Sale Proceeds received by such Issuer are applied (a) first, to the
extent the Company or any Restricted Subsidiary, as the case may be, elects, or
is required, to prepay, repay or purchase debt or to reduce an unused
commitment to lend under the Senior Credit Facility, the Senior Subordinated
Notes and/or any other Indebtedness of a Restricted Subsidiary incurred in
compliance with this Indenture within 180 days following the receipt of the
Asset Sale Proceeds from any Asset Sale, but only to the extent that any such
repayment shall result in a permanent reduction of the commitments thereunder
in an amount equal to the principal amount so repaid; (b) second, to the extent
of the balance of Asset Sale Proceeds after application as described above, to
the extent the Company or a Restricted Subsidiary elects, to an investment in
assets (including Capital Stock or other securities purchased in connection
with the acquisition of Capital Stock or property of another Person) used or
useful in businesses similar or ancillary to the business of the Company or
such Restricted Subsidiary as conducted at the time of such Asset Sale,
provided that such investment occurs or the Issuers or a Restricted Subsidiary
enter into contractual commitments to make such investment, subject only to
customary conditions (other than the obtaining of financing), on or prior to
the 181st day following receipt of such Asset Sale Proceeds (the "Reinvestment
Date") and Asset Sale Proceeds contractually committed are so applied within
270 days following the receipt of such Asset Sale Proceeds; and (c) third, if,
on the Reinvestment Date with respect to any Asset Sale, the Available Asset
Sale Proceeds exceed $10,000,000, the Issuers shall apply an amount equal to
such Available Asset Sale Proceeds to an offer to repurchase the Notes, at a
purchase price in cash equal to (x) 100% of the Accreted Value thereof, if the
applicable repurchase date is on or prior to November 15, 2002, or (y) 100% of
the principal amount at maturity thereof plus accrued and unpaid interest, if
any, to the date of repurchase, if the repurchase date is after November 15,
2002 (an "Excess Proceeds Offer").
(ii) If the Issuers are required to make an Excess Proceeds
Offer, the Issuers shall mail, within 30 days following the Reinvestment Date,
a notice to the Holders stating, among other things: (1) that such Holders
have the right to require the Issuers to apply the Available Asset Sale
Proceeds to repurchase such Notes at a purchase price in cash equal to
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(x) 100% of the Accreted Value thereof, if the applicable repurchase date is on
or prior to November 15, 2002, or (y) 100% of the principal amount at maturity
thereof together with accrued and unpaid interest, if any, to the date of
purchase, if the repurchase date is after November 15, 2002; (2) the purchase
date (the "Purchase Date"), which shall be no earlier than 30 days and not
later than 60 days from the date such notice is mailed; (3) the instructions,
determined by the Issuers, that each Holder must follow in order to have such
Notes repurchased; and (4) the calculations used in determining the amount of
Available Asset Sale Proceeds to be applied to the repurchase of such Notes.
The Excess Proceeds Offer shall remain open for a period of 20 Business Days
following its commencement (the "Offer Period"). The notice, which shall
govern the terms of the Excess Proceeds Offer, shall state:
(a) that the Excess Proceeds Offer is being made pursuant to this
Section 4.10 and the length of time the Excess Proceeds Offer will remain
open;
(b) the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment will
continue to accrete Accreted Value or accrue interest, as the case may be;
(d) that any Note accepted for payment pursuant to the Excess
Proceeds Offer shall cease to accrete Accreted Value or accrue
interest, as the case may be, on and after the Purchase Date and the deposit
of the purchase price with the Trustee;
(e) that Holders electing to have a Note purchased pursuant to any
Excess Proceeds Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Issuers, a depositary, if appointed by the Issuers,
or a Paying Agent at the address specified in the notice prior to the close
of business on the Business Day preceding the Purchase Date;
(f) that Holders will be entitled to withdraw their election if
the Issuers, depositary or Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a facsimile transmission
or letter setting forth the name of the Holder, the principal amount at
maturity of the Note the Holder delivered for purchase and a statement that
such Holder is withdrawing its election to have the Note purchased;
(g) that, if the Accreted Value of Notes surrendered by Holders
exceeds the Available Asset Sale Proceeds, the Issuers shall select the
Notes to be purchased on a
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pro rata basis (with such adjustments as may be deemed appropriate by
the Issuers so that only Notes in denominations of $1,000, or integral
multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part will be
issued new Notes equal in principal amount at maturity to the
unpurchased portion of the Notes surrendered.
On or before the Purchase Date, the Issuers shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, Notes
or portions thereof tendered pursuant to the Excess Proceeds Offer, deposit
with the Paying Agent U.S. legal tender sufficient to pay the purchase price
plus accrued interest, if any, on the Notes to be purchased and deliver to the
Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Issuers in accordance with the terms of this
Section 4.10. The Paying Agent shall promptly (but in any case not later than
5 days after the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Note tendered by such Holder and
accepted by the Issuers for purchase, and the Issuers shall promptly issue a
new Note and the Trustee shall authenticate and mail or make available for
delivery such new Note to such Holder equal in principal amount at maturity to
any unpurchased portion of the Note surrendered. Any Note not so accepted
shall be promptly mailed or delivered by the Issuers to the Holder thereof. The
Issuers will publicly announce the results of the Excess Proceeds Offer on the
Purchase Date by sending a press release to the Dow Jones News Service or
similar business news service in the United States. If an Excess Proceeds
Offer is not fully subscribed, the Issuers may retain that portion of the
Available Asset Sale Proceeds not required to repurchase Notes and use such
portion for general corporate purposes, and such retained portion shall not be
considered in the calculation of "Available Asset Sale Proceeds" with respect
to any subsequent offer to purchase Notes.
Section 4.11 Limitation on Transactions with Affiliates.
(i) The Issuers shall not, and shall not permit any of their
Restricted Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate (including entities in which the Issuers or any of
its Restricted Subsidiaries own a minority interest)(an "Affiliate
Transaction") or extend, renew, waive or otherwise modify the terms of any
Affiliate Transaction entered into prior to the Issue Date if such extension,
renewal, waiver or other modification is more disadvantageous to the Holders in
any material respect than the original agreement as in effect on the Issue Date
unless (i) such Affiliate Transaction is between or among the Issuers and/or
their Wholly-Owned Subsidiaries and/or Communications; or (ii) the terms of
such Affiliate
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Transaction are fair and reasonable to the Issuers or such Restricted
Subsidiary, as the case may be, and the terms of such Affiliate Transaction are
at least as favorable as the terms which could be obtained by the Issuers or
such Restricted Subsidiary, as the case may be, in a comparable transaction
made on an arm's-length basis between unaffiliated parties. In any Affiliate
Transaction involving an amount or having a value in excess of $1,000,000 which
is not permitted under clause (i) above, the Issuers must obtain a resolution
of the Board of Directors certifying that such Affiliate Transaction complies
with clause (ii) above. In any Affiliate Transaction with a value in excess of
$5,000,000 which is not permitted under clause (i) above (other than any sale
by the Company of its Capital Stock that is not Disqualified Capital Stock),
the Issuers must obtain a written opinion as to the fairness of such a
transaction from an independent investment banking firm.
(ii) The limitations set forth in Section 4.11(a) shall not
apply to (i) any Restricted Payment that is not prohibited by Section 4.09
hereof, (ii) any transaction pursuant to an agreement, arrangement or
understanding existing on the Issue Date and described in Schedule 4.11 hereto,
(iii) any transaction, approved by the Board of Directors of the Company,
Communications, TWP, Capital or Capital II, with an officer or director of the
Issuers or of any Subsidiary in his or her capacity as officer or director
entered into in the ordinary course of business or (iv) transactions permitted
by Section 5.01 hereof.
Section 4.12 Limitations on Liens.
The Issuers shall not create, incur or otherwise cause or
suffer to exist or become effective any Liens of any kind (other than Permitted
Liens) upon any property or asset of the Issuers or any shares of stock (other
than under the Senior Credit Facility) or debt of any Restricted Subsidiary
which owns property or assets, now owned or hereafter acquired, unless (i) if
such Lien secures Indebtedness which is pari passu with the Notes, then the
Notes are secured on an equal and ratable basis with the obligations so secured
until such time as such obligation is no longer secured by a Lien or (ii) if
such Lien secures Indebtedness which is subordinated to the Notes, any such
Lien shall be subordinated to the Lien granted to the Holders of the Notes to
the same extent as such subordinated Indebtedness is subordinated to the Notes.
Section 4.13 Limitations on Investments.
The Issuers shall not, and shall not permit any of their
Restricted Subsidiaries to, make any Investment other than (i) a Permitted
Investment or (ii) an Investment that is made as a Restricted Payment in
compliance with Section 4.09 hereof, after the Issue Date.
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Section 4.14 Limitation on Creation of Subsidiaries.
The Issuers shall not create or acquire, nor permit any of
their Restricted Subsidiaries to create or acquire, any Subsidiary other than
(i) a Restricted Subsidiary that is acquired or created in connection with the
acquisition by the Company of a business primarily engaged in, or an asset
primarily utilized in, providing directory services and/or classified
advertising, or (ii) an Unrestricted Subsidiary.
Section 4.15 Limitation on Sale and Lease-Back Transactions.
The Issuers shall not, and shall not permit any Restricted
Subsidiary to, enter into any Sale and Lease-Back Transaction unless (i) the
consideration received in such Sale and Lease-Back Transaction is at least
equal to the fair market value of the property sold, as determined, in good
faith, by the Board of Directors of the Company and (ii) the Issuers could
incur the Attributable Indebtedness in respect of such Sale and Lease-Back
Transaction in compliance with Section 4.06.
Section 4.16 Payments for Consent.
Neither the Issuers nor any of their Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Notes which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
Section 4.17 Legal Existence.
Subject to Article 5 hereof, the Issuers shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
their legal existence, and the corporate, partnership or other existence of
each Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Issuers and their Restricted Subsidiaries; provided, however, that the
Issuers shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of their Restricted
Subsidiaries if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the
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business of the Issuers and their Restricted Subsidiaries, taken as a whole,
and that the loss thereof is not adverse in any material respect to the
Holders.
Section 4.18 Change of Control.
(i) Within 20 days of the occurrence of a Change of Control,
the Company shall notify the Trustee in writing of such occurrence and shall
make an offer to purchase (the "Change of Control Offer") the outstanding Notes
at a purchase price equal to (x) 101% of the Accreted Value thereof, if the
Change of Control Payment Date is on or prior to November 15, 2002, or (y) 101%
of the principal amount at maturity thereof together with any accrued and
unpaid interest, if any, thereon to the Change of Control Payment Date, if the
Change of Control Payment Date is after November 15, 2002 (such applicable
purchase price being hereinafter referred to as the "Change of Control Purchase
Price") in accordance with the procedures set forth in this Section 4.18.
If the Senior Credit Facility is in effect or the Senior
Subordinated Notes are outstanding, or any amounts are owing thereunder or in
respect thereof, at the time of the occurrence of a Change of Control, prior to
the mailing of the notice to Holders described in paragraph (b) below, but in
any event within 20 days following any Change of Control, the Issuers on a
joint and several basis covenant to (i) cause the Borrowers thereunder to repay
in full all obligations under or in respect of the Senior Credit Facility or
offer to repay in full all obligations under or in respect of the Senior Credit
Facility and repay the obligations under or in respect of the Senior Credit
Facility of each lender who has accepted such offer and cause the issuers
thereof to repay in full all obligations in respect of the Senior Subordinated
Notes or offer to repay in full all obligations in respect of the Senior
Subordinated Notes and repay the obligations in respect of the Senior
Subordinated Notes of each holder who has accepted such offer or (ii) cause
such borrowers and issuers to obtain the requisite consent under the Senior
Credit Facility and from the holders of the Senior Subordinated Notes,
respectively, to permit the repurchase of the Notes pursuant to this Section
4.18. The Issuers must first comply with the covenant described in the
preceding sentence before they shall be required to purchase Notes in the event
of a Change of Control; provided that the Issuers' failure to comply with the
covenant described in the preceding sentence constitutes an Event of Default
described in clause (3) under Section 6.01 hereof if not cured within 60 days
after the notice required by such clause.
(ii) Within 20 days of the occurrence of a Change of Control,
the Company also shall (i) cause a notice of the Change of Control Offer to be
sent at least once to the Dow Jones News Service or similar business news
service in the United States and (ii) send by first-class mail, postage
prepaid, to the Trustee and to each Holder of the Notes, at the address
appearing in the register maintained by the Registrar of the Notes, a notice
stating:
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(i) that the Change of Control Offer is being made pursuant
to this Section 4.18 and that all Notes tendered will be accepted for
payment, and otherwise subject to the terms and conditions set forth herein;
(ii) the Change of Control Purchase Price and the purchase
date (which shall be a Business Day no earlier than 20 Business Days
from the date such notice is mailed (the "Change of Control Payment Date"));
(iii) that any Note not tendered will remain outstanding and
continue to accrete Accreted Value or accrue interest, as the case may be;
(iv) that, unless the Issuers default in the payment of
the Change of Control Purchase Price, any Notes accepted for payment pursuant
to the Change of Control Offer shall cease to accrete Accreted Value or accrue
interest, as the case may be, after the Change of Control Payment Date;
(v) that Holders accepting the offer to have their Notes
purchased pursuant to a Change of Control Offer will be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business Day preceding the
Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their
acceptance if the Paying Agent receives, not later than the close of business
on the third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have such Notes
purchased;
(vii) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount at maturity to the
unpurchased portion of the Notes surrendered, provided that each Note purchased
and each such new Note issued shall be in an original principal amount at
maturity in denominations of $1,000 and integral multiples thereof;
(viii)any other procedures that a Holder must follow to
accept a Change of Control Offer or effect withdrawal of such acceptance; and
(ix) the name and address of the Paying Agent.
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On the Change of Control Payment Date, the Issuers shall, to
the extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent
money sufficient to pay the purchase price of all Notes or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Issuers. The Paying Agent shall promptly mail to each
Holder of Notes so accepted payment in an amount equal to the purchase price
for such Notes, and the Issuers shall execute and issue and the Trustee shall
promptly authenticate and mail to such Holder, a new Note equal in principal
amount at maturity to any unpurchased portion of the Notes surrendered;
provided that each such new Note shall be issued in an original principal
amount at maturity in denominations of $1,000 and integral multiples thereof.
(iii) (i) If either Issuer or any Subsidiary thereof has
issued any outstanding (A) Indebtedness that is subordinated in right of
payment to the Notes or (B) Preferred Stock, and such Issuer or Subsidiary is
required to make a change of control offer or to make a distribution with
respect to such subordinated Indebtedness or Preferred Stock in the event of a
change of control, the Issuers shall not consummate any such offer or
distribution with respect to such subordinated Indebtedness or Preferred Stock
until such time as the Issuers shall have paid the Change of Control Purchase
Price in full to the Holders of Notes that have accepted the Issuers' Change of
Control Offer and shall otherwise have consummated the Change of Control Offer
made to Holders of the Notes and (ii) the Issuers will not issue Indebtedness
that is subordinated in right of payment to the Notes or Preferred Stock with
change of control provisions requiring the payment of such Indebtedness or
Preferred Stock prior to the payment of the Notes in the event of a Change in
Control under this Indenture.
In the event that a Change of Control occurs and the Holders
of Notes exercise their right to require the Issuers to purchase Notes, if such
purchase constitutes a "tender offer" for purposes of Rule 14e-1 under the
Exchange Act at that time, the Issuers will comply with the requirements of
Rule 14e-1 as then in effect with respect to such repurchase.
Section 4.19 Maintenance of Office or Agency.
The Issuers shall maintain an office or agency where Notes may
be surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Issuers in respect of the
Notes and this Indenture may be served. The Issuers shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Issuers shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee as set forth in Section
10.02.
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The Issuers may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations.
The Issuers shall give prompt written notice to the Trustee of such designation
or rescission and of any change in the location of any such other office or
agency.
The Issuers hereby initially designate the Corporate Trust
Office of the Trustee as such office of the Issuers.
Section 4.20 Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.
(i) The Issuers shall, and shall cause each of their
Restricted Subsidiaries to, at all times cause all properties used or useful in
the conduct of their business to be maintained and kept in good condition,
repair and working order (reasonable wear and tear excepted) and supplied with
all necessary equipment, and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereto.
(ii) The Issuers shall, and shall cause each of their
Restricted Subsidiaries to, maintain insurance (which may include
self-insurance) in such amounts and covering such risks as are usually and
customarily carried with respect to similar facilities according to their
respective locations.
(iii) The Issuers shall, and shall cause each of their
Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Issuers and each Subsidiary of the Issuers, in accordance with
GAAP consistently applied to the Issuers and their Subsidiaries taken as a
whole.
(iv) The Issuers shall and shall cause each of their
Subsidiaries to comply with all statutes, laws, ordinances or government rules
and regulations to which they are subject, non-compliance with which would
materially adversely affect the business, earnings, assets or financial
condition of the Issuers and their Subsidiaries taken as a whole.
Section 4.21 Further Assurance to the Trustee.
The Issuers shall, upon the reasonable request of the Trustee,
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the provisions of
this Indenture.
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Section 4.22 Limitation on Conduct of Business of Capital.
Except to the extent permitted under Section 5.01, Capital
shall not hold any operating assets or other properties or conduct any business
other than to serve as an Issuer and co-obligor with respect to the Notes and
shall not own any Capital Stock of any other Person other than up to 1% of the
Capital Stock of TWP.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01 Limitation on Consolidation, Merger and Sale of Assets.
(i) Neither of the Issuers will consolidate with, merge with
or into, or transfer all or substantially all of its assets (as an entirety or
substantially as an entirety in one transaction or a series of related
transactions) to, any Person unless (in the case of the Company): (i) the
Company shall be the continuing Person, or the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or to
which the properties and assets of the Company are transferred shall be a
corporation (or a limited partnership or a limited liability company) organized
and existing under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume, in writing by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all of the obligations of the Company under the Notes and this
Indenture, and the obligations under this Indenture shall remain in full force
and effect; provided that at any time the Company or its successor is a limited
partnership or a limited liability company there shall be a co-issuer of the
Notes that is a corporation; (ii) immediately before and immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing; (iii) immediately after giving effect to such
transaction or series of transactions on a pro forma basis the Consolidated Net
Worth of the Company or the surviving entity as the case may be is at least
equal to the Consolidated Net Worth of the Company immediately before such
transaction or series of transactions; and (iv) immediately after giving effect
to such transaction on a pro forma basis the Company or such Person could incur
at least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.06 hereof. Notwithstanding anything in this Article 5 to
the contrary, (a) either of the Company or Capital may merge with or into, or
consolidate with, the other, and any Subsidiary of THL that is a holding
company (with no assets other than partnership interests in the Company and no
liabilities) may merge with and into the Company, in either case subject only
to clause (i) of the immediately preceding sentence and (b) the Company may
merge into, consolidate with or transfer all or substantially all of its assets
to another entity,
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which entity shall have no significant assets and no liabilities immediately
prior to such transaction, without regard to the requirements of clause (iv) of
the immediately preceding sentence so long as the surviving or consolidated
entity or transferee, as the case may be, shall, immediately after giving
effect to such transaction, directly own at least 99% of the voting and
economic power of the Common Stock of TWP. Nothing in this Article 5 shall
limit any merger or consolidation involving TWP or Capital II so long as such
merger or consolidation is not with or into the Company or Capital.
(ii) In connection with any consolidation, merger or transfer
of assets contemplated by this Section 5.01, the Issuers shall deliver, or
cause to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and the
supplemental indenture in respect thereto comply with this Section 5.01 and
that all conditions precedent herein provided for relating to such transaction
or transactions have been complied with.
Section 5.02 Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01
above, the successor entity formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor entity had been named
as the Company herein, and thereafter the predecessor entity shall be relieved
of all obligations and covenants under this Indenture and the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.
An "Event of Default" occurs if
(a) there is a default in the payment of any Accreted
Value, principal of, or premium, if any, on the Notes when the same
becomes due and payable whether at maturity, upon acceleration,
redemption or otherwise;
(b) there is a default in the payment of any interest on
any Note when the same becomes due and payable and the Default
continues for a period of 30 days;
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(c) either of the Issuers or any Restricted Subsidiary
defaults in the observance or performance of any other covenant in the
Notes or this Indenture for 60 days after written notice from the
Trustee or the Holders of not less than 25% in the aggregate principal
amount at maturity of the Notes then outstanding;
(d) there is a default in the payment at final maturity
of principal in an aggregate amount of $5,000,000 or more with respect
to any Indebtedness of either Issuer or any Restricted Subsidiary
thereof, or there is an acceleration of any such Indebtedness
aggregating $5,000,000 or more which default shall not be cured,
waived or postponed pursuant to an agreement with the holders of such
Indebtedness within 60 days after written notice by the Trustee or any
Holder, or which acceleration shall not be rescinded or annulled
within 20 days after written notice to the Issuers of such Default by
the Trustee or any Holder;
(e) the entry of a final judgment or judgments which can
no longer be appealed for the payment of money in excess of $5,000,000
against either of the Issuers or any Restricted Subsidiary thereof and
such judgment remains undischarged, for a period of 60 consecutive
days during which a stay of enforcement of such judgment shall not be
in effect;
(f) either of the Issuers or any Restricted Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of
it or for all or substantially all of its property,
(D) makes a general assignment for the benefit
of its creditors, or
(E) generally is not paying its debts as they
become due; or
(g) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(A) is for relief against either of the Issuers or
any or any Restricted Subsidiary in an involuntary case,
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(B) appoints a Custodian of either of the Issuers
or any Restricted Subsidiary or for all or substantially all
of the property of either of the Issuers or any Restricted
Subsidiary, or
(C) orders the liquidation of either of the
Issuers or any Restricted Subsidiary,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
The Trustee may withhold notice to the Holders of the Notes of
any Default (except in payment of principal or premium, if any, or interest on
the Notes) if the Trustee considers it to be in the best interest of the
Holders of the Notes to do so. The Trustee shall not be charged with knowledge
of any Default, Event of Default, Change of Control or Asset Sale in payment of
Additional Interest unless written notice thereof shall have been given to a
Responsible Officer at the corporate trust office of the Trustee by the Issuers
or any other Person.
Section 6.02 Acceleration.
If an Event of Default (other than an Event of Default arising
under Section 6.01(6) or (7) with respect to either of the Issuers) occurs and
is continuing, the Trustee by notice to the Issuers, or the Holders of not
less than 25% in aggregate principal amount at maturity of the Notes then
outstanding may by written notice to the Issuers and the Trustee declare the
Notes to be immediately due and payable in an amount equal to (x) the Accreted
Value of the Discount Notes outstanding on the date of acceleration, if such
declaration is made on or prior to November 15, 2002 or (y) the entire
principal amount at maturity of the Notes outstanding on the date of
acceleration plus accrued but unpaid interest, if any, to the date of
acceleration, if such declaration is made after November 15, 2002, and (i) such
amounts shall become immediately due and payable or (ii) if there are any
amounts outstanding under the Senior Credit Facility or the Senior Subordinated
Notes, such amounts shall become due and payable upon the first to occur of an
acceleration of amounts outstanding under the Senior Credit Facility or the
Senior Subordinated Notes or five Business Days after receipt by the Company,
the representative of the lenders under the Senior Credit Facility and the
trustee under the indenture relating to the Senior Subordinated Notes of notice
of the acceleration of the Notes; provided, however, that after such
acceleration but before a judgment or decree based on such acceleration is
obtained by the
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Trustee, the Holders of a majority in aggregate principal amount at maturity of
outstanding Notes may rescind and annul such acceleration and its consequences
if all existing Events of Default, other than the nonpayment of accelerated
Accreted Value, principal, premium, if any, or interest that has become due
solely because of the acceleration, have been cured or waived and if the
rescission would not conflict with any judgment or decree. No such rescission
shall affect any subsequent Default or impair any right consequent thereto. In
case an Event of Default specified in Section 6.01(6) or (7) with respect to
either of the Issuers occurs, the Accreted Value or principal and all premium,
if any, and interest amount with respect to all of the Notes shall be due and
payable immediately without any declaration or other act on the part of the
Trustee or the Holders of the Notes.
Section 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect
the payment of Accreted Value or principal of, or premium, if any, and interest
on the Notes or to enforce the performance of any provision of the Notes or
this Indenture and may take any necessary action requested of it as Trustee to
settle, compromise, adjust or otherwise conclude any proceedings to which it is
a party.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Noteholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative.
Section 6.04 Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of
a majority in principal amount at maturity of the Notes then outstanding have
the right to waive any existing Default or Event of Default or compliance with
any provision of this Indenture or the Notes. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereto.
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Section 6.05 Control by Majority.
The Holders of a majority in principal amount at maturity of the Notes then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee by this Indenture. The Trustee, however, may refuse
to follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of another
Noteholder not taking part in such direction, and the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken or if
the Trustee in good faith shall, by a Responsible Officer, determine that the
proceedings so directed may involve it in personal liability; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06 Limitation on Suits.
Subject to Section 6.07 below, a Noteholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(a) the Holder gives to the Trustee written notice of a continuing Event
of Default;
(b) the Holders of at least 25% in aggregate principal amount at maturity
of the Notes then outstanding make a written request to the Trustee to pursue
the remedy;
(c) such Holder or Holders offer and if requested provide to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer, and, if requested provision, of indemnity
; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60 day period by the Holders of a majority in
aggregate principal amount at maturity of the Notes then outstanding.
A Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
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Section 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of Accreted Value or principal
of, or premium, if any, and interest of the Note (including Additional
Interest) on or after the respective due dates expressed in the Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
Section 6.08 Collection Suit by Trustee.
If an Event of Default in payment of Accreted Value or
principal, premium or interest specified in Section 6.01(1) or (2) hereof
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Issuers (or any other obligor on the
Notes) for the whole amount of unpaid Accreted Value or principal and accrued
interest remaining unpaid, together with interest on overdue Accreted Value or
principal and, to the extent that payment of such interest is lawful, interest
on overdue installments of interest, in each case at the rate set forth in the
Notes, and such further amounts as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relative to the Issuers (or any
other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same after
deduction of its charges and expenses to the extent that any such charges and
expenses are not paid out of the estate in any such proceedings and any
custodian in any such judicial proceeding is hereby authorized by each
Noteholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
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Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan or reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such
proceedings.
Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
Accreted Value or principal, premium, if any, and interest (including
Additional Interest, if any) as to each, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes;
and
THIRD: to the Issuers.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.07 hereof or a suit by Holders of more than 10%
in principal amount at maturity of the Notes then outstanding.
Section 6.12 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Issuers, the Trustee and the
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Holders shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
ARTICLE 7
TRUSTEE
Section 7.01 Duties of Trustee.
(i) If an Event of Default actually known to a Responsible Officer
of the Trustee has occurred and is continuing, the Trustee shall exercise such
rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the same circumstances in the conduct of his own affairs.
(ii) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and no implied covenants
or obligations shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture but, in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).
(iii) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts.
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(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Sections 6.02, 6.05 or 6.06 hereof.
(4) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its rights, powers or duties or to take or omit to take
any action under this Indenture or take any action at the request or direction
of Holders if it shall have reasonable grounds for believing that repayment of
such funds is not assured to it or it does not receive an indemnity
satisfactory to it in its sole discretion against such risk, liability, loss,
fee or expense which may be incurred by it in connection with such performance.
(iv) Whether or not therein expressly so provided,
paragraphs (a), (b), (c) and (e) of this Section 7.01 shall govern every
provision of this Indenture that in any way relates to the Trustee.
(v) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity satisfactory to it in
its sole discretion against any loss, liability, expense or fee.
(vi) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Issuers. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by the law.
Section 7.02 Rights of Trustee.
Subject to Section 7.01 hereof:
(a) The Trustee may rely on any document reasonably believed by it
to be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both, which shall
conform to the provisions of Section 10.05 hereof. The Trustee shall be
protected and shall not be liable for any action it takes or omits to take in
good faith in reliance on such certificate or opinion.
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(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed by
it with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection from liability in respect of any action
taken, omitted or suffered by it hereunder in good faith and in accordance with
the advice or opinion of such counsel.
Section 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may make loans to, accept deposits from,
perform services for or otherwise deal with either of the Issuers, or any
Affiliates thereof, with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. The Trustee, however, shall be
subject to Sections 7.10 and 7.11 hereof.
Section 7.04 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes,
it shall not be accountable for the Issuers' use of the proceeds from the sale
of Notes or any money paid to the Issuers pursuant to the terms of this
Indenture and it shall not be responsible for any statement in the Notes or
this Indenture other than its certificate of authentication.
Section 7.05 Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Noteholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
the principal of, or premium, if any, or interest on any Note the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determine(s) that withholding the notice is in the interests of
the Noteholders.
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Section 7.06 Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after
November 15 of any year, commencing November 15, 1998, the Trustee shall mail
to each Noteholder a brief report dated as of such November 15 that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA Section 313(c) and TIA Section 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by
mail:
(a) to all registered Holders of Notes, as the names and addresses
of such Holders appear on the Registrar's books; and
(b) to such Holder of Notes as have, within the two years
preceding such transmission, filed their names and addresses with the Trustee
for that purpose.
A copy of each report at the time of its mailing to
Noteholders shall be filed with the SEC and each stock exchange on which the
Notes are listed. The Issuers shall promptly notify the Trustee when the Notes
are listed on any stock exchange.
Section 7.07 Compensation and Indemnity.
The Issuers shall pay to the Trustee and Agents from time to
time such compensation as shall be agreed in writing between the Company and
the Trustee for its services hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust). The Issuers shall reimburse the Trustee and Agents upon
request for all reasonable disbursements, expenses and advances incurred or
made by it in connection with its duties under this Indenture, including the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Issuers shall indemnify each of the Trustee and any
predecessor Trustee for, and hold each of them harmless against, any and all
loss, damage, claim, liability or expense, including without limitation taxes
(other than taxes based on the income of the Trustee or such Agent) and
reasonable attorneys' fees and expenses incurred by each of them in connection
with the acceptance or performance of its duties under this Indenture including
the reasonable costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder (including, without limitation, settlement costs). The
Trustee or Agent shall notify the Issuers in writing promptly of any claim
asserted against the Trustee or Agent for which it may seek
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indemnity. However, the failure by the Trustee or Agent to so notify the
Issuers shall not relieve the Issuers of their obligations hereunder except to
the extent the Issuers are prejudiced thereby.
Notwithstanding the foregoing, the Issuers need not reimburse
the Trustee for any expense or indemnify it against any loss or liability
incurred by the Trustee through its negligence or bad faith. To secure the
payment obligations of the Issuers in this Section 7.07, the Trustee shall have
a lien prior to the Notes on all money or property held or collected by the
Trustee except such money or property held in trust to pay principal of and
interest on particular Notes. The obligations of the Issuers under this
Section 7.07 to compensate, reimburse and indemnify the Trustee, Agents and
each predecessor Trustee and to pay or reimburse the Trustee, Agents and each
predecessor Trustee for expenses, disbursements and advances shall be joint and
several liabilities of the Issuers and shall survive the satisfaction,
discharge and termination of this Indenture, including any termination or
rejection hereof under any bankruptcy law or the resignation or removal of the
Trustee.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) hereof occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall
include any trustee appointed pursuant to Article 9.
Section 7.08 Replacement of Trustee.
The Trustee may resign by so notifying the Issuers in writing.
The Holders of a majority in principal amount of the outstanding Notes may
remove the Trustee by notifying the removed Trustee in writing and may appoint
a successor Trustee with the Issuers' written consent which consent shall not
be unreasonably withheld. The Issuers may remove the Trustee at their election
if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the Trustee
or its property;
(d) the Trustee otherwise becomes incapable of acting; or
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(e) a successor corporation becomes successor Trustee pursuant to
Section 7.09 below.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Issuers shall notify the holders of
such event and promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount
at maturity of the Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Issuers.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Issuers or the Holders of a majority in principal amount at maturity of the
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Noteholder. Notwithstanding replacement of
the Trustee pursuant to this Section 7.08, the Issuers obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
Section 7.09 Successor Trustee by Consolidation, Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, the successor corporation without
any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2) in every respect. The Trustee
shall have a combined capital and surplus of at least $100,000,000 as set forth
in its most recent published annual report of
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condition. The Trustee shall comply with TIA Section 310(b), including the
provision in Section 310(b)(1).
Section 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311 (b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
Section 7.12 Paying Agents.
The Issuers shall cause each Paying Agent other than the
Trustee to execute and deliver to it and the Trustee an instrument in which
such agent shall agree with the Trustee, subject to the provisions of this
Section 7.12:
(A) that it will hold all sums held by it as agent for the payment
of Accreted Value or principal of, or premium, if any, or interest on, the
Notes (whether such sums have been paid to it by the Issuers or by any obligor
on the Notes) in trust for the benefit of Holders of the Notes or the Trustee;
(B) that it will at any time during the continuance of any Event
of Default, upon written request from the Trustee, deliver to the Trustee all
sums so held in trust by it together with a full accounting thereof; and
(C) that it will give the Trustee written notice within three (3)
Business Days of any failure of the Issuers (or by any obligor on the Notes) in
the payment of any installment of Accreted Value or principal of, premium, if
any, or interest on, the Notes when the same shall be due and payable.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01 Without Consent of Holders.
The Issuers, when authorized by a Board Resolution of each of
them, and the Trustee may amend, waive or supplement this Indenture or the
Notes without notice to or consent of any Noteholder:
(a) to comply with Section 5.01 hereof;
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(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(c) to comply with any requirements of the SEC under the TIA;
(d) to cure any ambiguity, defect or inconsistency, or to make any
other change that does not adversely affect the rights of any Noteholder; or
(e) to make any other change that does not adversely affect the
rights of any Noteholders hereunder.
The Trustee is hereby authorized to join with the Issuers in
the execution of any supplemental indenture authorized or permitted by the
terms of this Indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which adversely affects
its own rights, duties or immunities under this Indenture.
Section 8.02 With Consent of Holders.
The Issuers (each when authorized by a Board Resolution) and
the Trustee may modify or supplement this Indenture or the Notes with the
written consent of the Holders of not less than a majority in aggregate
principal amount at maturity of the outstanding Notes. The Holders of not less
than a majority in aggregate principal amount at maturity of the outstanding
Notes may waive compliance in a particular instance by the Issuers with any
provision of this Indenture or the Notes. Subject to Section 8.04, without the
consent of each Noteholder affected, however, an amendment, supplement or
waiver, including a waiver pursuant to Section 6.04, may not:
(a) reduce the amount of Notes whose Holders must consent to an
amendment, supplement or waiver to this Indenture or the Notes;
(b) reduce the rate of or change the time for payment of interest
on any Note;
(c) reduce the Accreted Value, principal at maturity of or premium
on or change the stated maturity of any Note;
(d) make any Note payable in money other than that stated in the
Note or change the place of payment from New York, New York;
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(e) change the amount or time of any payment required by the Notes
or reduce the premium payable upon any redemption of the Notes in accordance
with Section 3.07 hereof, or change the time before which no such redemption
may be made;
(f) waive a default in the payment of Accreted Value, the
principal of, or interest on, or redemption payment with respect to, any Note
(including any obligation to make a Change of Control Offer or, after the
Issuers' obligation to purchase Notes arises thereunder, an Excess Proceeds
Offer or modify any of the provisions or definitions with respect to such
offers);
(g) make any changes in Sections 6.04 or 6.07 hereof or this
sentence of Section 8.02; or
(h) affect the ranking of the Notes in a manner adverse to the
Holders.
After an amendment, supplement or waiver under this Section
8.02 or Section 8.01 becomes effective, the Issuers shall mail to the Holders a
notice briefly describing the amendment, supplement or waiver.
Upon the written request of the Issuers, accompanied by a
Board Resolution authorizing the execution of any such supplemental indenture,
and upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Noteholders as aforesaid and upon receipt by the
Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Issuers in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture, in which case the Trustee may, but shall not
be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 8.03 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Notes shall comply with the TIA as then in effect.
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Section 8.04 Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may
revoke the consent as to his Note or portion of a Note, if the Trustee receives
the written notice of revocation before the date the amendment, supplement,
waiver or other action becomes effective.
The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date unless the consent of the requisite number
of Holders has been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described
in any of clauses (1) through (8) of Section 8.02 hereof. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
Section 8.05 Notation on or Exchange of Notes.
If an amendment, supplement, or waiver changes the terms of a
Note, the Trustee (in accordance with the specific written direction of the
Issuers) shall request the Holder of the Note (in accordance with the specific
written direction of the Issuers) to deliver it to the Trustee. In such case,
the Trustee shall place an appropriate notation on the Note about the changed
terms and return it to the Holder. Alternatively, if the Issuers or the
Trustee so determines, the Issuers in exchange for the Note shall issue and the
Trustee shall authenticate a new Note that reflects the changed terms. Failure
to make the appropriate notation or issue a new Note shall not affect the
validity and effect of such amendment supplement or waiver.
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Section 8.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article 8 if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver the Trustee shall be
entitled to receive and, subject to Section 7.01 hereof, shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that such amendment, supplement or waiver is authorized or permitted by
this Indenture and is a legal, valid and binding obligation of the Issuers,
enforceable against the Issuers in accordance with its terms (subject to
customary exceptions).
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01 Discharge of Indenture.
The Issuers may terminate their obligations under the Notes
and this Indenture, except the obligations referred to in the last paragraph of
this Section 9.01, if there shall have been canceled by the Trustee or
delivered to the Trustee for cancellation all Notes theretofore authenticated
and delivered (other than any Notes that are asserted to have been destroyed,
lost or stolen and that shall have been replaced as provided in Section 2.08
hereof) and the Issuers have paid all sums payable by them hereunder or
deposited all required sums with the Trustee.
After such delivery the Trustee upon Issuer request shall
acknowledge in writing the discharge of the Issuers' obligations under the
Notes and this Indenture except for those surviving obligations specified
below.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Issuers in Sections 7.07, 9.05 and 9.06
hereof shall survive.
Section 9.02 Legal Defeasance.
The Issuers may at their option, by Board Resolution of the
Board of Directors of each of the Issuers, be discharged from their obligations
with respect to the Notes on the date the conditions set forth in Section 9.04
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such
Legal Defeasance means that the Issuers shall be
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deemed to have paid and discharged the entire indebtedness represented by the
Notes and to have satisfied all its other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee, at the expense
of the Issuers, shall, subject to Section 9.06 hereof, execute instruments in
form and substance reasonably satisfactory to the Trustee and Issuers
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of
outstanding Notes to receive solely from the trust funds described in Section
9.04 hereof and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such
payments are due, (B) the Issuers' obligations with respect to such Notes under
Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09 and 4.19 hereof, (C) the
rights, powers, trusts, duties, and immunities of the Trustee hereunder
(including claims of, or payments to, the Trustee under or pursuant to Section
7.07 hereof) and (D) this Article 9. Subject to compliance with this Article
9, the Issuers may exercise their option under this Section 9.02 with respect
to the Notes notwithstanding the prior exercise of its option under Section
9.03 below with respect to the Notes.
Section 9.03 Covenant Defeasance.
At the option of the Issuers, pursuant to a Board Resolution
of the Board of Directors of each of the Issuers, the Issuers shall be released
from their respective obligations under Sections 4.02 through 4.18, Section
4.20 and Section 4.22 hereof, inclusive, and clauses (a)(ii), (iii) and (iv) of
Section 5.01 hereof with respect to the outstanding Notes on and after the date
the conditions set forth in Section 9.04 hereof are satisfied (hereinafter,
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means that
the Issuers may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such specified Section or
portion thereof, whether directly or indirectly by reason of any reference
elsewhere herein to any such specified Section or portion thereof or by reason
of any reference in any such specified Section or portion thereof to any other
provision herein or in any other document, but the remainder of this Indenture
and the Notes shall be unaffected thereby.
Section 9.04 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of
Section 9.02 or Section 9.03 hereof to the outstanding Notes:
(a) the Issuers shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 hereof who shall agree to comply with the provisions of this
Article 9 applicable to it) as funds in trust for the purpose of making the
following payments, specifically pledged
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as security for, and dedicated solely to, the benefit of the Holders of the
Notes, (A) money in an amount, or (B) U.S. Government Obligations which through
the scheduled payment of principal at maturity and interest in respect thereof
in accordance with their terms will provide, not later than the due date of any
payment, money in an amount, or (C) a combination thereof, sufficient, in the
opinion of a nationally-recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, the principal of, premium, if any, and accrued
interest on the outstanding Notes at the maturity date of such principal,
premium, if any, or interest, or on dates for payment and redemption of such
principal, premium, if any, and interest selected in accordance with the terms
of this Indenture and of the Notes;
(b) no Event of Default or Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit, or shall have
occurred and be continuing at any time during the period ending on the 91st day
after the date of such deposit or, if longer, ending on the day following the
expiration of the longest preference period under any Bankruptcy Law applicable
to the Issuers in respect of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such period);
(c) such Legal Defeasance or Covenant Defeasance shall not cause
the Trustee to have a conflicting interest for purposes of the TIA with respect
to any securities of the Company;
(d) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute default under any other agreement or
instrument to which the Issuers are a party or by which they are bound;
(e) the Issuers shall have delivered to the Trustee an Opinion of
Counsel stating that, as a result of such Legal Defeasance or Covenant
Defeasance, neither the trust nor the Trustee will be required to register as
an investment company under the Investment Company Act of 1940, as amended;
(f) in the case of an election under Section 9.02 above, the
Issuers shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Issuers have received from, or there has been published by, the
Internal Revenue Service a ruling to the effect that or (ii) there has been a
change in any applicable Federal income tax law with the effect that, and such
opinion shall confirm that, the Holders of the outstanding Notes or persons in
their positions will not recognize income, gain or loss for Federal
<PAGE> 85
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income tax purposes solely as a result of such Legal Defeasance and will
be subject to Federal income tax on the same amounts, in the same manner,
including as a result of prepayment, and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(g) in the case of an election under Section 9.03 hereof, the
Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the outstanding Notes will not recognize income, gain or
loss for Federal income tax purposes as a result of such Covenant
Defeasance and will be subject to Federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(h) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under Section
9.02 above or the Covenant Defeasance under Section 9.03 hereof (as the case
may be) have been complied with;
(i) the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by the
Issuers with the intent of defeating, hindering, delaying or defrauding any
creditors of the Company or others;
(j) the Issuers shall have paid or duly provided for payment under
terms mutually satisfactory to the Issuers and the Trustee all amounts then due
to the Trustee pursuant to Section 7.07 hereof; and
(k) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (to the extent matters of law are
involved), each stating that (x) all conditions precedent herein provided for
relating to either the legal defeasance under paragraph 9.02 above or the
covenant defeasance under paragraph 9.03 above, as the case may be, have been
complied with and (y) if any other Indebtedness of the Issuers shall then be
outstanding or committed, such legal defeasance or covenant defeasance will not
violate the provisions of the agreements or instruments evidencing such
Indebtedness.
Section 9.05 Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to Section 9.04 hereof in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such
<PAGE> 86
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Notes and this Indenture, to the payment, either directly or through any Paying
Agent, to the Holders of such Notes, of all sums due and to become due thereon
in respect of principal, premium, if any, and accrued interest, but such money
need not be segregated from other funds except to the extent required by law.
The Issuers shall (on a joint and several basis) pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
9.04 hereof or the principal, premium, if any, and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of the outstanding Notes.
Anything in this Article 9 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Issuers from time to time upon an
Issuer Request any money or U.S. Government Obligations held by it as provided
in Section 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
Section 9.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03
hereof by reason of any legal proceeding or by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Issuers' obligations under this Indenture and
the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 9 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with Section 9.01 hereof; provided, however, that if the Issuers have made any
payment of principal of, premium, if any, or accrued interest on any Notes
because of the reinstatement of their obligations, the Issuers shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
Section 9.07 Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under the provisions of
this Indenture shall, upon written demand of the Issuers, be paid to the
Trustee, or if sufficient moneys have been deposited
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pursuant to Section 9.01 hereof, to the Issuers upon an Issuer Request, and
thereupon such Paying Agent shall be released from all further liability with
respect to such moneys.
Section 9.08 Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or
then held by the Issuers in trust for the payment of the principal of, or
premium, if any, or interest on any Note that are not applied but remain
unclaimed by the Holder of such Note for two years after the date upon which
the principal of, or premium, if any, or interest on such Note shall have
respectively become due and payable shall be repaid to the Issuers upon an
Issuer Request, or if such moneys are then held by the Issuers in trust, such
moneys shall be released from such trust; and the Holder of such Note entitled
to receive such payment shall thereafter, as an unsecured general creditor,
look only to the Issuers for the payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or any such Paying Agent, before
being required to make any such repayment, may, at the expense of the Issuers,
either mail to each Noteholder affected, at the address shown in the register
of the Notes maintained by the Registrar pursuant to Section 2.04 hereof, or
cause to be published once a week for two successive weeks, in a newspaper
published in the English language, customarily published each Business Day and
of general circulation in the City of New York, New York, a notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such mailing or publication, any
unclaimed balance of such moneys then remaining will be repaid to the Issuers.
After payment to the Issuers or the release of any money held in trust by the
Issuers, Noteholders entitled to the money must look only to the Issuers for
payment as general creditors unless applicable abandoned property law
designates another person.
ARTICLE 10
MISCELLANEOUS
Section 10.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
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Section 10.02 Notices.
Except for notice or communications to Holders any notice or
communication shall be given in writing and delivered in person, sent by
facsimile, delivered by commercial courier service or mailed by first-class
mail, postage prepaid, addressed as follows:
If to the Issuers:
TransWestern Holdings L.P.
(formerly TransWestern Publishing
Company, L.P.)
8344 Clairemont Mesa Boulevard
San Diego, California 92111
Attention: Chief Financial Officer
Fax Number: (619) 292-4125
Copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: William S. Kirsch, P.C.
If to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 10890
Attention: Corporate Trust Administration
Fax Number: (302) 651-8882
Copy to:
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Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Michele D. Ross, Esq.
Fax Number: (212) 715-8000
Such notices or communications shall be effective when
received and shall be sufficiently given if so given within the time prescribed
in this Indenture.
The Issuers or the Trustee by written notice to the others may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Noteholder shall be
mailed to him by first-class mail, postage prepaid, at his address shown on the
register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or
any defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication to a Noteholder is mailed in the
manner provided above, it shall be deemed duly given, whether or not the
addressee receives it.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 10.03 Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or the
Notes. The Issuers, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
Section 10.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee
to take any action under this Indenture, the Issuers shall furnish to the
Trustee:
(a) an Officers' Certificate (which shall include the
statements set forth in Section 10.05 below) stating that, in the opinion of
the signers, all conditions
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precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(b) an Opinion of Counsel (which shall include the statements
set forth in Section 10.05 below) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 10.05 Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, it or he
has made such examination or investigation as is necessary to enable
it or him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
Section 10.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or meetings
of Noteholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
Section 10.07 Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A
"Legal Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a
day on which banking institutions are not required to be open in the State of
New York or the State of Delaware. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
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Section 10.08 Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 10.09 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan, security or debt agreement of the Issuers or any Subsidiary thereof. No
such indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 10.10 No Recourse Against Others.
No recourse for the payment of the principal of or premium, if
any, or interest on any of the Notes, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Issuers in this Indenture or in any supplemental
indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any stockholder,
officer, director or employee, as such, past, present or future, of the Issuers
or of any successor corporation or against the property or assets of any such
stockholder, officer, employee or director, either directly or through the
Issuers, or any successor corporation thereof, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly understood that this Indenture and
the Notes are solely obligations of the Issuers, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, any
stockholder, officer, employee or director of the Issuers, or any successor
corporation thereof, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or the Notes or implied therefrom, and that any and
all such personal liability of, and any and all claims against, every
stockholder, officer, employee and director are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issuance of the Notes. It is understood that this limitation
on recourse is made expressly for the benefit of any such shareholder,
employee, officer or director and may be enforced by any of them.
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Section 10.11 Successors.
All agreements of the Issuers in this Indenture and the Notes
shall bind their respective successors. All agreements of the Trustee, any
additional trustee and any Paying Agents in this Indenture shall bind its
successor.
Section 10.12 Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 10.13 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 10.14 Separability.
Each provision of this Indenture shall be considered separable
and if for any reason any provision which is not essential to the effectuation
of the basic purpose of this Indenture or the Notes shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
<PAGE> 93
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed all as of the date and year first written above.
TRANSWESTERN HOLDINGS L.P.
(formerly TransWestern Publishing
Company, L.P.)
By: TransWestern Communications
Company, Inc., its
general partner
By: /s/ Joan Fiorito
------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial
Officer
TWP CAPITAL CORP.
By: /s/ Joan Fiorito
------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial
Officer
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Bruce L. Bisson
------------------------------
Name: Bruce L. Bisson
Title: Vice President
<PAGE> 94
EXHIBIT A
[FORM OF FACE OF NOTE]
TRANSWESTERN HOLDINGS L.P.
(formerly TransWestern Publishing Company, L.P.)
TWP CAPITAL CORP.
11 7/8% SENIOR DISCOUNT NOTE DUE 2008
This Note is issued with original issue discount for purposes of
Section 1271 et seq. of the Internal Revenue Code. For each $1,000 of
principal amount at maturity of this Note, the issue price is $561.16 and the
amount of original issue discount is $438.84. The issue date of this Security
is November 12, 1997 and the yield to maturity is 11 7/8%.
Number CUSIP
TransWestern Holdings L.P. (formerly TransWestern Publishing
Company, L.P.), a Delaware limited partnership (the "Company," which term
includes any successor corporation), and TWP Capital Corp., a Delaware
corporation (jointly and severally, together with the Company, the "Issuers"),
for value received promise to pay to or registered assigns the
principal sum of ($ ), on November 15, 2008.
Interest Payment Dates: May 15 and November 15, commencing May 15, 2003
Record Dates: May 1 and November 1
This Note shall not be valid or obligatory for any purpose until
the certificate of authentication shall have been executed by the Trustee by
its manual signature.
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at
this place.
A-1
<PAGE> 95
IN WITNESS WHEREOF, the Issuers have caused this Note to be signed
manually or by facsimile by their duly authorized Officers.
TRANSWESTERN HOLDINGS L.P.
(formerly TransWestern Publishing
Company, L.P.)
By: TransWestern Communications
Company, Inc., its
general partner
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
TWP CAPITAL CORP.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
Certificate of Authentication:
This is one of the 11 7/8% Senior
Discount Notes due 2008 referred to in
the within-mentioned Indenture
Dated:
A-2
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WILMINGTON TRUST COMPANY,
as Trustee
By: _____________________________
Authorized Signatory
A-3
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(REVERSE SIDE)
TRANSWESTERN HOLDINGS L.P.
(formerly TransWestern Publishing Company, L.P.)
TWP CAPITAL CORP.
11 7/8% SENIOR DISCOUNT NOTE DUE 2008
1. INTEREST.
TransWestern Holdings L.P. (formerly TransWestern Publishing
Company, L.P.), a Delaware limited partnership (the "Company"), and TWP Capital
Corp., a Delaware corporation (together with the Company, the "Issuers"),
jointly and severally promise to pay interest on the principal amount of this
Note semiannually on May 15 and November 15 of each year (each an "Interest
Payment Date"), commencing on May 15, 2003, at the rate of 11 7/8% per annum.
The Accreted Value of the Notes shall increase in the manner provided in the
Indenture. Commencing November 15, 2002, interest is payable at the option of
the Company, in whole but not in part, at the rate of 13 3/8% per annum by the
issuance of additional Notes (valued at 100% of the face amount thereof) in
lieu of cash interest; provided, however, that in connection with any
redemption or repurchase of the Notes as permitted or required by the Indenture
and upon the acceleration of the Notes, all accrued interest shall be payable
solely in cash. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
November 15, 2002.
The principal of this Note shall not bear or accrue interest until
November 15, 2002, except in the case of a default in payment of Accreted Value
or principal and/or premium, if any, upon acceleration, redemption or purchase
and, in such case, the overdue principal and any overdue premium shall bear
interest at the rate of 13 7/8% per annum (compounded semiannually on each May
15 and November 15) (to the extent that the payment of such interest shall be
legally enforceable), from the dates such amounts are due until they are paid
or duly provided for. To the extent, but only to the extent, interest on
amounts in default constituting original issue discount prior to November 15,
2002 is not permitted by law, original issue discount shall continue to accrete
until paid or duly provided for. On or after November 15, 2002, interest on
overdue principal and premium, if any, and, to the extent permitted by law, on
overdue installments of interest will accrue, until the principal and premium,
if any, and overdue installments of interest are paid or duly provided for, at
the rate of 13 7/8% per annum. Interest on defaulted amounts is payable at the
option of the Company, in whole but not in part, at the rate of 15 7/8% per
annum by the issuance of additional Notes (valued at 100% of the face amount
thereof) in lieu of cash interest. Interest on defaulted amounts shall be
payable on a special record date as provided in the Indenture.
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2. METHOD OF PAYMENT.
The Issuers will pay interest on this Note provided for in
Paragraph 1 above (except defaulted interest) to the person who is the
registered Holder of this Note at the close of business on the May 1 or
November 1 preceding the Interest Payment Date (whether or not such day is a
Business Day). The Holder must surrender this Note to a Paying Agent to
collect principal payments. The Issuers will pay Accreted Value or principal,
premium, if any, and cash interest in money of the United States that at the
time of payment is legal tender for payment of public and private debts;
provided, however, that the Issuers may pay Accreted Value or principal,
premium, if any, and interest by check payable in such money. They may mail an
interest check to the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, Wilmington Trust Company (the "Trustee") will act as
Paying Agent and Registrar. The Issuers may change any Paying Agent or
Registrar without notice to the Holders of the Notes. Neither the Issuers nor
any of their Subsidiaries or Affiliates may act as Paying Agent but may act as
Registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Issuers issued this Note under an Indenture dated as of
November 12, 1997 (the "Indenture") among the Issuers and the Trustee. The
terms of this Note include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of the Indenture. This Note is
subject to all such terms, and the Holder of this Note is referred to the
Indenture and said Trust Indenture Act for a statement of them. All
capitalized terms in this Note, unless otherwise defined, have the meanings
assigned to them by the Indenture.
The Notes are senior unsecured obligations of the Issuers limited
to $57,916,000 aggregate principal amount at maturity. The Indenture imposes
certain restrictions on, among other things, the incurrence of indebtedness,
the incurrence of liens and the issuance of capital stock by Subsidiaries of
the Issuers, mergers and sale of assets, the payments of dividends on, or the
repurchase of, capital stock of the Issuers and their Restricted Subsidiaries,
certain other restricted payments by the Issuers and their Restricted
Subsidiaries, certain transactions with, and investments in, their affiliates,
certain sale and lease-back transactions and a provision regarding
change-of-control transactions.
5. OPTIONAL REDEMPTION.
The Issuers, at their option, may redeem the Notes, in whole or in
part, at any time on or after November 15, 2002 upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as a percentage of
principal amount at maturity), set forth
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below, plus accrued and unpaid interest, if any, to the Redemption Date, if
redeemed during the twelve month period beginning on November 15 of each year
listed below:
Year Redemption Price
- ---- ----------------
2002.......................................... 105.938%
2003.......................................... 103.958%
2004.......................................... 101.979%
2005 and thereafter........................... 100.000%
Notwithstanding the foregoing, the Issuers, at their option, may
redeem all, but not less than all, of the aggregate principal amount of the
Notes outstanding at any time prior to November 15, 2002 at a redemption price
equal to 111.875% of the Accreted Value thereof, out of the Net Proceeds of one
or more Public Equity Offerings; provided, however, that any such redemption
occurs within 90 days following the closing of any such Public Equity Offering.
6. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first class mail at least
30 days but not more than 60 days prior to the redemption date to each Holder
of Notes to be redeemed at its registered address as it shall appear on the
register of the Notes maintained by the Registrar. On and after any Redemption
Date, Accreted Value will cease to accrete or interest will cease to accrue, as
the case may be, on the Notes or portions thereof called for redemption unless
the Issuers shall fail to redeem any such Note.
7. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales be
used, subject to further limitations contained therein, to make an offer to
purchase certain amounts of Notes in accordance with the procedures set forth
in the Indenture. The Issuers are also required to make an offer to purchase
Notes upon the occurrence of a Change of Control in accordance with procedures
set forth in the Indenture.
8. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement among the Issuers,
CIBC Oppenheimer Corp. and First Union Capital Markets Corp., as initial
purchasers of the Notes, the Issuers will be obligated to consummate an
exchange offer pursuant to which the Holder of this Note shall have the right
to exchange this Note for Notes of a separate series issued under the Indenture
(or a trust indenture substantially identical to the Indenture in accordance
with the terms of the Registration Rights Agreement) which have been registered
under the Securities Act, in like principal amount and having substantially
identical terms as the Notes.
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The Holders shall be entitled to receive certain additional amounts in the
event such exchange offer is not consummated and upon certain other conditions,
all pursuant to and in accordance with the terms of the Registration Rights
Agreement.
9. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in denominations
of $1,000 principal amount at maturity and integral multiples thereof. A
Holder may register the transfer or exchange of Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Note selected for redemption or register the
transfer of or exchange any Note for a period of 15 days before the mailing of
notice of redemption of Notes to be redeemed or any Note after it is called for
redemption in whole or in part, except the unredeemed portion of any Note being
redeemed in part.
10. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner of
it for all purposes.
11. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on any
Note remains unclaimed for two years, the Trustee or Paying Agent will pay the
money back to the Issuers at their written request. After that, Holders
entitled to money must look to the Issuers for payment as general creditors
unless an "abandoned property" law designates another person.
12. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be
modified, amended or supplemented by the Issuers and the Trustee with the
consent of the Holders of at least a majority in principal amount at maturity
of the Notes then outstanding and any existing default or compliance with any
provision may be waived in a particular instance with the consent of the
Holders of a majority in principal amount at maturity of the Notes then
outstanding. Without the consent of Holders, the Issuers and the Trustee may
amend the Indenture or the Notes or supplement the Indenture for certain
specified purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or
making any other change that does not materially and adversely affect the
rights of any Holder.
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13. SUCCESSOR ENTITY.
When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.
14. DEFAULTS AND REMEDIES.
Events of Default are set forth in the Indenture. If an Event of
Default (other than an Event of Default pursuant to Section 6.01(6) or (7) of
the Indenture with respect to either of the Issuers) occurs and is continuing,
the Trustee by notice to the Issuers, or the Holders of not less than 25% in
aggregate principal amount at maturity of the Notes then outstanding, may
declare the Notes to be immediately due and payable in an amount equal to (x)
the Accreted Value of the Notes outstanding on the date of acceleration, if
such declaration is made on or prior to November 15, 2002, or (y) the entire
principal amount at maturity of the Notes outstanding on the date of
acceleration plus accrued but unpaid interest, if any, to the date of
acceleration, if such declaration is made after November 15, 2002, and (i) such
amounts shall become immediately due and payable or (ii) if there are any
amounts outstanding under the Senior Credit Facility or the Senior Subordinated
Notes, such amounts shall become due and payable upon the first to occur of an
acceleration of amounts outstanding under the Senior Credit Facility or the
Senior Subordinated Notes or five Business Days after receipt by the Company,
the representative of the lenders under the Senior Credit Facility and the
trustee under the indenture relating to the Senior Subordinated Notes of notice
of the acceleration of the Notes; provided, however, that after such
acceleration but before judgment or decree based on such acceleration is
obtained by the Trustee, the Holders of a majority in aggregate principal
amount at maturity of the outstanding Notes may, under certain circumstances,
rescind and annul such acceleration and its consequences if all existing Events
of Default, other than the nonpayment of accelerated Accreted Value, principal,
premium, if any, or interest that has become due solely because of the
acceleration, have been cured or waived and if the rescission would not
conflict with any judgment or decree. No such rescission shall affect any
subsequent Default or impair any right consequent thereto. In case an Event of
Default specified in Section 6.01(6) or (7) of the Indenture with respect to
either of the Issuers occurs, the Accreted Value or principal and all premium,
if any, and interest amount with respect to all of the Notes shall be due and
payable immediately without any declaration or other act on the part of the
Trustee or the Holders of the Notes.
15. TRUSTEE DEALINGS WITH THE ISSUERS
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The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuers or their Affiliates, and may otherwise deal with the Issuers or their
Affiliates, as if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer,
employee or stockholder, as such, of the Issuers shall not have any liability
for any obligations of the Issuers under the Notes or the Indenture or for any
claim based on, in respect or by reason of, such obligations or their creation.
The Holder of this Note by accepting this Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of this Note.
17. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Issuers with certain conditions set forth in
the Indenture.
18. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of a
Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts
to Minors Act).
19. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on
Uniform Note Identification Procedures, the Issuers have caused CUSIP Numbers
to be printed on the Notes and have directed the Trustee to use CUSIP numbers
in notices of redemption as a convenience to Holders of the Notes. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. GOVERNING LAW.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF
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<PAGE> 103
THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS NOTE.
THE ISSUERS WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
TRANSWESTERN HOLDINGS L.P., 8344 Clairemont Mesa Boulevard, San Diego,
California 92111, Attention: Executive Vice President - Chief Financial
Officer.
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ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
______________________________________________________________
______________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
Date: ______________ Your Signature: _____________________
(Sign exactly as your
name appears on the
other side of this Note)
Signature Guarantee: _____________________________________
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased
by the Company pursuant to Section 4.10 or Section 4.18 of the Indenture, check
the appropriate box:
/ / Section 4.10 / / Section 4.18
If you want to have only part of the Note purchased by the
pursuant to Section 4.10 or Section 4.18 of the Indenture, state the amount you
elect to have purchased:
$________________________
Date: ___________________
Your Signature:____________________________________
(Sign exactly as your name appears on the face of
this Note)
__________________________
Signature Guaranteed
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<PAGE> 106
EXHIBIT B
[FORM OF LEGEND FOR 144A NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS NOTE AND THE LAST DATE ON
WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS, WAS THE OWNER OF THIS NOTE
(OR ANY PREDECESSOR OF SUCH NOTE), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO AN ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (D)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE
COMPANY AND THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT OR (F)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT
(IF AVAILABLE) AND (2) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS
OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE ACT.
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<PAGE> 107
[FORM OF ASSIGNMENT FOR 144A NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
_______________________________________________________________
_______________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with
the exemption from registration under the Securities Act
provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in
accordance with (a) above and documents are being furnished
which comply with the conditions of transfer set forth in this
Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Sections 2.16 and 2.17 of the Indenture
shall have been satisfied.
Date: ________________ Your Signature: _____________________
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<PAGE> 108
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: ____________________________________
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<PAGE> 109
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: ________________ ________________________________
NOTICE: To be executed by
an executive officer
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EXHIBIT C
[FORM OF LEGEND FOR REGULATION S NOTE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, UNLESS SO
REGISTERED, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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<PAGE> 111
[FORM OF ASSIGNMENT FOR REGULATION S NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
_______________________________________________________________
_______________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with
the exemption from registration under the Securities Act
provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in
accordance with (a) above and documents are being furnished
which comply with the conditions of transfer set forth in this
Note and the Indenture.
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<PAGE> 112
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Sections 2.16 and 2.17 of the Indenture
shall have been satisfied.
Date: ________________ Your Signature: _____________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: ____________________________________
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<PAGE> 113
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: ________________ _____________________________________
NOTICE: To be executed by
an executive officer
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<PAGE> 114
EXHIBIT D
[FORM OF LEGEND FOR GLOBAL NOTE]
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Note or Regulation S Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE
OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC")
TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IT REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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EXHIBIT E
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, ____
Attention:
Re: TransWestern Holdings L.P. (formerly TransWestern Publishing
Company, L.P.) (the "Company") and TWP Capital Corp. (together
with the Company, the "Issuers") 11 7/8% Senior Discount Notes
due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture dated
as of November 12, 1997 relating to the Notes and we agree to be bound by, and
not to resell, pledge or otherwise transfer the Notes except in compliance
with, such restrictions and conditions and the Securities Act of 1933, as
amended (the "Securities Act").
2. We understand that the Notes have not been registered under
the Securities Act, and that the Notes may not be offered, sold, pledged or
otherwise transferred except as permitted in the following sentence. We agree,
on our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so only (i) to
an Issuer or any subsidiary thereof, (ii) pursuant to an effective registration
statement under the Securities Act, (iii) in accordance with Rule 144A under
the Securities Act to a "qualified institutional buyer" (as defined in Rule
144A), (iv) to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the Notes, (v) outside
the United States to persons other than U.S. persons in offshore transactions
meeting the requirements of Rule 904 of Regulation S under the Securities Act,
or (vi) pursuant to any other exemption from registration under the Securities
Act (if available), and we
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<PAGE> 116
further agree to provide to any person purchasing any of the Notes from us a
notice advising such purchaser that resales of the Notes are restricted as
stated herein.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Issuers such certifications, legal
opinions and other information as you and the Issuers may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Notes purchased by us will bear a legend to the
foregoing effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting each are able to bear the economic
risk of our or their investment, as the case may be.
5. We are acquiring the Notes purchased by us for our account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: ______________________________
Authorized Signature
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EXHIBIT F
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
__________, ____
Attention:
Re: TransWestern Holdings L.P. (formerly TransWestern Puishing
Company, L.P.) (the "Company") and TWP Capital Corp. (together
with the Company, the "Issuers") 11 7/8% Senior Discount Notes
due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed sale of $__________ aggregate
principal amount at maturity of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a U.S. person or to a
person in the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States,
or (b) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither we nor any person acting on
our behalf knows that the transaction has been prearranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
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<PAGE> 118
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_____________________________
Authorized Signature
F-2
<PAGE> 1
EXHIBIT 10.8
________________________________________________________________________________
REGISTRATION RIGHTS AGREEMENT
Dated as of November 12, 1997
by and among
TRANSWESTERN HOLDINGS L.P.
and
TWP CAPITAL CORP.
and
THE INITIAL PURCHASERS
named herein
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. Damage Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8. Rules 144 and 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9. Underwritten Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(d) Adjustments Affecting Registrable Notes . . . . . . . . . . . . . . . . . . . . . . 30
(e) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(f) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(g) Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(h) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(i) Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(j) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(k) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(l) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(m) Joint and Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(n) Notes Held by the Issuers or Their Affiliates . . . . . . . . . . . . . . . . . . . 32
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
November 12, 1997, by and among TRANSWESTERN HOLDINGS L.P., a Delaware limited
partnership formerly known as TransWestern Publishing Company, L.P.
("Holdings"), TWP CAPITAL CORP., a Delaware corporation ("Capital" and,
together withHoldings, the "Issuers"), and CIBC OPPENHEIMER CORP. ("CIBC") and
FIRST UNION CAPITAL MARKETS CORP., as initial purchasers (the "Initial
Purchasers").
This Agreement is entered into in connection with the
Securities Purchase Agreement, dated as of November 6, 1997 among the Issuers,
TransWestern Publishing Company LLC and TransWestern Communications, Inc. and
the Initial Purchasers (the "Purchase Agreement") relating to the sale by the
Issuers to the Initial Purchasers of $32,500,000 initial principal amount of
the Issuers' 11 7/8% Senior Discount Notes due 2008 (the "Notes"). In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Issuers
have agreed to provide the registration rights set forth in this Agreement to
the Initial Purchasers and their direct and indirect transferees and assigns.
The execution and delivery of this Agreement is a condition to the Initial
Purchasers' obligation to purchase the Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Accreted Value: means, as of any date prior to November 15,
2002, an amount per $1,000 principal amount at maturity of Notes that is equal
to the sum of (a) $561.16 and (b) the portion of the excess of the principal
amount at maturity of each Note over $561.16 which shall have been amortized on
a daily basis and compounded semiannually on each May 15 and November 15 at the
rate of 11 7/8% per annum from the Issue Date through the date of determination
computed on the basis of a 360-day year of twelve 30-day months; and, as of any
date on or after November 15, 2002, the Accreted Value of each Note shall mean
the aggregate principal amount at maturity of such Note.
Advice: See Section 5.
Applicable Period: See Section 2(b).
Capital: See the introductory paragraph to this Agreement.
Closing: See the Purchase Agreement.
Consummation Date: The 180th day after the Issue Date.
<PAGE> 4
-2-
Damage Amount: See Section 4(a).
Effectiveness Date: The 135th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 45th day after the Issue Date.
Holder: Any holder of a Registrable Note or Registrable
Notes.
Holdings: See the introductory paragraph to this Agreement.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of November 12, 1997,
among the Issuers and Wilmington Trust Company, as trustee, pursuant to which
the Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Notes are sold to
the Initial Purchasers pursuant to the Purchase Agreement.
Issuers: See the introductory paragraph to this Agreement.
NASD: See Section 5(t).
<PAGE> 5
-3-
Notes: See the introductory paragraph to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
PIK Notes: Any Notes issued as payment in kind in lieu of
interest payments in cash to a holder of the Notes.
Person: An individual, corporation, limited liability
Company, partnership, joint venture, association, joint stock Company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Notes covered by such Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this
Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes and PIK Notes upon original
issuance of the Notes and PIK Notes and at all times subsequent thereto and, if
issued, the Private Exchange Notes, until in the case of any such Notes, PIK
Notes or any such Private Exchange Notes, as the case may be, (i) a
Registration Statement covering such Notes, PIK Notes or such Private Exchange
Notes has been declared effective by the SEC and such Notes, PIK Notes or such
Private Exchange Notes, as the case may be, have been exchanged and/or disposed
of in accordance with such effective Registration Statement, (ii) such Notes,
PIK Notes or such Private Exchange Notes, as the case may be, are sold in
compliance with Rule 144, (iii) in the case of any Note, such Note has been
exchanged for an Exchange Note or Exchange Notes pursuant to an Exchange Offer
or (iv) such
<PAGE> 6
-4-
Notes, PIK Notes or such Private Exchange Notes, as the case may be, cease to
be outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of
Holdings or Capital, including, but not limited to, the Exchange Registration
Statement, which covers any of the Registrable Notes pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
<PAGE> 7
-5-
Trustee: The trustee under the Indenture and, if existent,
the trustee under any indenture governing the Exchange Notes and Private
Exchange Notes (if any).
Underwritten registration or underwritten offering: A
registration under the Securities Act in which securities of Holdings or
Capital are sold to an underwriter(s) for reoffering to the public.
2. Exchange Offer
(a) Each of the Issuers jointly and severally agrees to
use its reasonable best efforts to file with the SEC as soon as practicable
after the Closing, but in no event later than the Filing Date, documents
pertaining to an offer to exchange (the "Exchange Offer") any and all of the
Registrable Notes for a like aggregate principal amount of debt securities of
the Issuers which are identical in all material respects to the Notes (the
"Exchange Notes") (and which are entitled to the benefits of the Indenture or a
trust indenture which is substantially identical to the Indenture (other than
such changes to the Indenture or any such identical trust indenture as are
necessary to comply with any requirements of the SEC to effect or maintain the
qualification thereof under the TIA) and which, in either case, has been
qualified under the TIA), except that the Exchange Notes shall have been
registered pursuant to an effective registration statement under the Securities
Act and will not contain terms with respect to transfer restrictions. The
Exchange Offer will be registered under the Securities Act on the appropriate
form (the "Exchange Registration Statement"), and the Exchange Offer will
comply with all applicable tender offer rules and regulations under the
Exchange Act. Each of the Issuers jointly and severally agrees to use its
reasonable best efforts to (x) cause the Exchange Registration Statement to
become effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 30 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer with respect to all Notes
validly tendered on or prior to the 60th day following the date the Exchange
Registration Statement is declared effective (in any event on or prior to the
Consummation Date) (or, in the event of any extension of the Exchange Offer
required by applicable law, the earliest day following any such extension).
Each Holder who participates in the Exchange Offer will be required to
represent that any Exchange Notes received by it will be acquired in the
ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, that such Holder is not
<PAGE> 8
-6-
an affiliate of either of the Issuers within the meaning of Rule 405
promulgated under the Securities Act or if it is such an affiliate, that it
will comply with the registration and prospectus delivery requirements of the
Securities Act, to the extent applicable, and that is not acting on behalf of
any Person who could not truthfully make the foregoing representations. Upon
consummation of the Exchange Offer in accordance with this Section 2, the
provisions of this Agreement shall continue to apply, mutatis mutandis, solely
with respect to Registrable Notes that are Private Exchange Notes and Exchange
Notes held by Participating Broker-Dealers, and the Issuers shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes and Exchange Notes held by Participating Broker-Dealers) pursuant to
Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus
contained in the Exchange Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of Exchange Notes received by such
broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"), whether
such positions or policies have been publicly disseminated by the staff of the
SEC or such positions or policies, in the reasonable judgment of the Initial
Purchasers, represent the prevailing views of the staff of the SEC. Such "Plan
of Distribution" section shall also allow the use of the Prospectus by all
Persons subject to the prospectus delivery requirements of the Securities Act,
including all Participating Broker-Dealers, and include a statement describing
the means by which Participating Broker-Dealers may resell the Exchange Notes.
Each of the Issuers shall use its reasonable best efforts to
keep the Exchange Registration Statement effective and to amend and supplement
the Prospectus contained therein in order to permit such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes, provided
that such period shall not exceed 180 days (or such longer period if extended
pursuant to the last paragraph of Section 5) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them and having, or which are reasonably
likely to be determined to have, the status as an unsold allotment in the
initial distribution, the Issuers upon the request of such Initial Purchasers
shall, simultaneously
<PAGE> 9
-7-
with the delivery of the Exchange Notes in the Exchange Offer, issue and
deliver to such Initial Purchasers, in exchange (the "Private Exchange") for
the Notes held by such Initial Purchasers, a like principal amount of debt
securities of the Issuers that are identical in all material respects to the
Exchange Notes (the "Private Exchange Notes") (and which are issued pursuant to
the same indenture as the Exchange Notes) except for the placement of a
restrictive legend on the Private Exchange Notes. If possible, the Private
Exchange Notes shall bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and Private Exchange Notes will accrue from the
last interest payment date on which interest was paid on the Notes surrendered
in exchange therefor or, if no interest has been paid on the Notes, from the
Issue Date.
In connection with the Exchange Offer, the Issuers shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New York; and
(iii) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York City time, on the last
business day on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Issuers shall:
(i) accept for exchange all Notes tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly
to each Holder of Notes, Exchange Notes or Private Exchange Notes, as
the case may be, equal in principal amount to the Notes of such Holder
so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture substan-
<PAGE> 10
-8-
tially identical to the Indenture, which in either event will provide that (1)
the Exchange Notes will not be subject to the transfer restrictions set forth
in the Indenture and (2) the Private Exchange Notes will be subject to the
transfer restrictions set forth in the Indenture. The Indenture or such
indenture shall provide that the Exchange Notes, the Private Exchange Notes and
the Notes will have the right to vote and give consents together on all matters
presented to such holders for votes or consents as one class and that neither
the Exchange Notes, the Private Exchange Notes nor the Notes will have the
right to vote or consent as a separate class on any matter.
(c) If (1) prior to the consummation of the Exchange
Offer, the Issuers or Holders of at least a majority in aggregate principal
amount of the Registrable Notes reasonably determine in good faith that (i) the
Exchange Notes would not, upon receipt, be freely transferable by such Holders
which are not affiliates (within the meaning of the Securities Act) of the
Issuers without restriction under the Securities Act and without restrictions
under applicable state securities laws, (ii) the interests of the Holders under
this Agreement would be adversely affected by the consummation of the Exchange
Offer or (iii) after conferring with counsel, the SEC is unlikely to permit the
commencement of the Exchange Offer prior to the Effectiveness Date, (2)
subsequent to the consummation of the Private Exchange, any holder of the
Private Exchange Notes so requests or (3) the Exchange Offer is commenced and
not consummated prior to the Consummation Date, then the Issuers shall promptly
deliver to the Holders and the Trustee written notice thereof (the "Shelf
Notice") and shall file an Initial Shelf Registration pursuant to Section 3.
The parties hereto agree that following the delivery of a Shelf Notice to the
Holders of Registrable Notes (in the circumstances contemplated by clauses (1)
and (3) of the preceding sentence), the Issuers shall not have any further
obligation to conduct the Exchange Offer or the Private Exchange under this
Section 2.
3. Shelf Registration
If a Shelf Notice is required to be delivered as contemplated
by Section 2(c), then:
(a) Initial Shelf Registration. The Issuers shall
prepare and file with the SEC a Registration Statement for an offering
to be made on a continuous basis pursuant to Rule 415 covering all of
the then existing Registrable Notes (the "Initial Shelf
Registration"). If the Issuers shall have not yet filed an Exchange
Registration Statement, each of the Issuers shall use its reasonable
best efforts to file with the SEC the Initial Shelf Registration on or
prior to the Filing Date. In any other instance, each of the Issuers
<PAGE> 11
-9-
shall use its reasonable best efforts to file with the SEC the Initial
Shelf Registration as promptly as practicable but, in any event,
within 45 days following delivery of the Shelf Notice. The Initial
Shelf Registration shall be on Form S-1 or another appropriate form
permitting registration of such Registrable Notes for resale by such
Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Issuers
shall not permit any securities other than the Registrable Notes to be
included in the Initial Shelf Registration or any Subsequent Shelf
Registration. Each of the Issuers shall use its reasonable best
efforts to cause the Initial Shelf Registration to be declared
effective under the Securities Act, if an Exchange Registration
Statement has not yet been declared effective, on or prior to the
Effectiveness Date, or, in any other instance, as soon as practicable
after the filing thereof and in no event later than 60 days after
filing of the Initial Shelf Registration, and to keep the Initial
Shelf Registration continuously effective under the Securities Act
until the date which is 24 months from the date on which such Initial
Shelf Registration is declared effective (subject to extension
pursuant to the last paragraph of Section 5 hereof), or such shorter
period ending when (i) all Registrable Notes covered by the Initial
Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration or (ii) a Subsequent
Shelf Registration covering all of the Registrable Notes has been
declared effective under the Securities Act (the "Effectiveness
Period").
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be
effective for any reason at any time prior to the termination of the
Effectiveness Period, each of the Issuers shall use its reasonable
best efforts to promptly restore the effectiveness thereof, and in any
event shall, within 45 days of such cessation of effectiveness, amend
the Shelf Registration in a manner reasonably expected to restore the
effectiveness thereof, or file an additional "shelf" Registration
Statement pursuant to Rule 415 covering all of the then existing
Registrable Notes (a "Subsequent Shelf Registration"). If a
Subsequent Shelf Registration is filed, each of the Issuers shall use
its reasonable best efforts to cause the Subsequent Shelf Registration
to be declared effective as soon as practicable after such filing and
to keep such Registration Statement continuously effective for a
period equal to the number of days in the Effectiveness Period less
the aggregate number of days during which the Initial Shelf
Registration or any Subsequent Shelf Registration was previously
continuously effective. As used
<PAGE> 12
-10-
herein the term "Shelf Registration" means the Initial Shelf
Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall
promptly supplement and amend the Shelf Registration if required by
the rules, regulations or instructions applicable to the registration
form used for such Shelf Registration or if required by the Securities
Act. The Issuers shall promptly supplement and amend the Shelf
Registration if any such supplement or amendment is requested by the
Holders of a majority in aggregate principal amount of the Registrable
Notes covered by such Registration Statement or by any underwriter(s)
of such Registrable Notes.
4. Damage Amount
(a) The Issuers and the Initial Purchasers agree that the
Holders of Registrable Notes will suffer damages if the Issuers fail to fulfill
their obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers agree to pay as liquidated damages to each Holder of the
Registrable Notes an amount ("The Damage Amount") under the circumstances and
to the extent set forth below:
(i) if neither the Exchange Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the Filing
Date;
(ii) if neither the Exchange Registration Statement nor the
Initial Shelf Registration has been declared effective on or prior to
the Effectiveness Date;
(iii) if an Initial Shelf Registration required by Section
2(c)(2) has not been filed on or prior to the date 45 days after
delivery of the Shelf Notice;
(iv) if an Initial Shelf Registration required by Section
2(c)(2) has not been declared effective on or prior to the date 105
days after the delivery of the Shelf Notice; and/or
(v) if (A) the Issuers have not exchanged the Exchange
Notes for all Notes validly tendered in accordance with the terms of
the Exchange Offer on or prior to the Consummation Date or (B) the
Exchange Registration Statement ceases to be effective at any time
prior to the time that the Exchange Offer is consummated as to all
Notes validly tendered or (C) if applicable, the Shelf Registration has
been declared effective and such Shelf Registration ceases to be
effective
<PAGE> 13
-11-
at any time prior to the termination of the Effectiveness Period.
(each such event referred to in clauses (i) through (v) above is a
"Registration Default"). The sole remedy available to Holders of Registrable
Notes for a Registration Default will be the payment of the Damage Amount as
follows: .50% per annum of the average Accreted Value of the Registrable Notes
during the first 90-day period following the occurrence of a Registration
Default and until it is waived or cured; and the Damage Amount will be
increased by an additional .25% per annum of average Accreted Value of the
Registrable Notes for each subsequent 90- day period during which the
Registration Default remains uncured, up to a maximum of 2.0% Damage Amount,
provided, however, that only Holders of Private Exchange Notes shall be
entitled to receive the Damage Amount as a result of a Registration Default
pursuant to clause (iii) or (iv), provided, further, that (1) upon the filing
of the Exchange Registration Statement or the Initial Shelf Registration (in
the case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or a Shelf Registration (in the case of (ii) above), (3) upon the
filing of the Shelf Registration (in the case of (iii) above), (4) upon the
effectiveness of the Shelf Registration (in the case of (iv) above), or (5)
upon the exchange of Exchange Notes for all Notes validly tendered or the
effectiveness of a Shelf Registration (in the case of (v)(A) above), or upon
the subsequent effectiveness of the Exchange Registration Statement which had
ceased to remain effective or the effectiveness of a Shelf Registration (in the
case of (v)(B) above), or upon the subsequent effectiveness of the Shelf
Registration which had ceased to remain effective (in the case of (v)(C)
above), the Damage Amount on the Notes as a result of such clause (i), (ii),
(iii), (iv) or (v) (or the relevant subclause thereof), as the case may be,
shall cease to accrue.
(b) The Issuers shall notify the Trustee within one
business day after each and every date on which an event occurs in respect of
which the Damage Amount is required to be paid (an "Event Date"). Any Damage
Amounts due pursuant to (a)(i), (a)(ii), (a)(iii), (a)(iv) or (a)(v) of this
Section 4 will be payable in cash semi-annually on each May 15 and November 15
(to the Holders of record on the May 1 and November 1 immediately preceding
such dates), commencing with the first such date occurring after any Damage
Amounts commence to accrue and until such Registration Default is cured, by
depositing with the Trustee, in trust for the benefit of such Holders,
immediately available funds in sums sufficient to pay such Damage Amounts. The
Damage Amount will be determined by multiplying the applicable Damage Amount
rate by the principal amount of the Registrable Notes, multiplied by a
fraction, the numerator of which is the number of days such Damage Amount rate
was applicable during such
<PAGE> 14
-12-
period (determined on the basis of a 360-day year comprised of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed),
and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Section 2 or 3 hereof, the Issuers shall effect such registrations
to permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Issuers shall:
(a) Prepare and file with the SEC, as provided herein, a
Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and use their respective reasonable best efforts
to cause each such Registration Statement to become effective and
remain effective as provided herein, provided that, if (1) such
filing is pursuant to Section 3, or (2) a Prospectus contained
in an Exchange Registration Statement filed pursuant to Section 2
is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Issuers shall,
upon written request, furnish to and afford the Holders of the
Registrable Notes covered by such Registration Statement and each such
Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriter(s), if any, a reasonable opportunity to review
copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to
be filed (to the extent practicable, at least 5 business days prior to
such filing). The Issuers shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto in respect of which
the Holders must be afforded an opportunity to review prior to the
filing of such document, if the Holders of a majority in aggregate
principal amount of the Registrable Notes covered by such Registration
Statement, or such Participating Broker-Dealer, as the case may be,
their counsel, or the managing underwriter(s), if any, shall reasonably
object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to
keep such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to
<PAGE> 15
-13-
be supplemented by any prospectus supplement required by applicable
law, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act
applicable to them with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent
resale of any securities being sold by a Participating Broker- Dealer
covered by any such Prospectus; the Issuers shall be deemed not to
have used their reasonable best efforts to keep a Registration
Statement effective during the Applicable Period if either of them
voluntarily takes any action that would result in selling Holders of
the Registrable Notes covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable
Notes or such Exchange Notes during that period unless such action is
required by applicable law or unless the Issuers comply with this
Agreement, including without limitation, the provisions of clauses
5(c)(v) and (vi) below.
(c) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, notify the
selling Holders of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriter(s), if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or
any prospectus supplement or post-effective amendment thereto has been
filed, and, with respect to a Registration Statement or any
post-effective amendment thereto, when the same has become effective
under the Securities Act (including in such notice a written statement
that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective
amendment thereto including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of any preliminary Prospectus
or the initiation of any proceedings for that purpose, (iii) if at any
time when a Prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes or resales
of Exchange Notes by Participating Broker-Dealers the representations
and warranties of the Issuers contained in any agreement (including
any underwriting agree-
<PAGE> 16
-14-
ment) contemplated by Section 5(n) below cease to be true and correct,
(iv) of the receipt by either of the Issuers of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable
Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose, (v) of the
happening of any event or any information becoming known that makes
any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires
the making of any changes in, or amendments or supplements to, such
Registration Statement, Prospectus or documents so that, in the case
of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (vi) of either Issuer's
reasonable determination that a post-effective amendment to a
Registration Statement would be necessary or appropriate.
(d) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, use their
reasonable best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending
the qualification (or exemption from qualification) of any of the
Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any
such order is issued, to use their reasonable best efforts to obtain
the withdrawal of any such order as promptly as practicable.
(e) If a Shelf Registration is filed pursuant to Section
3 and if requested by the managing underwriter(s), if any, or the
Holders of a majority in aggregate principal amount of the Registrable
Notes being sold in connection with an underwritten offering, (i)
promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriter(s), if any, or
such
<PAGE> 17
-15-
Holders reasonably request to be included therein and (ii) make all
required filings of such Prospectus supplement or such post- effective
amendment as soon as practicable after the Issuers have received
notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, furnish to each
selling Holder of Registrable Notes who so requests and to each such
Participating Broker-Dealer who so requests and to counsel and the
managing underwriter(s), if any, without charge, one conformed copy of
the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, deliver to each
selling Holder of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel, and the managing
underwriter or underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses (including each form of preliminary
Prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, each of
the Issuers hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the
case may be, and the managing underwriter or underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale
of the Registrable Notes covered by, or the sale by Participating
Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and
any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or
any delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, to
<PAGE> 18
-16-
use their reasonable best efforts to register or qualify, and to
cooperate with the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters, if any, and their respective counsel in
connection with the registration or qualification of (or exemption
from such registration or qualification), such Registrable Notes for
offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder,
Participating Broker-Dealer, or the managing underwriter or
underwriters, if any, reasonably request in writing, provided that
where Exchange Notes held by Participating Broker-Dealers or
Registrable Notes are offered other than through an underwritten
offering, the Issuers agree to cause their counsel to perform Blue Sky
investigations and file registrations and qualifications required to
be filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period
such Registration Statement is required to be kept effective and do
any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Exchange Notes
held by Participating Broker-Dealers or the Registrable Notes covered
by the applicable Registration Statement; provided that neither of the
Issuers shall be required to (A) qualify generally to do business in
any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to
taxation in any such jurisdiction where it is not otherwise so
subject.
(i) If a Shelf Registration is filed pursuant to Section
3, cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Notes to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Notes to be in
such denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably
request.
(j) Use their reasonable best efforts to cause the
Registrable Notes covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers
thereof or the managing underwriter or underwriters, if any, to
consummate the disposition of such Registrable Notes, except as may be
required solely as a
<PAGE> 19
-17-
consequence of the nature of such selling Holder's business, in which
case each of the Issuers will cooperate in all reasonable respects
with the filing of such Registration Statement and the granting of
such approvals.
(k) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, upon the
occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi),
as promptly as reasonably practicable prepare and (subject to Section
5(a)) file with the SEC, at the joint and several expense of each of
the Issuers, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or
any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Notes being sold
thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any
such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(l) Use their reasonable best efforts to cause the
Registrable Notes covered by a Registration Statement or the Exchange
Notes, as the case may be, to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration
Statement or the Exchange Notes, as the case may be, or the managing
underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with certificates for the Registrable Notes or Exchange Notes, as the
case may be, in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes or
Exchange Notes, as the case may be.
(n) In connection with an underwritten offering of
Registrable Notes pursuant to a Shelf Registration, enter into an
underwriting agreement upon such reasonable terms and conditions as
are customary in underwritten offerings of debt securities similar to
the Notes and take all such other
<PAGE> 20
-18-
actions as are reasonably requested by the managing underwriter(s), if
any, in order to expedite or facilitate the registration or the
disposition of such Registrable Notes, and in such connection, (i)
make such reasonable representations and warranties to the managing
underwriter or underwriters on behalf of any underwriters, with
respect to the business of Holdings and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily
made by issuers to underwriters in underwritten offerings of debt
securities similar to the Notes, and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Issuers and updates
thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the managing underwriter or
underwriters covering the matters customarily covered in opinions
received in underwritten offerings of debt securities similar to the
Notes and such other customary matters as may be reasonably requested
by the managing underwriter(s); (iii) obtain "cold comfort" letters
and updates thereof in form and substance reasonably satisfactory to
the managing underwriter or underwriters from the independent
certified public accountants of the Issuers (and, if necessary, any
other independent certified public accountants of any business
acquired by Holdings for which financial statements and financial data
are, or are required to be, included in the Registration Statement),
addressed to the managing underwriter or underwriters on behalf of any
underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings of debt securities similar to
the Notes and such other matters as may be reasonably requested by the
managing underwriter or underwriters; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 7 hereof (or such other provisions and procedures acceptable
to Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to
be indemnified pursuant to said Section. The above shall be done at
each closing under such underwriting agreement, or as and to the
extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes
<PAGE> 21
-19-
during the Applicable Period, make available for inspection by any
selling Holder of such Registrable Notes being sold, or each such
Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent
retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be (collectively, the "Inspectors"), at
the offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and
properties of Holdings (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and
employees of Holdings to supply all information in each case
reasonably requested by any such Inspector in connection with such
Registration Statement. Records which Holdings determines, in good
faith, to be confidential and any Records which they notify the
Inspectors are confidential shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records is necessary to avoid or
correct a material misstatement or material omission in such
Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or (iii) the information in such Records has been made
generally available to the public. Each selling Holder of such
Registrable Notes and each such Participating Broker-Dealer or
underwriter will be required to agree that information obtained by it
as a result of such inspections shall be deemed confidential and shall
not be used by it as the basis for any market transactions in the
securities of the Issuers or for any purpose other than in connection
with such Registration Statement unless and until such is made
generally available to the public. Each selling Holder of such
Registrable Notes and each such Participating Broker-Dealer will be
required to further agree that it will, upon learning that disclosure
of such Records is sought in a court of competent jurisdiction, give
prompt notice to Holdings and allow Holdings to undertake appropriate
action to prevent disclosure of the Records deemed confidential at
their expense.
(p) Provide an indenture trustee for the Registrable
Notes or the Exchange Notes, as the case may be, and cause the
Indenture or the trust indenture provided for in Section 2(a), as the
case may be, to be qualified under the TIA not later than the
effective date of the Exchange Registration Statement or the first
Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such
indenture and the Holders of
<PAGE> 22
-20-
the Registrable Notes, to effect such changes to such indenture as may
be required for such indenture to be so qualified in accordance with
the terms of the TIA; and execute, and use their respective reasonable
best efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(q) Comply in all material respects with all applicable
rules and regulations of the SEC and make generally available to its
securityholders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any
similar rule promulgated under the Securities Act) no later than 90
days after the end of any 12-month period (i) commencing at the end of
any fiscal quarter in which Registrable Notes are sold to underwriters
in a firm commitment or best efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of Holdings after the effective date
of a Registration Statement, which statements shall cover said
12-month periods.
(r) Upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuers, in a form
reasonable and customary for underwritten offerings of debt securities
similar to the Notes, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or
the Private Exchange, as the case may be, and which includes an
opinion that (i) each of the Issuers has duly authorized, executed and
delivered the Exchange Notes and Private Exchange Notes and the
related indenture and (ii) each of the Exchange Notes or the Private
Exchange Notes, as the case may be, and related indenture constitute a
legal, valid and binding obligation of each of the Issuers,
enforceable against each of the Issuers in accordance with its
respective terms (with reasonable and customary exceptions and
qualifications).
(s) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Issuers (or to such other Person as directed by the Issuers) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Issuers shall mark, or cause to be marked, on such
Registrable Notes that such Registrable Notes are being canceled in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; and, in no event shall such Registrable Notes be marked
as paid or otherwise satisfied.
<PAGE> 23
-21-
(t) Cooperate with each seller of Registrable Notes
covered by any Registration Statement and the managing underwriter(s),
if any, participating in the disposition of such Registrable Notes and
their respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. (the
"NASD").
(u) Use their respective reasonable best efforts to take
all other reasonable steps necessary to effect the registration of the
Registrable Notes covered by a Registration Statement contemplated
hereby.
The Issuers may require each seller of Registrable Notes or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, as the
Issuers may, from time to time, reasonably request. The Issuers may exclude
from such registration the Registrable Notes of any seller or Participating
Broker-Dealer who fails to furnish such information within a reasonable time
after receiving such request. Each seller as to which any Shelf Registration
is being effected agrees to furnish promptly to the Issuers all information
required to be disclosed in order to make the information previously furnished
to the Issuers by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
receipt of any notice from Holdings of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k), or until it is
advised in writing (the "Advice") by the Issuers that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event the Issuers shall give any such notice, each
of the Effectiveness Period and the Applicable Period shall be extended by the
number of days during such periods from and including the date of the giving of
such notice to and including the date when each seller of Registrable Notes
covered by such Registration Statement or Exchange Notes to be sold by such
Holder or Participating Broker-
<PAGE> 24
-22-
Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) or (y) the
Advice.
6. Registration Expenses
(a) All reasonable fees and expenses incident to the
performance of or compliance with this Agreement by the Issuers shall be borne
by the Issuers, jointly and severally, whether or not the Exchange Offer or a
Shelf Registration is filed or becomes effective, including, without
limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with
Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions in the United States (x) where
the Holders of Registrable Notes are located, in the case of the Exchange
Notes, or (y) as provided in Section 5(h), in the case of Registrable Notes or
Exchange Notes to be sold by a Participating Broker-Dealer during the
Applicable Period)), (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Notes or Exchange Notes in a
form eligible for deposit with The Depository Trust Company and of printing
Prospectuses if the printing of Prospectuses is reasonably requested by the
managing underwriter or underwriters, if any, or, in respect of Registrable
Notes or Exchange Notes to be sold by any Participating Broker-Dealer during
the Applicable Period, if reasonably requested by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any
Registration Statement or of such Exchange Notes, as the case may be), (iii)
messenger, telephone and delivery expenses, (iv) reasonable fees and
disbursements of counsel for the Issuers and reasonable fees and disbursements
of special counsel for the sellers of Registrable Notes (subject to the
provisions of Section 6(b)), (v) fees and disbursements of all independent
certified public accountants referred to in Section 5(n)(iii) (including,
without limitation, the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), (vi) rating agency fees,
(vii) Securities Act liability insurance, if the Issuers desire such insurance,
(viii) fees and expenses of the Trustee, (ix) fees and expenses of all other
Persons retained by the Issuers, (x) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties), (xi) the
expense of any annual audit, (xii) the fees and expenses incurred in connection
with any listing of the securities to be registered
<PAGE> 25
-23-
on any securities exchange and (xiii) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, securities sales agreements, indentures and any other documents
necessary in order to comply with this Agreement. In the event of an
underwritten offering of Registrable Notes the Issuers shall not be responsible
for any "roadshow" expenses in connection therewith.
(b) In connection with any Shelf Registration hereunder,
the Issuers, jointly and severally, shall reimburse the Holders of the
Registrable Notes being registered in such registration for the reasonable fees
and disbursements of not more than one counsel (in addition to appropriate
local counsel) chosen by the Holders of a majority in aggregate principal
amount of the Registrable Notes to be included in such Registration Statement
and other reasonable out-of-pocket expenses of the Holders of Registrable Notes
incurred in connection with the registration of the Registrable Notes.
(c) Notwithstanding any of the foregoing, the Issuers
shall not have any obligation to pay any underwriting fees, discounts or
commissions attributable to the sale of Registrable Notes.
7. Indemnification
(a) Each of the Issuers, jointly and severally, agrees to
indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, the officers and directors of each such Person, and each Person, if
any, who controls any such Person within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act (each, a "Participant"),
from and against any and all losses, claims, damages and liabilities
(including, without limitation, the reasonable legal fees and other expenses
actually incurred in connection with any suit, action or proceeding or any
claim asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Issuers shall have
furnished any amendments or supplements thereto) or any preliminary Prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Issuers in writing by such
<PAGE> 26
-24-
Participant expressly for use therein; provided that the foregoing indemnity
with respect to any preliminary Prospectus shall not inure to the benefit of
any Participant (or to the benefit of an officer or director of such
Participant or any Person controlling such Participant) from whom the Person
asserting any such losses, claims, damages or liabilities purchased
Registrable Notes or Exchange Notes if such untrue statement or omission or
alleged untrue statement or omission made in such preliminary Prospectus is
eliminated or remedied in the related Prospectus (as amended or supplemented if
the Issuers shall have furnished any amendments or supplements thereto) and a
copy of the related Prospectus (as so amended or supplemented) shall have been
furnished to such Participant at or prior to the sale of such Registrable Notes
or Exchange Notes, as the case may be, to such Person.
(b) Each Participant will be required to agree, severally
and not jointly, to indemnify and hold harmless the Issuers, their respective
directors and officers and each Person who controls either of the Issuers
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Issuers to
each Participant, but only with reference to information relating to such
Participant furnished to the Issuers in writing by such Participant expressly
for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary Prospectus. The liability of any
Participant under this paragraph (b) shall in no event exceed the proceeds
received by such Participant from sales of Registrable Notes or Exchange Notes
giving rise to such obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought
pursuant to either paragraph (a) or (b) of this Section 7, such Person (the
"Indemnified Person") shall promptly notify the Person against whom such
indemnity may be sought (the "Indemnifying Person") in writing, and the
Indemnifying Person, upon request of the Indemnified Person, shall retain one
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may reasonably
designate in such proceeding and shall pay the reasonable fees and expenses
incurred by such counsel related to such proceeding. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed in writing to the contrary, (ii) the Indemnifying Person has
failed to retain counsel reasonably satisfactory to the Indemnified Person or
(iii) the named parties in any such proceeding (including any
<PAGE> 27
-25-
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and such Indemnified Person shall have been advised by counsel that
there may be one or more legal defenses available to it which are different
from or additional to those available to any such Indemnifying Person. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate law firm (in addition to
any local counsel) for all Indemnified Persons, and that all such reasonable
fees and expenses shall be reimbursed as they are incurred. Any such separate
firm for the Participants and such control Persons of Participants shall be
designated in writing by Participants who sold a majority in interest of
Registrable Notes and Exchange Notes sold by all such Participants and any such
separate firm for the Issuers, their directors, their officers and such control
Persons of the Issuers shall be designated in writing by the Issuers. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its prior written consent, but if settled with such consent or
if there is a final judgment for the plaintiff for which the Indemnified Person
is entitled to indemnification pursuant to this Agreement, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested
an Indemnifying Person to reimburse the Indemnified Person for reasonable fees
and expenses incurred by counsel as contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 60 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not
have reimbursed the Indemnified Person in accordance with such request prior to
the date of such settlement; provided, however, that the Indemnifying Person
shall not be liable for any settlement effected without its consent pursuant to
this sentence if the Indemnifying Party is contesting, in good faith, the
request for reimbursement. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is a party
and indemnity has been sought hereunder by such Indemnified Person, unless such
settlement includes an unconditional release (or any other release reasonably
acceptable to the Indemnified Person) of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraphs (a)
and (b) of this Section 7 is unavailable to an Indemnified
<PAGE> 28
-26-
Person in respect of any losses, claims, damages or liabilities referred
to therein (other than as a result of the proviso set forth in Section 7(a)),
then each Indemnifying Person under such paragraphs, in lieu of indemnifying
such Indemnified Person thereunder, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect the relative
fault of the Issuers on the one hand and the Participants on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Issuers on the one hand and the
Participants on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers or by the Participants and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The parties agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall a Participant be required to contribute any amount in excess of the
amount by which proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes exceeds the amount of any damages that such Participant
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained
in this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
<PAGE> 29
-27-
Each of the Issuers covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and
the rules and regulations adopted by the SEC thereunder in a timely manner and,
if at any time Holdings is not required to file such reports, it will, upon the
request of any Holder of Registrable Notes, make publicly available other
information of a like nature so long as necessary to permit sales pursuant to
Rule 144 or Rule 144A. Each of the Issuers further covenants that so long as
any Registrable Notes remain outstanding to make available to any Holder of
Registrable Notes in connection with any sale thereof, the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to (a) such Rule 144A, or (b) any similar rule or
regulation hereafter adopted by the SEC.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banking
firm or firms that will underwrite the offering and the manager or managers
that will manage the offering will be selected by the Holders of a majority in
aggregate principal amount of such Registrable Notes included in such offering
and shall be reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any
underwritten offering hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by either Issuer
of any of its obligations under this Agreement, other than the occurrence of an
event which requires payment of Additional Interest, each Holder of Registrable
Notes, in addition to being entitled to exercise all rights provided herein, in
the Indenture or, in the case of the Initial Purchasers, in the Purchase
Agreement or granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Each of the Issuers,
jointly and severally, agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees, jointly and severally,
that, in the event of any action for specific performance in
<PAGE> 30
-28-
respect of such breach, it shall waive the defense that a remedy at law would
be adequate.
(b) Enforcement. The Trustee shall be authorized to
enforce the provisions of this Agreement for the ratable benefit of the
Holders.
(c) No Inconsistent Agreements. Neither of the Issuers
has entered, as of the date hereof, and the Issuers shall not enter, after the
date of this Agreement, into any agreement with respect to any of their
securities that is inconsistent with the rights granted to the Holders of
Registrable Notes in this Agreement or otherwise conflicts with the provisions
hereof. Neither of the Issuers has entered or will enter into any agreement
with respect to any of its securities which will grant to any Person piggy-back
rights with respect to a Registration Statement required to be filed under this
Agreement.
(d) Adjustments Affecting Registrable Notes. Neither of
the Issuers shall, directly or indirectly, take any action with respect to the
Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.
(e) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Issuers have obtained the
written consent of Holders of at least a majority of the then outstanding
aggregate principal amount of Registrable Notes. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Notes whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being sold by such Holders pursuant to such Registration Statement,
provided that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(f) Notices. All notices and other communications
(including without limitation any notices or other communications to the
Trustee) provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day courier or telecopier:
<PAGE> 31
-29-
(i) if to a Holder of Registrable Notes or any
Participating Broker-Dealer, at the most current address given by the
Trustee to the Issuers; and
(ii) if to the Issuers, to TransWestern Holdings L.P. and
TWP Capital Corp., 8344 Clairemont Mesa Boulevard, San Diego, CA
92111, Attention: Chief Financial Officer and with a copy to Kirkland
& Ellis, 200 East Randolph Drive, Chicago, IL 60601, Attention:
William Kirsch, Esq.
All such notices and communications shall be deemed to have
been duly given: (i) when delivered by hand, if personally delivered; (ii)
five business days after being deposited in the mail, postage prepaid, if
mailed; (iii) one business day after being timely delivered to a next-day
courier; and (iv) when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Notes; provided that, with respect
to the indemnity and contribution agreements in Section 7, each Holder of
Registrable Notes subsequent to the Initial Purchasers shall be bound by the
terms thereof if such Holder elects to include Registrable Notes in a Shelf
Registration; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and
except to the extent such successor or assign holds Registrable Notes.
(h) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF
<PAGE> 32
-30-
THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable best efforts to find and employ
an alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction.
(l) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein.
(m) Joint and Several Obligations. Unless otherwise
stated herein, each of the obligations of the Issuers under this Agreement
shall be joint and several obligations of each of them.
(n) Notes Held by the Issuers or Their Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the Issuers
or their affiliates (as such term is defined in Rule 405 under the Securities
Act) shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.
<PAGE> 33
-31-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TRANSWESTERN HOLDINGS L.P.
BY TRANSWESTERN COMMUNICATIONS
COMPANY, INC., its general partner
By: /s/ Joan Fiorito
---------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
TWP CAPITAL CORP.,
a Delaware corporation
By: /s/ Joan Fiorito
---------------------------------
Name: Joan Fiorito
Title: Vice President and
Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
CIBC OPPENHEIMER CORP.
By: /s/ Walter McLallen
---------------------------------
Name: Walter McLallen
Title: Managing Director
FIRST UNION CAPITAL MARKETS CORP.
By: /s/ Eric Lloyd
---------------------------------
Name: Eric Lloyd
Title: Director
<PAGE> 1
EXHIBIT 12.1
SCHEDULE RE: COMPUTATION OF RATE OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ENDED APRIL 30; OCTOBER 31,
------------------------------------------------ -----------------
1993 1994 1995 1996 1997 1996 1997
------ ------ ------- ------- ------- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income before extraordinary item and contribution
to Equity Compensation Plan .................................. $1,745 $1,486 $ 8,064 $ 9,079 $10,685 $ 730 --
Interest expense including amortization of debt issuance costs.. 342 2,951 4,345 6,630 7,816 4,029 --
Interest portion of Rental Expense ............................. 341 439 428 438 467 234
------ ------ ------ ------- ------- ------ ----
Earnings ....................................................... $2,428 $4,876 $12,837 $16,147 $18,968 $4,993 --
====== ====== ======= ======= ======= ====== ====
Interest expenses including amortization of
debt issuance costs .......................................... $ 342 $2,951 $ 4,345 $ 6,630 $ 7,816 $4,029 $
Interest portion of Rental Expense ............................. 341 439 428 438 467 234
------ ------ ------- ------- ------- ------ ----
Fixed Charges .................................................. $ 683 $3,390 $ 4,773 $ 7,068 $ 8,283 $4,263 $
====== ====== ======= ======= ======= ====== ====
Ratio of Earnings to Fixed Charges ............................. 3.55 1.44 2.69 2.28 2.29 1.17 --
</TABLE>
<PAGE> 1
EXHIBIT 21.1
TransWestern Holdings L.P. Subsidiaries:
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY STATE OR OTHER JURISDICTION OF NAMES UNDER WHICH SUCH
INCORPORATION OR ORGANIZATION SUBSIDIARY DOES BUSINESS
- ------------------------------------ ------------------------------ ------------------------
<S> <C> <C>
TWP Capital Corp. Delaware n/a
TransWestern Publishing Company LLC Delaware n/a
</TABLE>
TransWestern Publishing Company LLC Subsidiaries:
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY STATE OR OTHER JURISDICTION OF NAMES UNDER WHICH SUCH
INCORPORATION OR ORGANIZATION SUBSIDIARY DOES BUSINESS
- ------------------------------------ ------------------------------ ------------------------
<S> <C> <C>
TWP Capital Corp. II Delaware n/a
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNEST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated June 6, 1997 except for "Organization, Business
Activity and Basis of Presentation" under Note 1, as to which the date is
November 6, 1997, in the Registration Statement (Form S-4) and related
Prospectus of TransWestern Publishing Company LLC.
ERNST & YOUNG LLP
San Diego, California
December 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001050934
<NAME> TRANSWESTERN PUBLISHING CO LLC
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> APR-30-1997 APR-30-1998
<PERIOD-START> MAY-01-1996 MAY-01-1997
<PERIOD-END> APR-30-1997 OCT-31-1997
<CASH> 1,254 2,223
<SECURITIES> 0 0
<RECEIVABLES> 30,905 25,001
<ALLOWANCES> 7,626 7,771
<INVENTORY> 0 0
<CURRENT-ASSETS> 31,463 28,345
<PP&E> 5,938 6,519
<DEPRECIATION> 3,098 3,638
<TOTAL-ASSETS> 48,231 48,753
<CURRENT-LIABILITIES> 31,439 27,483
<BONDS> 67,514 173,875
0 0
0 0
<COMMON> 0 0
<OTHER-SE> (50,722) (152,605)
<TOTAL-LIABILITY-AND-EQUITY> 48,231 48,753
<SALES> 91,414 38,254
<TOTAL-REVENUES> 91,414 38,254
<CGS> 0 0
<TOTAL-COSTS> 64,041 35,975
<OTHER-EXPENSES> (48) 107
<LOSS-PROVISION> 8,920 3,747
<INTEREST-EXPENSE> 7,816 4,333
<INCOME-PRETAX> 10,685 (5,908)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 10,685 (5,908)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 1,391
<CHANGES> 0 0
<NET-INCOME> 10,685 (7,299)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
